Document 2 jppn 25042016

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.

AIM OF HR AUDIT: All Rights Reserved @ 2016 IJARMATE

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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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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

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.

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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.

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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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