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HR Management

Why Organizations Should Be Conducting Regular HR Audits.

By
Edwin
Mwangi

What is an HR Audit?

 As an HR manager or a business owner, you will have to deal with human resource issues.

These issues will include company policies, benefits, job descriptions, wages, and salaries. Everything that governs your employees fit under the umbrella of what a Human Resource manager or a business owner must address.  But how do you know if you’re handling it appropriately?

 That is where an HR audit comes in.

 A Human Resource Audit is therefore a thorough examination of your business’s HR policies, practices, and procedures where the ultimate goal is to identify trouble spots and come up with an improvement strategy where it is needed.

 

Why Organizations Should Be Conducting Regular HR Audit.

 According to a recently issued world Bank report, Sub-Saharan Africa is progressively emerging from the pandemic-triggered 2020recession. Its overall economy is projected to grow by 3.3% by the end of 2021and by 3.5% in 2022 thanks to various favorable aspects like the lifting ofcovid-19 restrictions and the renewal of global trade. That, without a doubt, is a good thing. However, poor management practices in companies and organizations remain an impediment to growth and development. A 2020 study based on findings from 136 Kenyan manufacturing SMEs showed that 23%of the differences in performance of those companies resulted from poor or unsatisfactory human resource management. One way to address this issue is through the establishment of HR philosophies that uphold periodic HR policy evaluations, also referred to as HR audits.

 The Need for HR Audits

 In addition to the benefit of helping to improve productivity in companies as highlighted in the aforementioned study, HR audits can also help to prevent costly lawsuits. In most African countries, the laws and regulations relating to human resource management are continuously evolving, so when companies fail to institute such periodic audits, it is not uncommon for them to be found on the wrong side of the law. Here are several other benefits of regular HR audits:

 1.    Accurate Employee Classification

 In this post-pandemic era, companies and organizations are taking on or making provisions for more remote workers and independent contractors than ever before. The inclusion of workers with remote or hybrid working arrangements can confuse terms of how they ought to be classified when compared to office-based workers. An HR audit can help to correctly classify such employees and will help to prevent the duplication of roles. It will also guide future hires.

 2.     Fair Pay

 To keep its workers motivated and also to comply with government regulations on current pay scales, a company needs to ensure that its salaries and compensations are fair and are in line with the current compensations for those roles being offered by other companies and organizations. An HR audit enables a company to do just that. It also enables companies to assess and update their benefits packages for all their employees.  

 3.    Identification of Problems or Challenges that Affect Employees

 At times, issues that are not obvious to managers or supervisors may cause problems in the workplace and even cause workers to resign unexpectedly, e.g. sexual harassment or negative ethnicity. An HR audit will investigate such issues and bring them to light.

 4.    To update Job Descriptions

 With an HR audit, a company can also assess the relevance of the roles and responsibilities given to employees of different ranks. The audit can reveal the need to improve or diversify specific job descriptions to improve productivity based on that information.

 How an HR Audit Looks Like

 A comprehensive HR audit should include a full review of a company’s HR policies, systems, documents, and procedures. As such, it will incorporate the following key elements:

 Legal Compliance: It will help to align a company’s human resource policies and procedures with current government-instituted workplace laws and regulations.

Performance Measures: For a company to achieve steady growth and realize desired productivity levels, it must align its performance measures with its overall business objectives. An HR audit will assess the effectiveness of a company’s performance measures, enabling it to adjust them for increased productivity.    

 People Management: A HR audit will also check how a company manages its employees. This includes how handles everyday HR operations, how it responds to employee challenges and issues, and how it organizes employees in departments, teams, or groups.

 Communications: A HR audit will also assess how an organization keeps its employees motivated and how it keeps them focused on its goals and objectives.

 Employer Retention: Also included in a comprehensive HR audit is an assessment of how well a company retains its employees.  

The Process

 Before the HR audit is done, the company must outline the different HR-related aspects that it would want the audit to highlight. For example, an HR audit can be made to have an emphasis on the collection of employee performance data. Similarly, it can also be designed to highlight how different teams and departments compare or meet their targets. After the objectives of the audit are set, the auditors will prepare a plan of action to achieve those objectives. They will then collect the required information and present their results or findings.      

 Blockers

 The following factors can frustrate the HR audit process:

 Communication issues: poor communication between the company and the HR auditor can put a spanner in the works and cause the process to extend longer than it ought to.

 The prevalent mood of the workplace: employees in negative workplace environments are less likely to cooperate with auditors in providing information.  

 Internal controls: HR auditors can have a hard time putting together a meaningful report when they have to contend with numerous internal controls that limit or hinder the collection of information.

 Conclusion

 AHR audit can conclusion really, but it is best to hire external HR audit experts; with such experts, the company is more assured of getting an unbiased HR  audit report. It is recommended that HR audits be done at least once a year, depending on the HR issues a company needs to address, mini-audits can also be organized quarterly or every few months.

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