The Human Resources (HR) department plays a key role in the running and protection of a company.
They assist on all matters of employee relations while keeping businesses compliant. However, with HR professionals wearing many hats in their day-to-day operations, it can be difficult and near impossible to stop and be able to properly assess the HR processes and protocols and if needed, fix them. To review your current HR practices, you will need to conduct an HR audit.
What Is An HR Audit?
An HR audit is a process of assessing your current HR operations to ensure your practices are compliant with the law. The goal of the audit is to identify potential and current risks that need to be fixed or improved upon. This is a proactive process that helps prevent your business from being non-compliant and facing extreme financial penalties and employee disputes.
The audit can be conducted by an external company or internally. However, for it to be conducted effectively, the process must be done objectively and without prejudice, which may necessitate the need for an external company to provide the service.
What Makes An External-Run Audit Successful?
A successful audit is dependent on being objective and cooperative. Cooperation is key to ensuring everything is properly assessed. It can sometimes be a confronting process as every HR-related policy, document, and protocol will be under a microscope.
A third party is the best way to maintain objectivity, as your internal HR team won’t have to assess their colleagues. An external provider is coming in from a removed objective and they don’t have prejudices or biases. They are also another eye to help identify potential problems that may have been missed by the internal team.
However, as mentioned earlier, the success of the audit is contingent on cooperation. Omitting essential information can weaken the audit and prevent all possible issues from being identified. That’s why it’s critical when conducting the audit to provide what is necessary. The party is there to help, not criticise. They want you to be compliant and safe from employee disputes and hefty financial penalties.
1. Understand Your Company’s Compliance
Knowing where your company stands compliance-wise is essential to avoiding employee disputes and financial penalties. An HR audit is a check-up where issues are identified and segmented into levels of priority. With all the problems written down and highlighted, it gives your HR team and company a broad look at the current operations. It also helps identify serious problems that need immediate action that may have slipped through the cracks.
2. Receive Recommendations
It’s all well and good to identify problems, but if you don’t know how to tackle them head-on, it’s not at all helpful. One of the best parts of an audit is the recommendations given. Once the audit has been combed through, the problems can be assessed in a triage-like mentality. The highest priority is usually reserved for potential legal problems and must be fixed promptly. The middle priority is usually for introducing policies that are not in place yet, for example, grievance and dispute resolution procedures or leave policy. The lowest priority is for things that don’t require immediate action; however, it would be ideal to sort these out as well.
An audit can be as flexible as you want. Perhaps you want an audit across all HR operations, or perhaps you want to focus on certain aspects of HR. For example, you may want your documents and contracts combed over for the onboarding and off-boarding process and make sure those are compliant. Or you may want your security policies reviewed or even want to set out pets in the office policies that not only protect your company but your employees as well. An HR audit can be as specific-focussed or general-focused as you like.
It can be difficult to assess yourself introspectively, which is where an external audit team thrives. They are assessing through a neutral lens that is not tainted by history, bias, prejudice or preconceived notions. The third party can review processes and standards for what they are. Emotion is removed and it also strengthens your HR team. With an internal audit, sometimes blame can be placed on other members of the team, by having an objective assessment by an outside team, that potential problem is removed.
5. Long-Term Cost Savings
An external audit can be more costly than an internal one. However, the costs you save in the long-run far outweigh the initial price. Maintaining compliance by taking proactive action is essential to keeping your company on track. The financial penalties for not committing to compliance are eye-watering, and the potential employee disputes that can ensue are just as costly. You want the most comprehensive assessment done to highlight all problems, big and small, which an outside audit service will do.
6. Lets Your Internal HR Team Keep Focus
An audit takes a lot of time – time that your internal HR team would not have. They have to sort out recruiting, hiring, onboarding, training and many other tasks that cannot be placed on the back burner. Having an external team who does the review instead takes a massive burden off your HR teams’ shoulders and lets them focus on their job. This ensures that they aren’t stretched out doing two things and once and lets them do their job to the best of their ability. It also removes the risk of missing something in the audit because they had to do another task at the same time.
7. Positive Company Reputation
Conducting an audit can also positively affect your reputation. It demonstrates that you are a business that is transparent, compliant and working hard to maintain it. Employees will feel more confident working for an organisation that is audited from time to time and is wanting to be compliant. In addition, the changes made in your HR processes can foster a more positive environment and a speak-up culture. This helps reduce issues from escalating in the workplace and lets employees feel comfortable and confident that their concerns will be heard and dealt with properly. This kind of open culture will increase your brand’s reputation and can make it a desirable workplace for potential candidates.
An HR audit is essential to a thriving business. You want to be compliant at all times or you may face avoidable costly penalties and serious employee disputes. An assessment is a great way to compartmentalise all of your potential problems, and having it segmented by priority with recommendations given on top of that – your company can easily implement what it needs to.