BY: SHIKHA SHARMA PRIYANKA SINGHAL MBA-3rd sem Flow of Presentation What is Audit Human resource Audit Objectives of HR Audit Need for HR Audit Benefits of HR Audit Principles of effective HR Auditing Approaches to HR Audit Areas of HR Audit What is Audit? Review and verification of completed transactions to see whether they represent a true state of affairs of the business or not. Examination and evaluation of accounts and records. Human Resource Audit HR Audit is an important management control device. It is a tool to judge organisations performance and effectiveness of HR management. According to Dale Yoder, “HR audit refers to an examination and evaluation of policies, procedures and practices to determine the effectiveness of personnel management.” OBJECTIVES OF HR AUDIT: (1) To review every aspect of management of HR to determine the effectiveness of each programmes in an organisation. (2) To seek explanation and information in respect of failure and success of HR. (3) To evaluate implementation of policies. (4) To evaluate the performance of personnel staff and employees. (5) To seek priorities, values and goals of management philosophy. Need for Human Resource Audit: The managements of organisations have realized the need for HR audit because of powerful influence on motivation of employees at work due to participation of employees in decision making. Growth of organisation needs HR audit. An effective two way communication system has also facilitated the need for HR audit. The HR audit becomes essential because of delegation of authority and decentralization of power. Many plants are located at large distances. This also made the HR audit compulsory. Benefits of HR Audit Identification of the contributions of the HR department to the organization. Improvement of the professional image of the HR department. Finding critical personnel problems. Ensuring timely compliance with legal requirements. Creation of increased acceptance of the necessary changes in the HR department. Encouragement of greater responsibility and professionalism among members of the HR department. Principles of effective HR Auditing 1) Need for independence 2) Audit activities should be budgeted for properly 3) Training of auditors is must 4) Set standards for the HR audits 5) Agree on reporting template 6) Auditors should sign a confidentiality agreement 7) Establish timeframes for every phase/step of the audit 8) Each type of an HR audit has its own purpose and objectives. Approaches to HR Audit: 1) Comparative approach 2) Outside authority approach 3) Statistical approach 4) Compliance approach 5) Management by objectives(MBO)approach (1) Comparative Approach: Under this approach auditors identify one model company and the results obtained of the organisation under audit are compared with it. (2) Outside Authority Approach: In outside authority approach a benchmark is set to compare own results. A standard for audit set by outside consultant is used as benchmark. (3) Statistical Approach: Under statistical approach the statistical information maintained by the company in respect of absenteeism, employee turnover etc. is used as the measures for evaluating performance. (4) Compliance Approach: Under compliance approach the auditors make a review of past actions to determine to see whether those activities are in compliance with the legal provisions and in accordance with the policies and procedures of the company. (5) MBO Approach: Under MBO approach specific targets are fixed. The performance is measured against these targets. The auditors conduct the survey of actual performance and compare with the goals set. Areas of HR Audit HR Function Managerial compliance HR climate Corporate strategy 1. Audit of human resource function Determination of objectives of each activity Identification of responsibility of performance Review of performance Follow- up of action plan Developing an action plan to correct deviations between results and goals 2. Audit of managerial compliance This covers audit of managerial compliance of personnel policies, procedures, and legal and welfare provisions. Compliance with the legal provisions is most important as any violation makes the management guilty of an offence. 3. Audit of human resource climate The working culture in any industry has an impact on employee motivation, morale, job satisfaction, Employee absenteeism, safety records and employee welfare. 4. Audit of corporate strategy This helps the industry to gain a competitive advantage. By analyzing the SWOT analysis of the industry, the management can take decisions regarding marketing channels, services, innovations, low cost production and other like decisions. Reference Thank You