Conducting a Successful HR Assessment Jennifer Kramer, SPHR, SHRM-CP Managing Director Sikich HR Consulting

Learning Objectives Why conducting an HR Assessment is a good practice Different kinds of HR Assessments The assessment process What to include in your Assessment Overall goal is to ensure compliance and increase effectiveness of your HR policies and procedures

Why Conduct an HR Assessment?

What Keeps You Awake at Night?

Increased EEOC Claims

External and Internal Forces Sarbanes-Oxley requires effective internal financial controls Securities and Exchange commission Guidelines require management to “…exercise reasonable management oversight.” The U.S. Federal Sentencing Guidelines require that management demonstrate that it took reasonable steps to engender an organizational culture of compliance and to “monitor and audit” compliance activities, behaviors and results Governmental agencies (EEOC, NLRB, DOL, etc.) are attacking systemic noncompliance.

Importance of Human Capital Human capital is becoming the single most importance factor in an organizations…a source of innovation and a driver of business success Compliance Productivity Sustainability, and Profitability

The HR Assessmsent

What is an HR Assessment? Objective and systematic evaluation that provides: Compliance and governance requirements are being met Business and talent management objectives are being Human resources management risks and fully identified, assessed, and managed The organization’s human capital adds value

Benefits of the HR Assessment Compliance regulation and/or company policies Ensuring alignment of HR management Assessing the outcomes Establishing an “early warning system” Exploring effective utilization of human resources Streamline work process Measure continuous improvement Maintaining or enhancing the organization’s reputation in a community Instill a sense of confidence in the human resources

Types of Assessments Compliance Best Practices Strategic Focuses on how well the company 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 practice 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/or the company’s strategic plan Function-Specific Focuses on a specific area in the HR function (i.e. – payroll, performance management, record retention, etc.)

When To Conduct an Assessment Annual Spring Cleaning Merger or Acquisition Major regulations or legal changes Certain employment thresholds Business growth

When to Conduct an Assessment New facility opening in another state or country Employee morale, high turnover, attendance or excessive discipline Prepare for potential government audit or litigation Taking over the HR function

Conducting an HR Assessment

Scope of the Assessment Planning Stage Who will conduct assessment? What do you want to audit? What assessment tools will you use? How will the process be rolled out? How will results get reported? Who will get the results?

Gaining Buy-In Stage Explain the reason for it To protect them and the organization To help them understand policies, procedures and laws To gain a better understanding of their department To help them set best practice procedures To avoid costly and time consuming litigation Show managers the relationship of key indicators to the organization’s goals

What to Include in Your Assessment The Foundation Managers and Supervisors Processes Stakeholder Input Workforce Analysis and HR Metrics

Review Your Foundation Recruitment and Selection Training and Development Compensation Performance Management Process Recordkeeping and Reporting Leave Administration Workplace Practices Benefits

Evaluate Managers… How to handle complaints of harassment Difference between exempt and non-exempt Giving employment references FMLA and other leaves of absence Consistency in applying policies and procedures Sick and vacation tracking Employee files

Review HR Processes Forms, policies, letters, approvals, workflow, etc. On-Boarding Processing payroll Administration of benefits Termination of an Employee Leave administration/Attendance Tracking

Survey Your Internal Customers What does management see as the department’s priorities? What do employees see as the department’s priorities? Is HR effectively meeting the needs? Recruitment Training and Development Employee Relations Open Door Policy Communications Salary Administration Benefits Administration Policies and Procedures Performance vs. Importance

Workforce Analysis and HR Metrics Diversity Employee Relations Job satisfaction Legal complaints or grievances Wage and salary market indicators Health Care Cots per Employee Incentives / Perks / Total Rewards Impact of compensation programs Cost per Hire Time to Fill Absence Rate Turnover Rate HR Expense Factor Training Expenses

Develop the Assessment Questionnaire Partner with Sikich SHRM Department of Labor Equal Employment Opportunity Commission Equal Employment Advisory Council

Gather and Analyze Information Assessment Tools Interviews Surveys / Test Focus Groups Document Review File Reviews Questionnaires Samplings Reports

Findings and Recommendations Executive Summary Assign risk level Written report State the facts Avoid opinions Provide back up where needed Departments involved

Findings and Recommendations Action Plan Recommend one or more strategies for improvement Identify action items and to whom each is assigned Establish realistic priorities Set time frame for follow-up Keep in mind resistance to change, but don’t be satisfied with adequacy—strive for continuous improvement.

Pitfalls to Auditing HR Lack of management commitment Choosing too great a scope Underestimating the time it will take “No news is good news” style of management … we do not want to “stir up trouble” Long tenure in the position As with accounting audits, the findings and recommendations from HR audits are only as good as the information provided. If you are not entirely honest and objective, no purpose is served.

A Word of Caution HR assessment reports are increasingly being used to report audit findings to wider audience Investors Major stockholders Venture capitalists Governmental agencies Civil rights groups Plaintiff attorneys HR assessment findings include proprietary and confidential information and in many cases produce discoverable information

Closing Comments The Optimal Outcome is to take HR to the next level Embrace a well-executed HR assessment as an important tool for creating, updating and executing HR strategies and best practices that are linked to and play a vital role in the company's strategic planning and execution

Questions or Comments?

Jennifer Kramer, SPHR. SHRM-CP Managing Director Human Resources Consulting Services Sikich LLP 630.566.8466 Jennifer.kramer@sikich.com