HR Audit Checklist: 8 Steps to Conduct HR Audit 2023
The growth of an organization should be constantly developing. You need to understand the weak points of the pitfall to move forward.
The audit is an essential part to conduct a performance review and in-depth study of the business process to understand the weak point. Also to ensure legal issues and companies’ policy, complies with employment and labor law. It is essential to perform a regular HR Audit.
In this post, You will get to know, Different types of Audits and how you can use the HR Audit in an effective way.
What is an HR Audit?
The HR Audit or Human Resource Audit is often used to assess the working, execution & maintenance of the human resource department. Managing HR tasks are enormous, ranging from processes, documentation, policies & other systems. While an audit is going on, all such methods get a detailed checkup. An HR audit checklist further reviews these HR aspects & finds the areas that are going well & areas that need improvement.
It allows us to understand that all human resources tasks contribute to the overall business success. The human resource audit examines the internal HR processes. And also, It tells how well your HR department is performing and if all the related policies & HR implementation strategies align with our company’s goals.
Purpose of HR Audit
In simple words, it gives the report card to the HR department about their overall performances so far. HR Audit Checklist finds the noncompliance fields of the company. It’s done to lessen the future threats that a company might face. All the HR attributes like recruitment, payroll, retention, training, onboarding, salary, compensation & performance management undergo inspection.
Human resource Audit makes sure that every aspect of HR is working in coordination & according to the company’s standards. Consistently checking the HR process ensures that the company is on the right track. Moreover, it also saves you from various limitations by adhering to laws & regulations. If everything stays in place, then your chances to get high success increases tenfold.
HR Audit Checklist Template
The HR Audit Takes Care of the Following Human Resource Employees’ Tasks:
1. Employee Benefits & yearly Packages
3. Strategizing Compensation Flow
4. Well-Defined Exit Interview
5. Performance Feedback System
6. Tenure Termination
7. Employee Onboarding
All the above categories are essential HR functions. Henceforth, it’s advised to study these core areas carefully. It provides a fair idea about how well your HR performance is going.
Types of HR Audit
Having a clear understanding of the Types of HR Audit keeps you aligned with obedience to the employee’s laws. Here are the various types of HR audits:
1. Company Culture
A successful firm also has an excellent working culture. Despite having diverse people, products, or portfolios, a strong culture is a secret of employee retention. When employees feel heard, they put in 100% of their effort. However, people might get confused if their culture is adequate for their growth. Here is when the company culture audit comes into the picture.
The audit team assists the company in looking into the bigger picture. In addition, with their help, the organization explores & inspects their cultural traits. These traits include philosophy, values, hypotheses, and standards. Such analysis determines if these traits benefit or hamper your organization’s productivity.
2. Legal Compliance Audit
In the field of human resources & audit, the Legal Compliance Audit has been the most commonly used so far. This particular audit is well known for performing the HR practices comparison. It correlates HR practices with the policies & legislation of the firm. Furthermore, the Legal Compliance Audit recognizes the prevailing gaps between prerequisites and existing circumstances. It also underlines all the disparities that aren’t working according to the rules and regulations.
HR Policies Audit allows to check into the existing policies & SOPs. It ensures that all the critical policies are working in place. Audit of policies also throws light on the entire procedure of making the policies. Moreover, it highlights the names of all stakeholders involved in making such policies. As a result, you get a clear picture of all the segments of the company’s policies especially sexual harassment. A safe work culture with no bullying or harassment attracts 90% of the employees.
If you want to know the scope of your current policies, if they can work in your favour, & if further improvements are needed, the HR Audit is the perfect solution. Outsourcing the best HR audit team helps get adequate awareness about your prevailing systems. Moreover, it helps to know what policies are best or not working for your company.
4. Health & Safety
The health and safety audit takes all the essential precautions to ensure good employee health. Also, all the surrounding working environment & resources are taken into account that’s best for a worker’s overall health. It is mandatory because when an employee is onsite and in the office, they might get vulnerable to numerous health complications.
That’s why taking care of it in advance is an intelligent act of handling employee health by auditing. As a result, all the work-related hazard threats get minimized with the help of a health and safety audit.
5. Strategic Plan
The audits of this type are performed when strategic planning is required to take critical business decisions. It includes mergers & acquisitions, significant company changes, restructuring, etc. Before bringing any new changes to the company, detailed knowledge about the ASLS state of the organization is required. The strategic plan audit helps recognize, collect, and examine essential information of the company.
This information is an enormous scope to find all the unseen future risks in advance. Furthermore, it provides details regarding the existing state of the organization. Finally, it speaks about what loopholes & gaps are there in the coming that needs to be aligned with its policies.
HR Audit Checklist 2023
Performing the HR Audit Checklist is vital for various segments of an organization. It increases the chances of employee retention & business success for a long-term period. Here are the different parts where HR Audit Checklist is performed:
1. Employee Documentation
✔ It checks the overall operations of the HRIS – Human Resource Information System. Audit reviews this system to ensure that employees’ details are easy to browse & track whenever required.
✔ In employee documentation, HR audit checklist, personal files & I-9 forms must be placed systematically. Also, audit checks these I-9 forms to ensure they exist and are timely filed.
✔ It safeguards each employee’s confidential data. It can be related to health, background, as well as career history.
Also Read: 10 HR Documents You Need To Have For a Hassle Free and Safe Workplace
2. Employee Handbook
✔ Make sure that company laws adhere to the local, state & national employment laws. It is done by taking a quick legal consultant glance over it.
✔ It is aiming for the yearly employee handbook scrutiny. It helps to make sure that there are no loopholes in the system.
✔ They are giving employees the proper knowledge regarding the alterations made in the handbook. Furthermore, they take their consent before implementing them.
3. Employee Training and Development
✔ It audits the irrelevant content from the training portfolio and also removes it.
✔ The T&D program HR Audit checklist analyses the employee development programs. Also. It searches for all the existing training gaps, statutory training competition & whether every training is happening at the right time.
The training portfolio audit takes care of the following questions:
1. What is the employee feedback (whether positive or negative) over the learning assets?
2. What is the total time consumed by these learning training?
3. What is the overall impact of the training on employee performance?
4. What if learning materials from training sessions are not available because of technological changes?
4. Compensation and Rewards
✔ It is developing a structure to promote competitive salary packages. Also, it is done by analyzing the national pay scale.
✔ It removes all the pay-related discrepancies due to gender, race, caste, colour, nation, or physical disability.
✔ It is developing a fair system to specify the suitable alternative for a salary hike.
✔ Analyzing the salary laws for answering questions on minimum wages, average salary, low salary hikes, etc
5. Selection and Onboarding Process
✔ It is appropriately assessing the ATS – Applicant Tracking System. It keeps track of all the applicants and selected employees’ data. Furthermore, it ensures the smooth Selection and Onboarding Process that’s as per the pre-set needs of the company.
✔ They are analyzing all the current recruiting tools utilized by the company for hiring. It makes sure that all devices are capable enough to meet organizational needs.
✔ The onboarding prices are more effective by allocating a mentor or a buddy to new joiners.
6. Performance Review/Analysis
✔ They decide regarding a specific time for evaluating employees’ performances.
✔ They develop a system for specifying the demotion & promotion parameters & real-time employee performance.
✔ They use the performance appraisal tool to cross-check if set expectations meet the actual outcomes.
✔ They keep an eye on the existing system to promote equality among employees. It helps to keep the favoritism & partiality away at the performance appraisal time.
7. Health & Safety
✔ Health & Safety Audit takes place to examine all the existing safety measures. Auditing allows ensuring that each employee is working in a safe environment and is free from any threat to their health.
✔ Auditing further checks whether each company is working as per the OSHA standards or not.
✔ The health, as well as safety auditor, checks the company’s health and safety policies, strategies, and protocols.
✔ It addresses two things priorly. First is if the company’s policies regarding employee safety are appropriate. The second is if the company is safeguarding the employee’s wellbeing.
8. Labour Laws
✔ Performing auditing for the labour laws is a recent belief. It came into the picture because of its nonobedience to various laws made for workers.
✔ The overall motive of the Labor law audit is to maintain the relevant awareness, examination as well as track it. Moreover, statutory compliance is conserving you by putting the laws far away.
✔ Labor & Employment law Audit has proven to be a valuable tool for various firms. Also, it’s highly effective for keeping the compliance related to employment, industrial & labour laws.
✔ Auditing also helps to highlight all those fields where the employees are not getting enough benefits from labour laws. It causes the firm to pay huge penalties.
1. Why Conduct an HR Audit?
HR Audit is a crucial component of every organization. Conducting an HR Audit creates value to your firm in the nine primary ways
1. Provides alternatives to embrace the millennials’ expectations.
2. Ensures the fair distribution of salary and also, compensation.
3. Solves the problem of frequent employee turnover & increases employee retention.
4. Enhances the structure of your company & also, revises the job descriptions.
5. Also, helps in employee classification.
6. Helps to comply with the HR regulations.
7. Also, Your work improves by remaining updated with the latest employment news, trends as well as respective laws.
8. It recognizes the prevailing harassment & provides ways to suppress it.
2. What are the Benefits of an HR Audit?
Huge benefits are associated with the HR Audit. Let’s understand then below:
1. Promote the best industrial HR practices.
2. Minimizes overall HR expenses.
3. Analyze the job systematically.
4. Also, It tells you about the HR personnel’s contributions to the company.
5. Ensures fair performance appraisal systems.
6. It handovers the legal needs on time.
7. Searches for HR problems & provides solutions to them.
8. Motivates the HR department team.
9. Making the HR department look more professional to the outsiders.
10. Also, helps in coordinating the HR objectives for business purposes.
11. Adapt to the ever-changing HR parameter, technologies, and changing market trends.
12. Also, enhance the HR department’s operational & administrative effectiveness.
13. The audit team finds the current strength & weaknesses of HR functions & works upon polishing them.
14. They are making HR policies, rules & regulations without violating the federal, state & local employment laws.
15. It brings the latest HR tools to increase the system’s affordability.
3. How do I Prepare For an HR Audit Checklist?
Adopt the most innovative way to prepare for an HR Audit Checklist using the following four suggestions:
Step 1: Adopt Smart Paperless Working:
The most competitive alternative to ensure the best HR audit preparation is paperless working. But, practically speaking, keeping a record of every employee’s file in a physical paper or documents is a big cumbersome task.
Also, It increases the high scope of errors with time wastage. The proper electronic system allows you to have quick access, security, fast implementation, time-saving & better organization. For bringing the paperless working faster, also adopt the latest tools like scanning automation to convert paper files of employees to digital format.
Step 2: Maintaining a Track of Documents:
You are required to maintain each employee’s data in a well-structured platform. Also, each employee has dozens of files keeping his record in place. Imagine how problematic it is for HR if the company has more than 50 employees. Above all, if an HR audit visits your office and demands a random employee file, then you’ll get all puzzled about finding it offline.
When you adopt the digital HR software system, you need to keep relevant filters to track & find any random file. Also, it smoothes conversation between employees, HR, and the auditor. HR Audit this way quickly finds the missing file, data incompletion, as well as other system errors.
Step 3: Keeping Certifications Updated:
One needs to ensure that all employees’ certifications are up to date & not expired. Employees’ professional accreditation & periodic training is a big headache for HR audits. However, If things are going according to the offline paper documented manner, checking each employee’s training & certifications will be time-consuming, taking weeks to months. In the online digital system, also, HR audits need to put filters of the expiration date.
Additionally, It checks for the list of employees whose certifications are getting expired and require renewal. The same way out is training sessions are scheduled for each employee, ensuring quick and easy management, and you can track these reports by asking your employees to email you reports either every week or every month. Therefore, they will get an intimation of renewal or any required changes.
Step 4: Digital Coordination With Auditors:
The HR auditor’s daily visit to your office is a very cumbersome task for him & you as well. What it does is that every single person related to the HR department gets indulged with the HR auditor’s orders. Therefore, it leads to a considerable wastage of time, leading to low or no productivity.
You can reduce this onsite visiting of the auditors by storing employees’ files & other necessary HR data online. Also, it leads to less scope of errors & higher productivity by minimizing time wasted in back & forth coordination. Whatever the auditor demands, whether it’s a single file or a big bunch of files, you can check digitally and send him. Moreover, file management software helps in accessing information sharing with safety.
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