HR Audit: Why You Need One
When we first hear the word “audit” often times it sends a shiver down our spine. No one ever gets super excited when the IRS decides its time to audit them, we get that. However, an audit doesn’t always have to be a terrifying experience. Whether you have in house HR, or you are a small business with no current plans to have HR on site in the near future, you should still prioritize an audit. The results obtained from it can help identify gaps in HR practices, as well as mitigate your risk on current policies or practices. An audit can help you prioritize these gaps in an effort to minimize lawsuits or regulatory violations.
So, what should an audit be looking at? Here are a few key elements that should be included in every HR audit. Most HR audits will go above and beyond to not only audit these but other key areas as well.
- An evaluation of your company’s operational HR policies, practices and processes with a focus on key HR department delivery areas:
- employee retention
- employee benefits
- performance management
- employee relations
- training and development
- A review of current HR indicators:
- number of unfilled positions
- the time it takes to fill a new position
- employee satisfaction
- internal grievances filed
- number of legal complaints
- absenteeism rates
- A review of documents to ensure you are following all legal parameters set forth by the government:
- Tax Documents
- Personnel Files
What should happen once you have a completed audit?
- Provide feedback about the results:
- At the end of the audit process, the audit team should summarize the data and provide feedback to the organization's leadership in the form of findings and recommendations. Findings are typically a written report with recommendations prioritized based on the risk level assigned to each item. So, most likely they will ask you to get your I9s in order before you work on your company’s job descriptions.
- Create action plans:
- Creating an action plan to act on the information you have uncovered is critical. Conducting an audit and then failing to act on the results actually increases legal risk.
- Foster a climate of continuous improvement:
- At the conclusion of the audit, leaders must engage in constant observation and continuous improvement of the organization's policies, procedures and practices so that the organization never stops improving. One way to do this is to continuously monitor HR systems to ensure that they are up-to-date and to have follow-up mechanisms built into every one of them
If your company has not had an HR audit in over a year, now is a great time to consider one. Random and targeted government audits (as well as the fines associated with them) are increasing. Not having things in order can cost your business thousands, hundreds of thousands or even millions of dollars. Although an audit may seem overwhelming, the results are worth the effort. If you have any questions please reach out to ALT HR Partners, we are here to help anytime you need it.