Good Morning!

Ginny Champney, SPHR

HR Consulting Solutions LLC
Providing a full range of HR Services
802-498-5786

Is Your Company like the Emperor

without Clothes?
Remember the story
about the Emperors new
clothes? The Emperor
convinced himself and his
loyal subjects that he was
wearing the finest
clothes, when in fact he
was exposed to the
elements.

Remember connectthe-dots puzzles?

Without a numbered path
to define the picture, the
answer typically remains a
mystery. In solving the
puzzle of effective human
resource and risk
management, organizations
similarly need a structured
approach.

What is a Human Resources Audit?

A Human Resources Audit is a method to review
current human resources policies, procedures,
documentation and systems to identify needs for
improvement and enhancement of the HR function as
well as to ensure compliance with ever-changing rules
and regulations.

An Audit involves systematically reviewing all aspects

of human resources ~ Connecting the Dots!

Value of the HR Audit

Can also ensure that policies and procedures
are fair and consistent thus strengthening
employee satisfaction.
By maintaining a satisfied and productive
workforce, an employer lessens the expense
associated with costly turnover of staff. Losing
one employee is estimated to cost a company
50 150% of the lost employees salary in time
and money spent to replace that employee.

The Value of an HR Audit

It helps organizations:
1) assess current HR management and
employment practices;
2) identify and diagnose systemic problems;
3) evaluate and predict the impact of corrective
measures;
4) develop a plan of action; and
5) determine the ROI of such actions.

HR Audit Evolution
HR audits are evolving from a simple checklist of
dos and donts and periodic affirmative action
plans to a comprehensive process that:
Is an integral part of the organizations
internal auditing and risk management
activities;
Includes external auditing practices;

Types of Audits

Strategic HR Audits
Compliance HR Audits

Strategic HR Audits: Why?

Impact of HR on Bottom Line
Recognition that Employees are the
Competitive Edge
Heightened concern about organizational
culture
Increasing interest in strategic perspective

Strategic HR Audit
A comprehensive process that:
Is a fundamental element of the organizations
strategic management activities;
Emphasizes internal controls;

Strategic HR Audit
A comprehensive process that:
Reviews the effectiveness and efficiency of
operations

Reliability of financial reporting

Compliance with applicable laws and regulations

Strategic HR Audit
Assess alignment of HR management activities
with organizational objectives
Assess and manage human capital related risks

Protect and enhance the value of the

organizations human capital

Strategic HR Audit

Ensure compliance
Assist in due diligence

Strategic HR Audits:
Areas Frequently Audited
HR strategies and objectives
Human Capital-Talent management issues
Culture, values, and mission

Employee staffing and competencies

Strategic HR Audits:
Areas Frequently Audited
Alignment with organizational objectives, budgets,
culture, values, and mission
The impact on organizational activities and
competitiveness, revenues, and profitability
Organizational structure

Strategic HR Audit: Tools

Ask organizational leaders to complete a self
assessment.
Generally, it is a questionnaire that includes
yes/no type questions; for example, "The hiring
process is timely. (1 = Never, 5 = Always)."
Interviews are conducted with management.

Strategic HR Audit: Tools

Employee surveys to assess the effectiveness
of HR programs, performance management,
etc.
Interviews are conducted with management.
Extensive interviews of HR Staff to cover all
areas of the function.

Compliance Focused HR Audits

Focused on verifying compliance to federal
and state regulations.
Primarily involves HR staff.
Specific list of items to be reviewed.

Compliance HR Audits:
Areas Frequently Audited
Employment policies, practices, procedures, and
processes
Compensation and benefits
Employment posters and notices

Compliance HR Audits:
Areas Frequently Audited
Form review

Facilities inspection

Job descriptions

Process control

Contractual
relationships

I-9s

Sections of review include:

Hiring and Orientation
Benefits
Compensation
Performance evaluation process

Sections of review include:

Termination process and exit

interviews

Job descriptions
Personnel file review

Personnel Records Audit:

Many company liability issues arise from

improper employment records maintenance &
retention
Lawsuits & penalties for violations of laws
relevant to:
Medical Privacy
Non-Discrimination

Personnel Records Audit:

I-9s
Identity Thefts
Record Retention & Destruction

PERSONNEL RECORDS: Audit

Are your employment
records kept locked and
confidential?
Are personnel files up to
date? Are documents
getting filed in a timely
manner?
Are documents going into
the correct files?

PERSONNEL RECORDS: Audit

Are security procedures
for maintaining medical
and other protected
information continually
updated to be in
compliance with new
laws and best practices
to avoid new risks?

PERSONNEL FILE: What should be

included?
Letters of recognition.

Disciplinary notices or documents.

Performance evaluations and goal setting
records.
Termination records.

PERSONNEL FILE: What should be

included?
Job descriptions.
Records relating to job offers, promotion,
demotion, transfer, layoff, rates of pay and other
forms of compensation, and education and
training records.
Records relating to other employment practices
(including policy acknowledgments).

PERSONNEL FILE: What should NOT

be included?
Medical/insurance records (medical questionnaires,
benefit enrollment forms, doctors notes, leave of
absence records and accommodation requests).
Child support/garnishments.
Litigation documents.
Workers' compensation claims.

PERSONNEL FILE: What should NOT

be included?
EEO/invitation to self-identify disability or
veteran status records.
Interview notes and employment test results.
Reference/background checks/credit reports.

PERSONNEL FILE: What should NOT

be included?

Drug test results.

Immigration (I-9) forms.
Requests for employment/payroll verification.

PERSONNEL FILE: What should NOT

be included?
Investigation records.
Only any relevant disciplinary action, counseling or
other direct communications would be placed in the
employees personnel file.

PERSONNEL FILE
GUIDELINE
Ask yourself:
1. Is the document relevant for
a manager making an
employment decision?
2. Is it related to the employees
performance, knowledge,
skills, abilities, and/or
behavior?
3. If it is, then it should be
placed in the employees
personnel file as long as it
doesnt include non-work
related data!

Developing an HR Audit Plan

Determine the purpose and objectives of the audit.
Why are you conducting an HR audit?
Determine the scope of the audit. What issues and
areas will be audited?
Determine the organizational components to be
audited. Who will be audited?
Determine: Who will conduct the audit? Who will be part
of the audit team? Who will be the audit team leader?

Developing an HR Audit Plan

Determine the audit tools to be used.
Checklist
Employee surveys
Internally developed assessment tools
Determine the costs and resources needed to
perform the audit. Develop a budget.

Developing an HR Audit Plan

Determine audit team governance.

Ensure there is top management commitment

for the audit and to correct identified problem
areas.
Review audit plan and activities with the
organizations counsel. Protect discoverability

Developing an HR Audit Plan

Determine key organizational metrics.
Organizations measure what they treasure.

Remember
The purpose of an HR Audit is to recognize
strengths and identify any needs for
improvement in the human resources function.
A properly executed Audit will also provide
recommendations and suggestions for the
remedy of these problems. (Perhaps, more HR
Staff!)

Remember

It is a learning or discovery tool

NOT a test or a judgment
There will always be room for improvement
in every organization.