Are you sure your HR foundation was set up solidly and litigation proof? Now is the Perfect Time to Audit Your HR Functions!

May 1, 2020 at 4:00 AM
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Eliminate your Risk and Potential Liability with an HR Assessment ~ Set your organization up for unlimited success: Compliance; Best Practices; Strategic; Function Specific.

There are 4 types of HR audits:

* Compliance. Focuses on how well the organization is complying with current federal, state, and local laws and regulations.

* Best practices. Helps the organization maintain or improve a competitive advantage by comparing its practices with those of companies identified as having exceptional HR practices.

* Strategic. Focuses on strengths and weaknesses of systems and processes to determine whether they align with the HR department's and the organization's strategic plan.

* Function-specific. Focuses on a specific area in the HR function (e.g., payroll, performance management, records retention).

What is involved in an HR Audit?

Auditing involves an organized and structured review of your organizational practices. By reviewing company and department goals, policies, procedures, legal requirements, and established processes, the HR Audit will allow a complete review to assure you are on track and compliant. The review will help identify gaps in policies and identify what is happening versus what should be happening. Many audits identify areas where procedures are not followed or haven’t been updated. Identifying outdated or inconsistent policies and procedures can lead to:

· Review of processes to determine what makes the most sense for your organization

· Assuring that everyone is following the same procedures

· Process improvement and enhanced customer service

· Assuring legal compliance

· Improvement of the quality of the process from those inside human resources as well as those outside of the process who rely on it for their department’s success.

How to conduct an effective HR Audit?

How do you make sure your HR Audit is a constructive event resulting in improvements rather than a poor report card? The key to an effective audit is to clearly define it and have the process work to your advantage. When selecting a thought partner to review your function, I recommend securing an individual or team that will partner with you to ensure you get what you want out of the assessment.

Consider the following before you engage in the process:

1. Identify your desired outcome. What is the goal of your HR Audit? Why are you conducting this review? What do you hope to accomplish from the review? Is it a compliance-driven review? Is it a review of process and best practice? Some employers are confident that their compliance is on point and prefer a review of processes and best-practices in functional activities such as recruiting, payroll processing, or even benefits administration. Others are solely concerned about compliance and keeping up with the myriad of changing legal requirements. Determine your desired outcome before you begin and tailor the review to meet those expectations on the front end.

2. Determine which HR areas you want to review. Are you reviewing all of the functional aspects of HR or just one or two key areas? For example, some employers request an in-depth review of a specific area, such as their recruiting function rather than a review of all areas. The assessment would consist of an evaluation of both compliance and best practices in the recruiting process to identify areas of potential improvement surrounding their recruiting efforts. Others prefer to have a review of all of the HR areas. In this type of review, all functional areas reviewed would include recruiting and employment, recordkeeping, policy development, engagement, compensation, benefits, health and safety, communications, and payroll. These reviews typically involve a focus on compliance in these areas but also review processes and procedures for each of the areas. The organizational effectiveness of the HR function can also be reviewed to assure the department is meeting the needs of their internal customers.

3. Determine who you would like to have involved in the assessment. Will you only include human resources staff that regularly touch the function or will you include your internal customers as well? For example, if you are doing a review of your recruiting and employment process, who will you include? Your HR recruiting staff is an obvious choice, but what about the hiring managers in the functional areas? Will you include a sampling of individuals involved in the orientation and onboarding program? Determine how deep you wish to go as you review the areas and who will be involved in the audit.

4. Determine how you are going to address any deficiencies or findings. The report provided at the end of the audit will most likely include items that will be highlighted for improvement. Findings may include items such as general compliance or regulatory items that need to be addressed or even a process improvement recommendation. Your thought partner should highlight the level of importance/risk to you in that report. Most assessments help you to determine the high priority items versus those of lower priority based upon compliance concerns. Once they are identified, it will be up to you and your team to create your own internal priority for the action items and determine who will be tasked with correction. Some may involve an easy one-person / one-click fix, such as updating the I-9 form you are using. Others may involve improved process recommendations which could include a team to work through, resolve, and update. Determine how you will approach the “fixes” so expectations are clear at the onset. Not everything will be able to be addressed in one day, so align expectations accordingly.

A clearly laid out plan and expectation can significantly impact the concerns surrounding a human resources assessment. Work cooperatively with your chosen thought partner to make sure you are getting what you want out of the review so positive outcomes can be reached.

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