Many organizations have put forth much effort and expense to develop human resources policies, practices, and procedures that are both aligned with the organization’s corporate culture and compliant with the law. Still, with organizations and the legal landscape constantly changing, it is important to perform frequent reviews to ensure that everything is up-to-date. Performing regular human resources audits is a proactive way of ensuring that an organization stays up-to-date and out of hot water when it comes to legal issues.

The purpose for conducting HR audits goes beyond ensuring legal compliance, however. While these audits are key for recognizing HR deficiencies, they also aid in recognizing HR successes. Furthermore, they help HR professionals standardize processes, identify risk areas, and align HR practices with the overarching strategy and goals of the organization. An HR audit assesses the current activities and inputs available, and then determines the future HR needs of the organization. When done properly, the audit will ultimately result in meaningful action items, including a suggested timeline and allocation of resources that will improve the effectiveness and efficiency of the HR function. Beyond these reasons, the HR audits help to instill confidence in management and the HR function.

Areas To Do HR Audits Examine?

When you conduct an HR audit you can look into one or more of the following areas, depending on your concerns, budget, and time frame.

Compliance

Any human resource leadership team will want to know that they are compliant. An HR compliance audit focuses on how well your business is complying with current local, state, and federal employment laws and regulations. This is a risk-mitigation audit. Your goal is to ensure you aren’t violating any laws or leaving yourself open to liability lawsuits.

Best Practices

Is your human resource management team at the top of their game? An HR best-practices audit compares your HR processes and policies with the accepted industry standards. This type of audit can be greatly beneficial to a growing company because it can help ensure you’re on the right track as you increase payroll, create handbooks, establish job descriptions, and set expectations for your new employees.

Performance

An HR performance audit involves a review of personnel files with the goal of evaluating the quality of feedback your managers are giving their staff. A lack of quality feedback can inhibit the growth of employees. But a performance audit can identify problems with your review and feedback process before employee development suffers.

Competitiveness

What kind of compensation packages have your HR managers put together? Are your wages, salaries, and benefit packages competitive? An HR competitiveness audit looks into all areas of employee compensation and benefits to assess whether your business is doing what it needs to do to attract the best-qualified employees. Even if you can’t compete on wages or salaries, a competitiveness audit can identify other areas (such as telecommuting opportunities and flexible work schedules) that can improve how attractive you are to applicants.

Function Specific

A function-specific audit is a kind of mini-audit where you examine just one area of your HR processes or policies. You might choose to investigate an area such as payroll management, employee review policies, record-keeping efficiency, etc.

Why Are HR Audits Important?

An HR audit is the only way you can fully assess whether your HR processes and policies are benefiting or harming your overall business. If you’re in danger of a lawsuit or criminal suit, if your HR systems are inefficient, if your employees aren’t developing, or if you can’t attract the right employees, your business will suffer. Improve those areas, and you can improve your chances for success.