Purpose and Intent
The purpose of an audit is to assure your HR unit’s policies, procedures, and practices are what they should be. The intent is the self-discovery of where your organization is now, so you can best decide where you need to move it going forward. The audit can absolutely help you decide where to focus your attention. It is a very useful tool that will help you set your priorities. Your goal is to assure your human resources activities are satisfying three “C’s”:
• Compliance (with both Federal and applicable State laws)
While I am an advocate of doing HR audits, there are two cautions to be aware of before you start.
1. Paper trail.
Realize that if you conduct an HR audit, or have one done for you, the results are legally discoverable. The only way I know around this is to have your attorney do the audit so the findings may then be privileged, under your attorney/client relationship.
2. Approval needed.
Secure senior management approval in advance of the audit to correct all deficiencies that pose a legal liability. Otherwise, knowing you have issues and willfully ignoring them puts you in a higher risk position than being ignorant of the problems. Neither spot a good place to be.
You need to determine your scope and your resources of time and money for an HR audit, as you need to do with all business projects. To accomplish an HR audit, you have essentially three options.
1. Do it yourself.
When tackling this yourself, you can download a checklist from the Internet and self score your organization against it. This is by far your cheapest option. It can also be your least complete, which could lead to a false sense that all is well when that may or may not be the case.
2. Do it yourself with specialized software.
There are specialized software applications for human resources audits you can license or purchase. These have a list of questions for you to answer and give recommendations back to you based upon your responses. Clearly, the suggestions for action steps are only as good as the answers you provide. When doing your homework, make sure you understand if the software you are using is software you have licensed or if it is yours. If in a licensing situation, if you don’t renew your license the following year, you may loose access to all your prior work. Understand what you are agreeing to and what access you have now and in the future.
3. Use outside help.
For this option, you can bring into your organization a big gun consulting firm, or a smaller boutique enterprise. This decision can be driven by the size of your organization as well as your budget. Either way, do realize you will need to share all written policies, handbooks, and procedures up front. Then, make knowledgeable staff available to answer questions, as well as sometimes walking through step-by-step processes.
There are many different ways to tackle all the various HR topics for an audit. The following is my preferred method.
1. Follow the life-cycle of an employee.
Begin with a review of the hiring system for recruiting and selection, then offer letters, checking for employment at-will statements and assessing on-boarding processes, including I-9 verifications and where all the forms supporting these processes are kept and for how long.
2. Assess how well do you inform and educate your employees on your policies, procedures, and practices.
Is your handbook/personnel policy manual up to date? Is a hard copy given to each new hire or are they taught how to access it online? Are written acknowledgments on file that the employees have signed, affirming it is their responsibility to read and understand the contents of your handbook? What health and safety training is done to comply with OSHA regulations? And how is that tracked? Is all the OSHA paperwork in order? Are you in a state that mandates sexual harassment prevention training for your supervisors?
3. Review the systems that support the on-going relationship with the employee.
This includes looking at the performance management system, assessing the state of your compensation structures, training and development, plus looking how you handle employee grievances or complaints. How well do you communicate about your total rewards with your employees?
4. Assess how well your processes support exiting employees.
Do you get final checks into the hands of the exiting employee within the state-mandated time frame? Do you give out all the required informational information, such as how to apply for unemployment benefits and COBRA? What happens to the personnel file? Are critical forms being kept for the appropriate length of time?
Make sure you don’t audit exclusively at the Federal level but, as mentioned throughout this article, take state laws into consideration, too. If you are in a small organization, i.e. fewer than 100, be mindful of which laws apply to you, as some do not. If a full-scale audit is not within your scope of resources, can you at least lay the groundwork for a plan going forward, such as tackling some targeted areas that concern you within the next six months?
Do not push away the process of an audit in hopes of getting everything “cleaned up” first. Auditors are not expecting you to be perfect. Use their feedback to get better.
Beverly Dance, MBA, SPHR-CA, CCP, CEBS
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