Conducting a human resource department audit helps a company to know how well its human resource department functions, whether it complies with the requirements set by governmental laws and identifies areas that need improvement. An audit may also review HR policies and procedures and determine which policies require removal, updating or further elucidation.
Because of the many regulations a company faces in today’s marketplace regarding how it deals with its employees, a major element of an HR audit must focus on its legal compliance. Companies must have policies and procedures in place that parallel laws regarding human resource functions. An effective HR audit includes this element in its overview of the HR department’s compliance with internal policy and external laws.
Evaluating the HR department includes setting performance measures in relationship to the company’s overall business strategy. Performance measures will differ from company to company, but provide a means to assess the value of the HR department’s activities in relationship to the company’s overall business goals.
Another main element of conducting an HR audit needs to include the effectiveness of the HR department’s people management activities. Areas for auditing under people management include staff performance and employee morale, department organization, responsiveness to employees, day-to-day HR operations, the department’s HR strategies and more.
How effective the HR department is in communicating the company’s mission statement, goals and strategies to the employee workforce is another area for review. Without an effective communication system, employees may not receive the information they need to complete their jobs in line with the company’s goals and strategies. An HR audit needs to include a review of the HR department’s communications.
An important aspect of a company’s capability to remain successful in the marketplace is in its direct relationship to its ability to retain valued employees. One of the first aspects of retaining employees involves providing equitable compensation and benefits. The HR department plays a part in ensuring employee retention by continually updating job descriptions and ensuring employee pay is commensurate with the salaries available in the marketplace. Auditing the HR department’s effectiveness in employee retention is a good measure of how well the HR department does its job.