Human Resource Auditing 15 . C H A P T E R F I F T E E N Human Resource Auditing

Human Resource Audit An examination of the human resource policies, practices, and systems of a firm (or division) to eliminate deficiencies and improve ways to achieve goals.

Importance and Benefits of a HR Audit Helps align HR goals Reduces human resource costs Finds better ways for HR to contribute Provides specific, verifiable data Ensures timely compliance Stimulates uniformity Discloses how well managers are doing Reviews and improves information system Uncovers critical problems & solutions Enhances professional image

Importance of HR Research Legal implications People costs are significant Department’s activities help shape productivity and quality of work life Critical resource is human resources Growing complexity of human resource work

Steps in Conducting HR Audits Defining the scope of the audit Analyzing data, evaluating, and preparing report Choosing the research approach Selecting research design and data collection method

Managerial Compliance Employee Satisfaction The Scope of HR Audits Alignment with Corporate Strategy HR strategy must be consistent with corporate strategy and continually examined Managerial Compliance Managers must comply (obey) with HR policies, procedures and legal requirements Employee Satisfaction Human resource departments should attempt to meet employee objectives where feasible

Research Approaches to Audits Comparative Simplest form of research Uses another division or company as a model or may use benchmarks as indices (Index) Compliance Reviews past practices Reviews documentation to ensure managers are complying with policies and laws Management-by-objectives Creates specific objectives to assess performance dimensions Balanced scorecard looks at multiple perspectives

Research Design & Data Collection Interviews Surveys Records analysis Human resource experiments

Interviews Interviews with employees and managers Exit interviews Interviews with departing employees to gauge their impressions of a firm’s strengths and weaknesses, especially relating to HR systems and policies

Surveys Surveys May be used to supplement interviews Attitude surveys Systematic assessment of employees’ opinions about various work-related factors

Attitude Surveys Areas of Concern Employee attitudes about supervisors Perceived effectiveness of HR department Employee attitudes about their jobs

Records Commonly Reviewed Human Rights Compliance Records Human rights law, number and pattern of sexual harassment Safety and Health Records Number of safety violation observed Productivity Records Absenteeism and employee turnover HR Implementation Records Number of employee complaints on various HR related matters Grievance Records Employee Files and Records Turnover and absenteeism records classified by age, gender, departments Compensation Records Special Programming Reports Planned vs actual of special programs Job Placement/ Selection Records Percentage of jobs filled internally

Human Resource Experiments Field experiment HR compares results of an experimental and a control group e.g. implement safety training program with experimental group and compare subsequent safety records with those that did not receive training (control group)

The Audit Report A comprehensive description of HR activities, containing commendation (approval) for effective practices and recommendations for improving ineffective practices.

Preparing for the Future Audits are necessary, but they are backward looking Human resource departments require a proactive approach and a future orientation

Challenges Facing HR Managers Productivity improvement Integrating immigrants into the organization Preparing for an aging workforce Changing values Innovation Portable pensions more

Challenges Facing HR Managers (cont’d) Technological changes Constitutional changes Employee rewards Women and minority workers Dual-career families Protecting employee privacy

Human Resource Auditing 15 . C H A P T E R F I F T E E N Human Resource Auditing