ISSN (ONLINE): 2454-9762 ISSN (PRINT): 2454-9762 International Journal of Advanced Research in Management, Architecture, Technology and Engineering (IJARMATE) Vol. II, Issue IV, April 2016
HUMAN RESOURCE AUDIT ABSTRACT:(“The things that get measured and managed”) Guide: K.P. Sasi kanth Reddy
email: harni.1729@gmail.com
Student Names: M.V.Pooja
malkaripooja92@gmail.com, Mob:8897145298,
P.Umera Banu
Pumeranikhath1993@gmail.com
B.varalakshmi
bVaralakshmi859@gmail.com
E.ugrappa
ugraugrppa@gmail.com , Mob:8500469362
INTRODUCTION: Human Resource Audit is the process of identifying, examining, measuring, documentation, systems and practices with respect to an organisation’s HR functions and communicating data about human resources. It aims at ascertaining the effectiveness of the HR department and its functions. PURPOSE: The purpose of the HR Audit is to reveal the strength and weaknesses in the organisation. The basic goal of HR Audit is to find out the HR interventions that will increase the firm’s competitive advantage by the basic information about human resources like 1) Number of Employees, 2) Categories, 3) Grades, 4) Total value of human resources, 5) Value per employee. Human Resource Audit refers to a periodic review of employment files, reports, documents and records. HR audit finds out the reasons for low productivity and improve HRD strategies by evaluating of the HR staff
and employees. It modify and review HR systems and challenges. Helps in identifying the gaps between the current state and standard, there by streamlining HR work processes. It clarifies the duties and responsibilities and encourages the professionalism. HRA shows how the organisation makes investment in its people and how the value of the people changes over time and value of the employees increases by training and experience over a time period. such information on human resources facilitates effectiveness of performance of HR department by effective implementation of policies and procedures with effective management. Ensuring timely compliance with legal requirements. It reduces HR costs through more effective personnel procedures in order to achieve the objective of the organisation. KEY WORD’s: Human resource audit, implementation of HR policies and procedures, employees, evaluation, effectiveness, productivity, HR cost reduction.
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“HR AUDIT is very much useful to achieve the organizational goal and also is a vital tool which helps to assess the
effectiveness of HR functions of an organization”.
HUMAN RESOURCE AUDIT;
Value of the employees can be increased
“The things that get measured and
by training and experience over a time period.
managed” INTRODUCTION:
DEFINITION OF HR AUDIT:
A Resource is defined as an entity which
The Human Resources (HR) Audit is a
can provide expected future services.
process
Hence, objects which do not have
procedures ,documentation ,systems, and
expected future service potential, cannot
practices
be resources. people being capable of
organisation’s HR functions.
rendering future services
MEANING OF HR AUDIT:
comprise a
HR
form of capital. “Auditing
for
organizational
people
resource.
Audit
examining
with
policies,
respect
means
the
to
an
systematic
an
confirmation of job analysis and design,
involves
recruitment and selection, orientation
as It
of
measuring the costs incurred by business
and
firms and other organizations to recruit,
development, performance appraisal and
select, hire, train and develop human
job assessment, employee and executive
assets. It also involves measuring the
remuneration, motivation and morale,
economic value
participative
of people to the
placement,
training
and
management,
organisation”.
communication,
welfare
and
social
HRA shows how the organisation makes
security, safety and health, industrial
investment in its people and how the
relations, trade unionism, and disputes
value of the people changes overtime.
and their resolution.
PURPOSE OF HR AUDIT:
resolution. The audit works best when
The purpose of HR audit is to expose the
the focus is on analyzing and improving
strengths and weaknesses in the human
the HR function in the organization.
resource system, and any issues needing
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ISSN (ONLINE): 2454-9762 ISSN (PRINT): 2454-9762 International Journal of Advanced Research in Management, Architecture, Technology and Engineering (IJARMATE) Vol. II, Issue IV, April 2016
It is a Diagnostic tool, not a
To review every aspect of HRM to
prescriptive instrument it will help you
determine the effectiveness of each
recognize what you are missing or need
programme in an organisation.
to improve, It is most useful when an
To seek explanation and information
organisation is ready to act on the
in respect of failure and success of
findings, and to evolve its HR function
HRM.
to a level where its full potential to support the organization’s mission and
To
evaluate
implementation
of
policies. To evaluate the performance of
objectives can be realized.
employees.
OBJECTIVES OF HR AUDIT:
To seek priorities, values and goals of management philosophy. SCOPE OF HR AUDIT:
with federal and state loss, the Human
The scope defines the breadth of the HR
Resource Information Systems (HRIS)
Audit
the
the department service and management
individual areas for review and provides
roles as well as any strategic HR
guideline for the group or business
programs
conducting the audit. This may include
personnel
.This
step
determines
in
place
for
company
requiring a review of HR compliance .
POSSIBILITY
*Reduces the HR cost.
BENEFITS OF HR AUDIT:
*Motivation of the HR personnel.
*It helps to find out the proper
*Find out the problems and solve them
contribution of the HR department
smoothly.
towards the
*Sound performance appraisal systems.
organization.
*Development of professional image of the HR department of the organization. *Systematic job analysis.
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ISSN (ONLINE): 2454-9762 ISSN (PRINT): 2454-9762 International Journal of Advanced Research in Management, Architecture, Technology and Engineering (IJARMATE) Vol. II, Issue IV, April 2016
*Smooth
adoption
of
the
WHO SHOULD CONDUCT THE
changing mindset.
AUDIT :
NEED FOR HUMAN RESOURCE
The team that is responsible for the audit
AUDIT:
to represent a cross-section of the
1. Though there is no legal obligation to
organisation’s staff, including line staff,
have HR Audit as in case of financial
middle and upper management, and
accounts but the managements have
those
realized
functions.
its
need
and
usefulness.
responsible
for
HR
capital
SHOULD
BE
Therefore they have taken up HR Audit
HOW
voluntarily.
CONDUCTED:
2. The managements of organisations
The audit process consist of a series of
have realized the need of HR Audit
questions covering the eight primary
because
components of HR function:
of
powerful
influence
on
IT
motivation of employees at work due to
1. Roles, head count and HR Information
participation of employees in decision
systems (HRIS)
making.
2. Recruitment
3.
Large
organisation
requires
3. Documentation
continuous feedback for improvement in
4. Training , development, and career
performance of its employees.
management
4.Mounting pressures from trade unions
5. Compensation and benefits
of employees and their participation in
6.
formulating employment policy and
evaluation
questioning of managerial competence
7. Termination and Transition
have raised the need of HR audit.
8. Legal issues and personnel policies
5. An effective way to communication
9. Health/Welfare systems
has provided the need for HR Audit.
10. Employee relations
6. The HR Audit becomes essential
11. Safety
Performance
measurement
and
because of delegation of authority and decentralization of power. 12. Resourcing Thus
the
The focus is on how these activities and Team
works
to
collect
tasks are actually performed in the
information to answer the HR audit
organization. The first step is to collect
questions in each of these categories.
all
the
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information.
The 165 162
ISSN (ONLINE): 2454-9762 ISSN (PRINT): 2454-9762 International Journal of Advanced Research in Management, Architecture, Technology and Engineering (IJARMATE) Vol. II, Issue IV, April 2016
process of getting information
,in
and
of
itself,
can
be
quite
informative.
Observation
METHODS OF HR AUDIT: Individual
Analysis
Interview method
of
secondary data Group
Analysis
Interview
method
reports,
Workshop
manuals,
Method
other
Questionnaire
of records, and published
literature.
method
AUDIT
OF
EMPLOYEE
and union activity
are more
likely to
SATISFACTION:
learn how well employee needs are met.
It refers to an employee’s general attitude
The team collects information about
toward his or her job. When employee
wages, benefits supervisory practices,
needs are unmet, turnover, absenteeism,
career planning assistance and other dimensions of jobs.
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According to Keith Davis, there
are five approaches for the purpose of evaluation as follows below:
Comparative Approach
employee turnover are used as the
Outside Authority Approach
measures for evaluating performance.
Statistical Approach
COMPLIANCE APPROACH:
Compliance Approach
Under
MBO Approach
auditors make a review of past actions to
Compliance
Approach
the
determine to see whether those activities These are briefly outlined as under:
are in compliance with the legal
Under this approach auditors identify
provisions and in accordance with the
one model company and the
policies and procedures of the company.
results
obtained of the organisation under audit
MBO APPROACH: (Management by
are compared with it.
Objectives)
COMPARITIVE APPROACH :
Under MBO Approach specific targets
Under this approach auditors identify
are fixed. The performance is measured
one model company and the results
against these targets. The auditors
obtained of the organisation under audit
conduct
are compared with it.
performance and compare with the goal
OUTSIDE
AUTHORITY
the
survey
of
actual
set.
APPROACH: a
HR Audit Model: The general process
benchmark is set to compare own
of conducting an audit includes 7 key
results. A standard
steps each of which is follows below:
In
outside
authority
approach
for audit set by
outside consultant is used as benchmark. STATISTICAL APPROACH:
Determine the scope and type of audit.
Under statistical approach the statistical
Develop the audit questionnaire.
information maintained by the company
Collect the data.
in relation to employee absenteeism,
Benchmark the findings
Provide feedback about the results. Create action plans. Foster a climate of continuous improvement.
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FIVE CRITICAL COMPONENTS OF THE HR AUDIT PROCESS:
: 1. ACTIVITIES
2. BEHAVIOURS
5. OUTCOMES 4.INTERVAL CONTROLS 3. RISK 1. ACTIVITIES:
potential use, loss, peril or vulnerabilities,
The starting point of the HR auditing process is
and management’s willingness to accept
a review of the organisation’s activities, that is,
those risk. Risk assessment is also the
the tasks and actions that create or implement
identification of events or conditions that
employment polices, practices procedures and
create
programs. The activities component of HR
organisation
audit is typically evaluated by using a
objectives.
“Checklist approach”, that is the item is
management with the information to make
checked off when it is completed.
informed decision about the allocation of
new
opportunities to
Risk
achieve
for
the
its
business
assessment
provides
2. BEHAVIOURS:
the organisation’s human, physical, and
Behaviours in this context are actions and
financial capital and effective ways to
conduct that affect – either positively or
eliminate, mitigate, control, or transfer those
negatively-the
or
risks. Human resource management and
effectiveness of the organisations policies,
employment practices liability related risks
practices, procedures and programs, and
include.HR
demonstrate
assessments of the external and internal
implementation
that
the
organisations
commitment to stated goals and objectives.
factors
Auditing
that
impact
activities
human
include
resource
3. RISK ASSESSMENT:
management and employment practices-
Risk Assessment is the identification of
includes.
current and or future events that have the 1. The economy. All Rights Reserved @ 2016 IJARMATE
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ISSN (ONLINE): 2454-9762 ISSN (PRINT): 2454-9762 International Journal of Advanced Research in Management, Architecture, Technology and Engineering (IJARMATE) Vol. II, Issue IV, April 2016
2. Legal, regulatory, and litigation 3. Demographic and structural changes in the trends.
work place and work force.
4. INTERNAL CONTROLS:
Group Dynamics is an important theory that
Internal controls are processes, tests and can enable managers to adopt the right assessments that help ensures compliance, approach to interacting with others. people manage risks, identify frauds, and help ensure work in groups quite frequently and in many the achievement of organisational goals HR different areas of their of e.g, at work , auditing activities includes :
school/college, sport, hobbies.
1. Assessment of the effectiveness and TEAM BUILDING: efficiency of HR management processes, Team building or (“Teambuilding)”refers to policies, practices and procedures.
the process of establishing and developing a
2. The reliability and accuracy of HR greater sense of collaboration and trust management reporting.
between team members. Interactive exercises,
3 .The level of compliance with laws and team assessments, and group discussions regulations of industry and professional enable groups to cultivate this greater sense standards, codes of conduct and ethics, of team work. organisational policies and budgets.
TEAM EFFECTIVENESS:
5. OUTCOMES:
When evaluating how well team members are
Outcomes are quantitative and qualitative working together the following statements measurements and metrics that measures and can be used as a guide: help assess the achievement of organisational • Team Goals are developed through a group goals and objectives.HR auditing activity process of team interaction and agreement in includes the identification or metrics used by which each team member is willing to word the organisation to measure organisational achieving these goals. and individual performance the assessment of • Participation is actively shown by all team results by comparing actual results against members and roles are shared to projected
results,
budgets,
facilitate
internal and and the accomplishment of tasks and feelings
external standards and a description of the of group togetherness. activities, behaviours, and internal controls • Leadership is distributed and shared among that are needed to maintain or improve future team members and individuals willingly results.
contribute their resources as needed.
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• Problem Solving discussing team issues, effectiveness are encouraged by all team members. *This is essential because employees are not
OBSERVATION:
* The auditors should physically visit the likely to give their best if they don’t live in workplace.
good surroundings.
*To access the extent to which a congenial and supportive human welfare
* The observations can be conducted using a
oriented check list of questions.
climate exists in the company.
SURVELLIANCE
REPORT FOR HR MANAGER:
Human resource problems and their
It contains all the information given to implication.
both
operating
managers
and
staffs
specialists. In addition, HR managers gets REPORT FOR LINE MANAGERS: feedback about
Attitude
How line managers handle their duties such operating
managers
and as:
employees about services given by HRD
• Intervening applicants
Recommendations for needed changes • Training employees.
and priorities for their implementation.
• Evaluating performance.
• Motivating workers
A review of HRD plans
• Satisfying employee needs The report also identifies people problems violations of policies and employee relations law are highlighted. All Rights Reserved @ 2016 IJARMATE
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REPORT FOR HR SPECIALIST:
Qualified workers that need for
The specialists who handle employment development training, compensation, and other activities
What others company are doing.
also needed feedback.
Such feedbacks are:
personnel policies.
Unqualified workers that need for
Attitude operating managers towards
Workers pay dissatisfaction.
training.
A DAPTABLE AUDIT PROCESS:
Documentation
Training , development and career
The audit process consists of a series management
of questions covering the eight primary components of the HR function
Performance
measurement
and
Roles, headcount, and HR function evaluation
(HRIS)
Compensation and benefits
Recruitment
Termination and transaction
Legal issues and personnel policies.
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PROCESS
HUMAN RESOURCE AUDIT (HRIS): HRIS is the systems to acquire, store,
may like to have data on
manipulate,
and
compensation cost to the organisation.
disseminate relevant information on
Mere extrapolating on headcounts may
human
give an inaccurate figure. But simulating
analyze,
resources.
It
interpret
is
not
mere
aggregate
computer hardware or some customized
this with other factors like,
or standard HR software. It broadly
• Attrition Rate.
includes people, policies, procedures,
• DA increase/decrease.
both exogenous and endogenous and
• Absenteeism.
data. It need not limit its focus on
• Mandays lost due to IR related
automation of manual HR jobs like,
problems.
record keeping or payroll preparation. It
• Increments.
is a service in the form of information.
• Incentives.
The nature of information depends on user’s may not be limited to the HR department it may be even an MD of the organisation .To illustrate,
Finance
manager, to prepare his Annual Budget
172
• Promotion. • Redundancy. Will certainly ensure a better projection. Similarly at the corporate level, for competency mapping of manpower to
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decide
about
technological
change, the nature of information may
we commonly call manpower) skill sets, training and development programmes.
be data on biographical details (which To evaluate the impact of some HR
litigation, strikes and lockouts, man days
related policies, it may concentrate on
loss,
productivity
data of Grievances, work stoppages, rate, attrition rate, etc Earlier we have
corporate,
tactical
or
business,
examined the nature of information,
operational), information requirement
required for HRP. Thus depending on
varies.
the nature and level (strategic or HRIS MODEL HR Systems: •
Recruitment and selection
•
Performance management
•
Training and development.
•
Employee services.
Environment:
General:
•
Economic, political, social.
•
Legal
HRIS
General Information:
•
Information within the Organisation.
•
Endogenous
Strategic Information:
* Outside the organisation(to benchmark)
•
Redundancy.
•
Growth
Exogenous
•
Technological change.
future planning and also for policy
OBJECTIVES: Effective
planning
and
173
policy
formulations, both at macro and micro
Formulation: HRIS provides support for
levels. At enterprise or micro level,
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HRIS forms the basis for HRM and more particularly HRP. Monitoring
and
facilitates
HRIS
of
human
Providing Inputs to Strategic Decisions: HRIS
provides
required
demand
and
supply
imbalances and evaluation of the policy
Evaluation:
monitoring
resources
resource. The organization’s human capital adds
to
value. Under this definition, HR audits are
enterprise-wide strategic decisions, like
more than an audit activity that solely
redundancy,
collects
rightsizing,
inputs
on development and utilization of human
competency,
and
presence
evidence
of
profiling, change of technology, etc Other
compliance.HR audits are increasingly
routine
to
expected to look behind and beyond the
automate employee related information,
organization’s assertions of sound and
cost minimization, faster response to
proper HR management practices and to
employee related services, faster HR
access the assumptions being made, to
related
benchmark the organisations processes
objectives
of
decisions
transfer,
(like,
payroll
compensation
HRIS
are
promotion,
administration,
planning,
manpower
and
practices,
and
to
provide
the
necessary consultative services that help the organizations achieve its business
planning, etc.)
goals and objectives.
OVERVIEW OF HR AUDIT: The HR auditing process is-or should be-
CONCLUSION:
an independent objective, and systematic
Thus planning evolves in Human resource
evaluation that provides assurance that:
planning becomes more integrated with
Compliance
business planning the convenience of the
and
governance
requirements are being met. Business
and
Talent
planning process will increase. Reporting
management
objectives are being achieved.
future plans and highlight areas requiring
Human resource management risks are fully
identified,
managed; and.
assessed
174 on performance will serve to educate
and
attention. Periodic reporting will allow course corrections on timely basis where justified. Human resource planning should be a function at all levels of the organisation, and those individual unit
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plans and regional plans should
resource planning in the department going
all be harmonizing with the overall
forward
corporate
uncomplicated,
plan.
Every
employee
in
is
to
keep and
in
the so
process doing,
organisation should be able to see how
increasing its usefulness and assess risks
their contribution impacts the overall and
and the management framework in place.
how they contribute to the success to the department the key to incorporated human
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