An internal HR audit has the same goal as any other audit: to scrutinize business operations to ensure best practices are in place and consistently applied. Of course, an HR audit is exclusively focused on HR practices, offering an opportunity to identify deficiencies in employment policies and their application, employment-related documentation, and compliance with relevant employment law. Proactively auditing HR practices is the most effective method of addressing small issues before they have a chance to take up time and money that would be better spent elsewhere.
If you haven’t conducted a full review within the last couple of years, let this guide serve as a wake-up call to making an audit part of your Engagement Plan for the coming year.
The job of a Human Resources, Employee Relations or Labor Relations professional is often reactive: investigating employee relations issues, responding to a compliance violation, or searching through poorly maintained records when a legal claim is made. However, it is far more satisfying to take a proactive approach and address small problems before they become major headaches. HR auditing sets businesses up for success, establishing basic HR practices. Audits systematically review whether and how policies are being applied, ensuring consistency among staff members and compliance with legal and regulatory requirements.
Other benefits of HR audits include:
• Company-wide adoption of best practices
• Identification of potential processes improvements
• Reduction of errors and employee complaints
• Proactive preparation for government investigations
• Reduced likelihood of fines for noncompliance with employment regulations
• Possible reduction in insurance expenses
• Improved utilization of legal budgets
• Increased buy-in from managers regarding HR policies and practices
• Reduced likelihood of successful union organizing
Launching an HR audit is a major endeavor, and it is important to secure the appropriate resources. These subject matter experts are particularly helpful:
Legal Counsel – The results of an audit can be discoverable in future legal proceedings. Consult legal counsel for advice on protecting the business.
Department Leaders – Enlisting the help of department leaders saves time. They can point you towards the relevant records and explain how policies are applied from day to day.
Once your team is assembled, outline the areas you will audit and develop a list of audit questions. Common inquiries for HR audits include the following…
Creating a highly engaged workforce has become a vital aspect of business success. Statistically, employee engagement has been poor in the last few years. According to recent data from Gallup, nearly 70 percent of the American workforce is disengaged; around the world it’s worse, with only 15 percent of workers engaged. When employee engagement is low, it can harbor dissatisfaction in employees, making them susceptible to reduced productivity, turnover and an increased presence of labor unions. Therefore, all organizations must have a system for checking that their labor and employment practices are conducive to a highly engaged workforce.
Our comprehensive guide to conducting an HR Audit can help you form a plan of action for making sure that your company is on the right track. Here are five incredibly easy (and practical) first steps you can take to develop workforce policies that promote improved employee engagement:
The journey to greater employee engagement can be a difficult one, but it is easier to manage with a clear roadmap. This often starts before an individual actually begins work — in the pre-hire stage of their experience. When a company’s brand reputation emphasizes a positive culture where employees feel valued, it sets things up for long-term success.
What you can do now: The applicant tracking system and way candidates are treated throughout the interview, hiring and on boarding process makes a huge difference. Use the audit guide to help you to identify any areas that need to be corrected.
All human resource teams must ensure that employees are receiving the best possible compensation and benefits in order to remain competitive. The 2017 PayScale Compensation Best Practices Report indicated that 32 percent of top performing companies have changed their compensation strategies as a result of employee engagement feedback. More employers are actively listening to what their employees are asking for and taking steps to ensure they get what they need.
What you can do now: Take the time to conduct a brief survey of your employees to find out if your compensation program needs improvement.
In today’s business world, everything from customer data to employee information is stored in a digital format. This often includes the use of scheduling, payroll, performance and benefit platforms. Ongoing monitoring is needed to ensure that data is accurate and up-to-date and that people are paid correctly.
What you can do now: Your organization should verify that all information systems are secure from information breaches, and accessible and easy-to-use for employees. A third-party auditing firm can often pinpoint potential issues.
Working conditions make a big difference in how employees view their employer. There are too many toxic conditions invading otherwise good companies. The aspects that human resources can control include: having clearly written policies to deal with things like employee grievances, anti-bullying, drug use, union card signing, and more.
What you can do now: Review employee handbooks and update labor law posters in employee break areas. For some objective feedback, ask employees during exit interviews what the company can do better.
When employees are recognized for their efforts at work, they tend to stay more engaged in their careers. Having a professional development program to guide employees through the various stages of career growth is one step in the right direction.
What you can do now: Review job types with management and create structured learning paths for each department.
By following this checklist , any human resource team can help to elevate employee engagement, productivity, knowledge and morale.
Looking For More? Download our FREE Guide to conducting a Labor & Employment Audit to help you make your workplace more positive & productive!
Conducting an internal audit may not top the list of things HR professionals look forward to doing, but the importance of reviewing HR practices should not be understated or ignored. Simply put, an HR audit can be the savior that keeps your company out of the court room.
Think about this: On average, there are more than 450 employment lawsuits filed each week. The most common target is private employers with between 15 and 100 employees. While you may not be able to control if somebody files the suit, are you prepared to defend the company when someone does? With plaintiff attorneys on the offensive, joined by an administration and Department of Labor sympathetic to that cause, employers need to be ready to handle whatever is thrown their way.
But the reasoning behind internal HR audits extends further than lawsuit defense, for example:
So, what exactly does an HR audit do? As with any audit, it takes a look at just what you are doing a little more closely. In this case, it measures the health of current HR practices. An HR audit will help you identify deficiencies and provide direction in the following subjects: employment practices, employment policies, employment related documentations, employment law compliance.
Bottom line: an internal HR audit is an opportunity to save the company money and avoid problems they may otherwise face. At the end of the day, an audit should help you to develop more consistent policies, treat employees more fairly, and in return the employees become more productive.
When it comes to an audit, there are two main areas of focus- compliance and best practices. Compliance looks at the legal aspects of HR and includes areas such as missing, outdated, or conflicting policies or inconsistencies between policy and practice. The practices pays attention to what is (and isn’t) working for the company including the current processes (on issues such as recruiting, discipline or terminations) and procedures (on issues such as performance or evaluations).
To get started, you will need to develop an audit team. This includes key management personnel. You want people who can give you clear input of what exactly is going on. Feedback from non-management employees is helpful, but they should not be part of a formal ‘team.’
So you have the team and are ready to go. Which areas should you look at first? I don’t know if there is a good first or second place to begin with, but there are plenty of places to get to. An HR audit should ask the following questions:
And as you move forward, remember these two rules from HR 101: document everything (juries will only believe what you have in writing) and be consistent (a policy isn’t a policy unless it’s followed every time).
Note: This information is not intended as legal advice or counsel. Please seek a qualified attorney for more information.
So you’ve made the decision to conduct an internal Human Resource audit. The team is in place and you are ready to begin. Which areas should you look at first? An HR audit should ask the following questions:
– Do you have all the required postings present and visible?
– Does your company follow all appropriate I-9 requirements, including proper recording?
– Do employment applications contain any questions that are illegal? Are they properly maintained?
– Is the employee handbook current and legal? Do employees have a copy? Have they signed documentation showing that they have obtained a copy?
– Are any files stored in the managers’ desk files (rather than properly placed in records file)?
– Are all OSHA logs are up to date, completed, and available to employees?
– Do you have an electronic communication policy (this includes email, social media, etc.)?
– Do you have a policy for company-issued cell phones (how often can they talk, can they text/ send pictures, for personal use or just business, etc.)?
– Do you have a legally sufficient anti-harassment policy? Does it include a strong anti-retaliation policy?
– Do you have a grievance or complaint procedure in place that employees are aware of and feel like they can use?
– Is the at-will language in your handbook legal?
– Is the paid time off policy clear?
– Do you have a satisfactory equal opportunity employment policy? Is it noted on job postings?
– Are FMLA policies and procedures up to date?
– Do you have substance abuse policies in place?
– Are employees aware of safety or accident reporting policies?
– Are ERISA and COBRA requirements met and followed through on?
– Are ADA policies up to date and followed?
– Does the company comply with all FLSA regulations? See this article for more information on wage and hour requirements under FLSA.
– What are your recruiting procedures that you have in place? Are you looking for the right candidate? Do you have an effective (and legal) application? Do you conduct a background check (criminal check plus work history/ references)? Who handles the interviews?
– Do you have a proper onboarding practice for new employees?
– Do you have a formal performance evaluation procedure? What about a disciplinary policy procedure? Is it followed consistently?
– Are you properly retaining all records for the appropriate time as required by law?
Of course, your company will also have specific and unique needs, so make sure your audit is comprehensive with regard to these things.