Services / Human Resources / HR Audit / What is an HR Audit? | Wilkins Kennedy

Human resources or HR is an integral part of any company. A good HR department will keep the company running smoothly, successfully hiring appropriately qualified staff and letting others go legally, help deal with employee grievances, meet legal employment requirements, use best practice employment guidelines and much more.

A well-run and managed HR department can increase morale, reduce employee turnover and help a business run smoothly and in many cases remain competitive. Employees should be seen as the most valued asset of a company and treated accordingly. Because of this, to make sure an HR department is operating to its best capacity, it is important to run a periodic HR audit.

What is an HR audit? Similar to a financial audit, an HR audit is a way to diagnose problems in a company’s HR department. An HR audit can be done through self-assessment, internally, or can be done by hiring a professional audit company, to undertake an audit. An HR audit and the subsequent HR audit report will pinpoint where there are weaknesses or risks in the HR department and help address these.

The HR audit process

The HR audit process can cover a whole range of areas and can be as specific or broad depending on the company. Requirements will vary, depending on the size of your business and size of HR department as well.

An HR audit will look at issues, such as:

  • the company’s recruitment process
  • benefits and compensation processes
  • contracts and employee handbooks
  • how employee performances are evaluated
  • training and education programmes
  • HR strategy
  • hiring and firing practices
  • exit procedures

Each area can be customised to meet your company’s specific needs. In fact, depending on what your needs are, an HR audit can focus on a specific area, such as contracts or benefits, or cover the whole spectrum of an HR department’s activities.

Employee analysis

Another area an HR audit can be helpful with is to analyse company employee statistics. During an audit, HR staff can take time to look at company statistics and data and analyse these. Data collected by the HR department can be vital to pin-pointing issues within the company. Some of the typical data that can be analysed includes, amount of sick leave taken by employees, how much overtime is worked, the number of disciplinary cases, employee turnover and so on. By taking the time to analyse this type of data, managers can easily pin-point some problem areas.

A thorough HR audit can also include an employee survey, so that management can understand how employees feel about their HR department. Such a survey is also a good way to understand what employees are thinking about, generate new ideas and pin-point strengths and weaknesses. Management need to realise also that privacy is important in order to help get the correct and most pertinent feedback from employees.

Getting the most from your HR Audit

An HR audit is time-consuming and costs money, so it is important to also understand what the benefits are about undergoing an HR audit. The main advantage is to pin-point risks and potential problem areas of an HR department. This is important, because these issues can damage morale and in the long-term the company’s competitiveness – in the worst case, a company could be breaking the law! This means that maintaining a professional and well-managed HR department is a win-win situation for everyone involved.