How to do HR audits and why is it important?

12 of February, 2021

Doing an HR audit is a great way of reviewing a company’s inner workings. In some areas, the law makes such audits mandatory. But even if you are not required by law to conduct an HR audit, it’s still a good idea to do one. Indeed, HR audits deliver valuable information about how you can improve the way your company functions. Keep reading and find out how.

What is an HR audit?

HR audits are the practice of reviewing all the organization’s policies, processes and documentation. They provide a large range of valuable data regarding all aspects of the company’s HR department, such as: recruitment procedures, compensations and benefits, performance evaluations, termination processes, etc. This allows you to answer several questions, for instance what exactly causes low productivity in your workspace.

Conducting an HR audit is a good way of making sure that the business complies with all regulations and labor standards. It also checks if the humans resources are being used efficiently. What’s more, it points out the organization’s weaknesses, so that you know exactly which areas to improve in order to maximize profitability. You can then work efficiently on revising your workforce management.

What are the methods to conduct HR audits?

There are several methods you can choose to use to conduct HR audits. Each of them has its particularities and focuses on analyzing a different aspect of the organization’s inner workings. Here are four of the most common types of HR audits and the questions that they seek to answer:

• Compliance: To what extent is the organization abiding by the current laws and regulations?
• Best practices: How well is the company doing compared to organizations that are known to have excellent HR practices?
• Strategic: What are the strengths and weaknesses of the current systems? How do they align with the company’s strategic plan?
• Function-specific: Focusing on a specific HR function, what is its current state and how can it be improved?

HR checklist for audit

Obtaining accurate data is essential to carrying out a successful HR audit. An HR checklist for audit can help you make sure you’re gathering all the right information according to the audit method that you chose. A human resources audit checklist can include the following areas:

• Employee records: Check how well your Human Resource Information System (HRIS) is working. Correct the form I-9 errors, that is errors due to inadequate or incomplete documentation in the forms.
• Employee handbook: Review the new labor regulations and update the handbook. Make sure your employees know about any modifications to the employee handbook.
• Compensation: Check the national pay scale to make sure you keep offering a competitive salary. Keep up to date with salary regulations, for instance minimum wages.
• Benefits: Review your employee benefits package to ensure it is competitive. Create a survey to determine which benefits your employees require the most.
• Hiring processes: Have a look at the functioning of your Applicant Tracking System (ATS) and other recruitment tools.
• Performance reviews: Check up on your performance appraisal tools as well as the way that employee promotion and demotion is decided.
• Training: Review your training and mentorship programs.

Sesame’s HR reports gives you access to valuable data to help you do an HR audit easily and manage your teams better.