How to Conduct an HR Audit

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31 Jan 2019

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Happy, motivated, and engaged employees are the driving force of a successful company. Ensuring your staff remain that way isn’t easy, but the key is in keeping HR compliant and accessible.

Having up to date policies and procedures ensures your employees know where to go if they need support. Without them, you open your business up to inefficiency, unhappy employees, & tribunal claims.

The best way to keep your documentation up to date is to conduct regular HR audits.

But what are they? How often should you conduct them? And are they really effective? Let’s start with the definition

What is an HR audit?

A human resources audit is a means of reviewing current policies, procedures, documentation and systems, and highlighting areas that need improvement or updating to remain compliant with the most recent rules and regulations.

You should aim to conduct an audit on a regular basis, regardless of whether there is a pressing issue or not.

We recommend a yearly review for most businesses, but some organisations may choose to conduct them more frequently.

Whatever you choose, a proactive approach is essential for remaining compliant.

With that in mind, you might want to start right away and begin reviewing your HR systems.

However, there are some things you need to consider before developing your HR internal audit program. Beginning with…

How to conduct an HR audit

Before you begin conducting any kind of review, you should determine what it is you aim to achieve.

Consider your reasons behind conducting it, as well as the scope—are you looking at one particular department, or the entire business?

You also need to figure out what you are looking to measure.

The best way to do this is by setting clear objectives for the HR audit.

Some good objectives are:

  • Discover the reason you have been getting poor reviews on employee feedback sites
  • Find out why your retention rate is low
  • See if your hiring processes are out of date

Breaking the HR audit process into steps makes it easier to ensure you’re fulfilling certain criteria:

  • Compliance: whether your documentation is up to date with current employment law
  • Best practice: whether your procedures are following best practice as outlined by the HSE
  • Strategy: If you have a strategic plan for your company, how well do your processes and procedures align with it?
  • Functions: You can break this category down into further criteria, but essentially it reviews how each area of HR performs within your business. Areas such as recruitment, training, employee relations, performance management, and so on.

It may be that you want to conduct one large audit that reviews all systems and documentation, or a series of smaller, more specific ones that target individual areas.

All approaches are valid, and it is important to assess which is right for your business.

In all scenarios, there are two things you will need: a checklist and a questionnaire.

Let’s take a look at what you will need with the former:

HR compliance audit checklist

Having a list of what it is you want to monitor and review is always helpful.

It can be easy to forget to include key areas on this list when planning your audit, especially when there are so many areas to cover.

A full checklist normally spans several pages, you can separate them by tactical functions (see above) or by the four steps:

  • Compliance.
  • Best practice.
  • Strategy.
  • Functions.

Here are some of the areas you should cover in a basic internal audit checklist for your HR department:

Hiring

Job descriptions, forms, medical information, job postings, data protection, background checks, employment contracts, etc.

New Employees

Communication of policies/procedures, employee handbooks, induction/training, discrimination and harassment.

Wages and hours

Formal pay structure, pay reviews, working time, paid time off, sick leave/absence, flexible working.

Benefits

Employee perks, membership schemes, performance related pay, who administers benefits?

Employee relations

Performance evaluation, staff policies, complaints policy, disciplinary policy, whistleblower policy.

Discrimination

Discrimination and harassment training, equality training, supervisor/manager training.

Recordkeeping and data protection

Up to date employee information, GDPR, who has access to data, commitment to privacy

It is vital that your HR audit checklist applies correctly to your business, which is why you should customise your own and not rely solely on the sample provided above.

HR audit questionnaire

Having accurate data is crucial to conducting a successful review.

To obtain that data, you will need a comprehensive survey.

It's important that when you create an HR audit questionnaire for employees, that you consider the type of audit you are conducting.

It’s a waste of time getting heaps of data for questions unrelated to the review.

Some key metrics that are useful to collect data on, are:

  • Absence rate.
  • Diversity statistics.
  • Time-to-hire metrics.
  • Compliance training (effectiveness & cost).
  • Overtime expenses.
  • Productivity.
  • Employee happiness.
  • Retention rate (per manager, department and office).

Conducting a full HR audit can be tricky…

That's why Croner can take the responsibility out of your hands.

If you want support conducting your own audit, or want someone else to take over entirely, Croner has a team of expert consultants who can advise, guide, and perform an audit on site for you.

For more information on our HR service, speak to a Croner expert on 01455 858 132.

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