COVERAGE & TYPES

Are All HR Audits Created the Same?

 

There are multiple types of HR audits with differing goals. The two main types are risk mitigation and value creation. While you can conduct both types of audits simultaneously, they will focus on different aspects of your HR processes and policies. Risk mitigation will mainly look for areas where you can get into legal trouble or are leaving yourself open to employment-related lawsuits. Value creation will mainly look for areas where your processes and policies can be improved to maximize the value of your employees or attract better employees.

What Areas 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.

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.

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.

Performance

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.

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.

LET’S WORK TOGETHER

The HR audit is only one part of the whole. HR managers should therefore continuously address the optimization of internal processes, workflows and concepts. In this way, they guarantee the quality of their work and help the company to be successful and gain a competitive advantage in the long term.

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