HR leaders need to have a strong grasp of what is working well and to be able to clearly identify areas for improvement and gaps in compliance. Conducting an HR audit is a great way to examine the effectiveness of your talent-management strategy, maintain compliance with ever-changing employment laws, and keep up with workforce trends. And, importantly, an audit can help facilitate fact-driven decision-making.
There is no one-size-fits-all approach to an HR audit. In fact, there are many different types of audits that HR professionals can conduct, including recordkeeping audits, legal compliance audits, and employee leave management audits.
Here are some effective strategies to use when conducting an HR audit:
Determine Where You Lack Clarity
Are there any areas of the HR function that are not clearly defined? Are there HR processes that create confusion and frustration? Areas lacking clarity or direction would be the best places to begin auditing.
Establish Clear Objectives
When conducting an HR audit, it’s essential to know its purpose and the desired outcomes. For example, let’s say you are an HR professional looking to conduct an audit on your company’s total rewards strategies. Total rewards is a broad topic that encompasses everything an employee perceives to be of value, such as compensation, benefits, vacation time, development opportunities, and more. An audit scope that is too broad can quickly get overwhelming and disorganized. An overly broad scope can also cause the audit process to fall through the cracks if the objectives are unclear.
Here’s an example of a clear objective for an audit: “To ensure the company’s salary structures and compensation practices are compliant with Colorado’s Equal Pay for Equal Work Act.” Another example: “Identify any discrepancies in the company’s processes for salary increases.”
Decide Who Will Conduct the Audit
Some HR departments may have the resources and staff necessary to conduct their own HR audit. If that is the case, it’s important to establish whether an individual will conduct the audit or if it will be a team effort. If you decide to create an audit team, it’s critical that the responsibilities and expectations are clearly defined.
For many organizations, it may be beneficial to seek outside assistance. At Employers Council, we provide HR audits that empower organizations to make informed decisions and prioritize next steps.
Develop an Audit Questionnaire
Developing an HR audit questionnaire will help with gathering the appropriate data. Below is a brief example of some of the questions that you can ask in an audit depending on the specific HR function you are auditing. For the purposes of this article, we’ll use the talent acquisition function as an example.
- Do you have a current approval and tracking process for requisitions?
- For Colorado employers: Are all positions posted internally to ensure compliance with Colorado’s Equal Pay for Equal Work Act?
- Are all applicants completing all job application forms?
- What departments have the most open requisitions? Why? (high turnover, difficult-to-fill positions, etc.)
- What departments have the least open requisitions? Why?
- What resources does the organization utilize for building a steady pipeline of talent? (This could be a combination of internal referrals, partnerships with universities or other community organizations, industry-specific job boards, etc.)
- From what source are candidates hired the most? (Feel free to break this down by department, industry practices, etc.)
- What metrics are used to track the success of the candidate experience?
- Are managers and supervisors properly trained on best practices and compliance topics related to recruiting and hiring?
Create an Effective Audit Report
Effective audits are not meant to raise awareness only about current HR processes but to drive change where it’s truly needed. The purpose of HR audit reports is to capture the health of the workforce, and the report itself plays an important role in transforming talent strategies for the better. One of the keys to creating an HR audit report that propels action is knowing the audience who will be reading it. For example, will the audience mostly be senior leadership, such as the CEO or CFO?
The way the audit findings are presented to the intended audience will have a significant impact on how the findings are perceived and acted on (or not acted on). Senior leaders often have different priorities than HR, so clear and confident communication (as well as active listening from senior leaders) is essential. An effective audit is a commitment that takes time and consistency. The report should be written in a way that propels decision-makers to act.
When writing the HR audit report, ensure that the information included is relevant to the objectives and desired outcomes. You should also share any root causes along with specific recommendations and timelines. You could utilize different graphics, visual aids, and tailored communications to help the readers see that there are no quick fixes when it comes to human assets.
Conducting an HR audit gives you deeper insight into the processes and policies that drive the employee experience, helping lay the foundation for long-term efficiency and growth.
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