HRM textbook

CHAPTER 3 HUMAN RESOURCE MANAGEMENT STRATEGY AND ANALYSIS 89
What Are HR Audits?
Human resource managers often collect data on matters such as employee turnover
and safety with the help of human resource audits. One practitioner calls an HR audit
an analysis by which an organization measures where it currently stands and determines
what it has to accomplish to improve its HR function. 37 Another calls it a
process of examining policies, procedures, documentation, systems, and practices
with respect to an organization s HR functions. 38 In sum, the HR audit generally
involves (1) reviewing the functioning of most aspects of the company s human
resource function (recruiting, testing, training, and so on), usually using a checklist,
as well as (2) ensuring that the employer is adhering to government regulations and
company policies.
In conducting the HR audit, managers often benchmark compare their results
to those of comparable companies. Many private human resource management
consulting firms (such as Mercer, www.mercer.com) offer such comparable data on a
variety of HR activities. Sample activities include what other employers are paying
and the ratio of HR professionals per company employee. We saw that the Society for
Human Resource Management provides extensive benchmarking services. HR
audits vary in scope and focus. As an example, typical broad areas to cover with the
HR audit include: 39
1. Roles and head count (including job descriptions, and employees by exempt/
nonexempt and full/part-time status)
2. Legal issues (compliance with federal, state, local employment related legislation)
3. Recruitment and selection (including selection tools, background checks, and so on)
4. Compensation (policies, incentives, survey procedures, and so on)
5. Employee relations (union agreements, performance management, disciplinary
procedures, employee recognition)
6. Mandated benefits (social security, unemployment insurance, workers compensation,
and so on)
7. Group benefits (insurance, time off, flexible benefits, and so on)
8. Payroll (internal versus external payroll options, FLSA compliance)
9. Documentation and record keeping (HR information systems, personnel files,
I-9 and other forms, and so on)
10. Training and development (new employee orientation, workforce development,
technical and safety, career planning, and so on)
11. Employee communications (employee handbook, newsletter, recognition
programs)
12. Internal communications (policies and procedures, and so on)
13. Termination and transition policies and practices
Drilling down to a finer level of analysis, here is what we might look for in several
of these 13 items.
Item 9, Personnel Files Do our files contain information including résumés
and applications, offer letters, job descriptions, performance evaluations,
benefit enrollment forms, payroll change notices and/or documentation related
to personnel actions, documents regarding performance issues, employee
HR audit
An analysis by which an organization measures
where it currently stands and determines
what it has to accomplish to improve its HR
function.