Designing and using HRD Audit for Business Improvement

Submitted to: Prof. Rahul N Dalvi By: Trupen T Rathod

What is HRD Audit ?

A Human Resources Audit is a comprehensive method (or means) 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.
Hiring and Orientation
Benefits Compensation Performance evaluation process Termination process and exit interviews Job descriptions

Purpose ????

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 reveal problem areas and provide recommendations and suggestions for the remedy of these problems.

Why HRD Audit is not playing a significant role?

Bcoz,

1. Top management not recognizing the strategic the strategic role of the HR function and not paying it the attention it deserves. 2. Low-level competencies of HRD managers and staff

How to use HRD Audit ?

1. Insist on a written report. 2. Insist on making the presentation to the top management 3. Appoint a task force or a number of task groups 4. Finalise the exact membership of the task force subsequently and announce it in appropriate forums 5. Ask the HRD department to study the report and prepare its own action plan 6. Communicate a summary of the report 7. Have a review mechanism

Role of CEOs and Top Management !!!

Getting the best out of HRD audit needs a good deal of involvement of the top management or the CEO and his team. 12 hours is the minimum time that important business issues like aligning the people and their competencies for the business goals and improvement deserves. Double this time may be required by line managers to constitute internal task forces for implementing the

CONTD..
The CEO should play the role of an unbiased participant and should be willing to listen to the external auditor. A good CEO can even use the opportunity to generate feedback from the consultant about his own role and style and the extent to which they are in tune with what is required by the organisation. The HRD audit can help in aligning human resource with the business plans of various units and departments.

CONTD..
This is a good opportunity for all the top-level managers to get to know what is happening to the people in their units or division or functions. Top managers or divisional heads should make it a point to provide all the data and set goals from the beginning.

Audit and other Forms of evaluation:

Role of CEOs

The CEO has a very important role to play in ensuring that a good audit is conducted and that the audit report is used for improvement.

It is recommended that the CEO treat the HR audit as a serious exsercise and do the following:
Understand what HRD audit means and the potential it has to bring about business improvement. Allocate an appropriate budget for the audit.

Enthuse the heads of departments to seek department-wise audit comments as it provides scope for them to improve themselves. Give time to the auditors in the beginning of the audit and at the end of the audit.

CONTD
Organise a formal presentation alongwith the draft report. Get an implementation team going and monitor the implementation of the recommendations.

Role of line managers in HRD audit:

The success of the audit also depends upon cooperation from the line managers. The line managers supply information regarding the HRD needs, their own perceptions of the HRD functions, their expectations ,etc. Line managers will do well by insisting on a department-wise audit and using the data for improvements. They should not use the HRD audit as an opportunity to express their frustrations.

CONTD.. Line managers should also get involved in seeking feedback from the audit and insisting on the implementation of the recommendations. Managing and developing human resource is the most critical factor for their success. Those who cannot inspire, develop , motivate, and manage their own staff cannot do well as top-level managers or CEOs of corporations. Corporations are increasingly judging the potantial of their employees to occupy top management positions on the basis of HR competencies.

The points that should be kept in mind by line managers of corporations that are undertaking an HRD audit:
Participate in setting the agenda for the HRD audit
Develop departmental priority and pass it on to the auditors so that they pay special attention to the departmenntal issues. Ask the auditors to give the hrd audit questionnaire data separately for the department. Try to get a departmental-level presentation of the audit results .

CONTD.
Set up an internal , department-level presentation of the audit results. Take the help of HR managers or staff to improve implementation effectiveness.

Conducting HRD Audit

Who should conduct HRD audit ?

It depends on the objectives, stage at which the HRD audit is being conducted and availability of experts to conduct the audit. It is always useful to get HRD audit conducted by an external team.
The external team may be of HRD consultants from consulting companies , or a group of trained and certified auditors from other organisations.

Why external auditors:

They are more objective and are not guided by internal compulsions They are likely to bring in newer perspectives They are likely to suggest new benchmarks They are not influenced by internal politics and familiarities.

Possible stages of a corporation when an HRD audit can be conducted:

Stage 1: Corporation in the initial years of establishment (1 to 3 yrs) Stage 2: Corporation after five years of establishment Stage 3: Corporation after eight years of establishment

Stage 4: After diversification or other business-expansion decissions

Stage 5: After downsizing, reorganisation and other consolidation or synergy decission Stage 6: For restructuring the HR function Stage 7: After the change of the CEO or the top management

Competencies and qualifications of auditors:

Expertise in integrated HRD systems Experience in HRD systems implementation as a consultant or as an executive Skills for identifying developmental needs Skills in interviewing , observation, content analysis, etc., and in research methods Programme and project evaluation competencies Organisational diagnosis and od skills Social science research skills including data analysis Reporting skills Benchmarking skills

CONTD..
Networking skills Empathy and understanding Knowledge of business and HR strategies
A certified auditor is better than an untrained and uncertified person. There are too many agencies involved in training auditors

Preparation of HRD Audit: Organisational attitudes and preparation needed for HRD Audit
If an HRD audit is undertaken without adequate preparation, it can be waste of effort and money

The following preparation is helpful in getting the best out of an HRD audit:
Educate all the employees about the basics of HRD audit Decide an appropriate timing for the audit Request all the line managers to be interviewed to cooperate and provide sometime for Questionnaire and interviews

CONTD.. Do not expect the HRD audit to solve all or any of the organisational problems

Make all records and secondary data available to the auditors

Role of HRD department:

The hrd department has the most crucial role to play in hrd audit The hrd department can use hrd audit as a step to step to build the desired awareness among line managers. It needs a good deal of maturity on the part of the hrd manager and the top management to appreciate the role of all employees.

The following are some useful tips for the hrd department to use hrd audit effectively:
Do not become defensive.

Do not take criticism of the weak areas in HRD function negatively.

You cannot ensure everything to be perfect. You need to ensure that the HR function plays a significant role in giving the right direction to the company. Use the audit to: 1. Point out to the top management about their role in HRD and the support required from them 2. Educate the line managers about their role in HRD

CONTD.. 3. Educate the unions about the opportunities they have to develop their employees and the company Create mechanisms to discuss the report and improve the function. Build your own competencies and learn to play a more significant role in making your corporation competitive and world class.

Conclusion
HRD audit can become an important intervention to rejuvenate the whole organisation as it highlights critical issues such as competency requirements , motivational value, competency gaps in that HR staff, roles and areas where more involvement is required , alignment of HR strategies with the business goals. Several factors are necessary for the success of the audit : 1. Top management involvement 2. Involvement of line managers 3. Attitude of the HR department 4. Adequate training of employees Who should conduct HRD audit depends on: 1. Objectives 2. Stage at which HRD audit is being conducted 3. The availability of experts to conduct the Audit 4. Its diversification/expansion, restructuring 5. Change of Leadership etc.

Contd.
The effectiveness of the audit is highly dependent on the competence of the auditors which includes expertise in HR systems, surveys research, OD skills, social science research skills, benchmarking skills, general management competence and ethical soundness. It is a good idea to train internal people as auditors The data generated through the audit should be rightly used by first communicating it across the organisation and forming an implementation task force.