H U M A N R E S O U R C E A U D I T, E F F I C I E N T T O O L T O A S S E S S T H E EFFECTIVENESS OF CURRENT HR ACTIVITIES ALSO GIVES INSIGHT TO ASSESS BLUEPRINT FOR THE FUTURE HR CORE ACTIVITIES AND ORGANIZATIONAL

COMMITMENT TOWARDS GROWTH AND EXCELLENCE

An HR "Early Warning System" that works!

A human resource audit reviews an organization's policies, procedures, and practices. Its purpose is to examine the technical and practical dimensions of the HR function and to create a comprehensive system that adds value to the organization. An audit is a means by which an organization can measure where it currently stands and determine what it has to accomplish to improve its human resources function. It involves systematically reviewing all aspects of human resources, usually in a checklist fashion, ensuring that government regulations and company policies are being adhered to. The key to an audit is to remember it is a learning or discovery tool, not a test. There will always be room for improvement in every organization. Human Resource Audit is a systematic assessment of the strengths, limitations, and developmental needs of its existing human resources in the context of organizational performance (Flamholtz, 1987)

PURPOSE OF H.R. AUDIT:

To examine and pinpoint strength and weaknesses related to H.R. areas and Skills and Competencies to enable an organization to achieve its long-term and short-term goals. To increase the effectiveness of the design and implementation of human resource policies, planning and programs. To help human resource planners develop and update employment and program plans. To insure the effective utilization of an organization's human resources. To review compliance with a myriad of administrative regulations. To instill a sense of confidence in management and the human resources function that it is well managed and prepared to meet potential challenges. To maintain or enhance the organization's and the department's reputation in the community. To perform a "due diligence" review for shareholders or potential investors/owners.

NEED FOR H.R. AUDIT Top Management saw solutions to their problems, issues and challenges in HRD to face business competition and to achieve organizational goals.

SCOPE OF HUMAN RESOURCE AUDIT

Whenever the H.R. Audit it taken up, the scope is decided. Audit need not be exhaustive, but should be focused on particular function of H.R.M. such as Training and Development, Performance Appraisal, Compensation, etc.. However, the objective and approach of H.R. Audit, more or less, remains the same, regardless of scope. What does a full HR Audit entail":

1) Legal compliance

2) Compensation/Salary Administration 3) Employment/Recruiting 4) Orientation 5) Terminations 6) Training and Development 7) Employee Relations 8) Communications 9)Files/Record Maintenance/Technology 10)Policies and procedures (including employee handbook) 11)Communications

APPROACH TO H.R. AUDIT

Methods which can adopted for HR Audit

Self directed surveys.

Task Forces within the organization

out side Consultants

AUDITING PROCESS: STEPS IN H.R. AUDIT

Auditing process varies from organizations to organizations Generally involves following STEPS

STEP ONE: Briefing and Orientation: Key Staff Members meet: i. To discuss particular issues considered to be important. ii. To chart out audit procedures, and iii. To develop plans and program of audit. STEP TWO: Scanning material information: Scrutiny of all available information pertaining to personnel, personnel handbooks and manuals, guides, appraisal forms, computer capabilities and any other related information. STEP THREE: Surveying employees: a. Interview with key managers, functional executives, Top functionaries in the organization and employees Representatives, if necessary. b. The purpose is to pinpoint issues of concern, Present strengths, anticipated needs and managerial views on human resources. STEP FOUR: Conducting interviews: I. What questions to be asked, are developed during scanning of information. II. It is better for H.R. Audit, if clarity about the key factors of H.R.M. selected for audit and the related questions that need to be examined. STEP FIVE: Synthesizing: The data gathered is synthesized to present the a. Current Situation. b. Priorities. c. Staff pattern, and d. Issues identified. STEP SIX; Reporting: 1. The results of the audit are discussed with Managers and Staff Specialists, in several rounds. 2. Important issues are identified for inclusion in the formal Report.

H.R. AUDIT TOPICS (AREAS) FOR INTERVIEW QUESTIONNAIRES AND RELATED ASPECTS

Important HR Topic Areas

1. INFORMATION
COVERAGE SOURCE ADEQUACY GAPS

2. FORECASTING
METHODOLOGY RELIABILITY TESTABILITY BUDGETING TIME ORIENTATION TECHNOLOGY PERSPECTIVE

3. TRAINING AND DEVELOPMENT

NEED ASSESSMENT SELECTION CRITERIA LEVELS COVERED AND FREQUENCY INTERNAL VS EXTERNAL TRAINING QUALITY CONSCIOUSNESS CHANGING NEEDS CLIMATE FOR SELF-DEVELOPMENT

Important HR Topic Areas

- continued

4. PERFORMANCE APPRAISAL
VALIDITY OF APPRAISAL PROCESS FITNESS BENEFITS AND/OR DRAW BACKS/PROBLEMS KNOW-HOW OF APPRAISING CLEAR OBJECTIVES UNIFORMITY IN PROCESS UNDERLYING BENCHMARKS CONSISTENCY IN RATINGS LINKAGES WITH PAY FEEDBACK TO EMPLOYEES CHANGING NEEDS

5. MANAGEMENT SUCCESSION PLANNING

POLICY FORMULATION IDENTIFYING KEY POSITIONS AVAILABILITY OF SUCCESSORS MATCHING FUTURE NEEDS RESPONSIBILITY FOR GROOMING AND DEVELOPING HANDLING NON/POOR PERFORMERS

Important HR Topic Areas

- continued

6. COMPENSATION
APPROPRIATENESS OF POLICIES COMPANY PHILOSOPHY ADEQUACY OF REWARDS NATURE OF JOB DESCRIPTIONS FLEXIBILITY IN JOB EVALUATION SYSTEMS CONTROL OVER COSTS RATIONALE OF REWARD SYSTEM OPPORTUNITIES FOR IMPROVEMENT

7. AFFIRMTIVE ACTION
EFFICIENCY OF ACTION PROGRAMMES LESSONS FOR FUTURE 8. SPECIAL ASSIGNMEN (OTHER H. R. FUNCTIONS) CLARITY COMMENTS ACTIVITIES JURISDICTIO

Important HR Topic Areas

- continued

8. SPECIAL ASSIGNMEN
(OTHER H. R. FUNCTIONS) CLARITY COMMENTS ACTIVITIES JURISDICTIO

9. NEED INTER-RELATIONSHIPS
UNIQUENESS DISTINCTIVENESS PRESENCE AND AWARENESS OF ABOUTCOMPANY'S H. R. POLICY CLARITY ON OBJECTIVES OF H.R. AUDIT FUTURE OUTLOOK ON PHILOSOPHY * CAPABILITIES ON IMPLEMENTATION

10. THE STAFF FUNCTION

(THE H.R. STAFF) EXPECTATION FROM HUMAN RESOURCE STAFF DEGREE OF SATISFACTION ADEQUACY ATTIDUDE AND APPROACH CAPABILITY AND POTENTIAL SUGGFESTION FOR CHANGE .

CHALLENGES FOR H.R. DEPARTMENT EIGHT CHALLENGES IDENTIFIED BY DAVE ULRICH (1997)

1. GLOBALISATION INVOLVES
NEW MARKETS NEW PRODUCTS NEW MINDSETS NEW COMPETENCIES NEW WAYS OF THINKING H. R. DEPATMENTS WILL NEED TO CREATE MODELS AND PROCESSES FOR ACHIEVING: GLOBAL ACTIVENESS COMPETITIVENESS EFFECTIVENESS

2. VALUE CHAIN FOR GLOBAL

COMPETITIVENESS AND HR SERVICES BUILDING CUSTOMER-RESPONSIVENESS ORGANISATION THROUGH: a. Innovation b. Faster Decision Making c. Price or Value Advantage d. Effective linking with Suppliers

3. GROWTH OF ORGANISATION
By INCREASING Customers BY MERGERS BY ACQUISITION BY JOINT VENTURES HR ISSUES INVOLVED: Having EXECUTIVES with BUSINESS MINDSET. - For CUTING COST on hiring PEOPLE. - For overcoming CHALLENGE in New Business.

4. BUILDING ORGANISATIONAL CAPABILITIES

Reviewing Existing Capabilities New Capabilities. Aligning Capabilities with Business Strategies.

5. MANAGING CHANGE
Adopting some new H.R. Practices. Learning some New Skills and Attitudes. Unlearning some existing skills and Attitudes. Modifying Mindset of Executives and Employees.

6. MAKING TECHNOLOGY VIABLE

Finding out ways and means to make technology successful.

7. ATTRACTING AND RETAINING

COMPETENT PEOPLE Attracting Talented People. Retaining them. Utilising them suitably. 8. TRANSFORMING ORGANISATION Creating fundamental and lasting changes.

METHODS OF H.R. AUDIT

I. INDIVIDUAL INTERVIEW METHOD:

Top level management and senior managers are interviewed, individually. It helps in following: A. Knowing their thinking about future plans and opportunities available for the company. B. Knowing about their expectations from the H.R.Audit. C. Getting sensitive information pertaining to working styles and culture. Union leaders, departmental heads, some strategic clients and informal leaders are also interviewed, individually. In case of small companies, manned by professionals, interviews can be extended with selected employees from different levels and functions. .

II. GROUP INTERVIEW METHOD

Group interviews and discussions with the employees and/or executives of large companies for H.R. Audit, facilitate collection of information about effectiveness of existing systems. Composition Of Group: 1. Ideally, the group should be of 4 to 8 persons. 2. Group should consists of same or similar level of employees from cross functional areas. 3. In case of large organization, group interviews for each functional area can be conducted, separately. Relevant Questions That Are Asked In Individual And Group Interviews : a. What do you see as the future growth opportunities and business directions of the company? b. What skills and competencies does the company have which you are proud of? b. What skills and competencies do you need to run your business, or to perform your role, more effectively at present? c. What are the strengths of your HRD function? d. What are the areas where your HRD function can do better? e. What is good about your HRD subsystems, such as: performance appraisal, career planning, job rotation, training, quality circles, induction training, recruitment policies, performance counseling, worker development programmes, and HRD departments? f. What is weak about them? What can be improved? g. What changes do you suggest to strengthen HRD in your company? h. What do you think are the ways in which line managers can perform more developmental roles?

III. WORKSHOP METHOD:

In some cases of H.R. Audit, instead of Individual and Group Interviews, Workshop Methods i.e. Large Scale Interactive Process (LSIP) is conducted, as under: a. 30 to 300 participants can be asked to gather in a room. b. They are divided in small groups. c. They are asked to work either around Systems, Subsystems or around different dimensions of HRD and do SWOT Analysis. d. All the groups thereafter give presentations. e. The H.R. Auditor compiles the views of all groups, makes own observation, conclusions and prepares a report. f. The H.R. Auditor announces the audit Results before submitting the report to top Management. LSIP WORKSHOP FOR HRD AUDIT ON PERFORMANCE APPRAISAL SYSTEM - RELEVANT QUESTIONS THAT HAVE BEEN ASKED IN ONE OF THE HR AUDIT CONDUCTED BY Dr. T.V. RAO: i. What are the three good things in your performance appraisal system? ii. What is the one thing you would like to change in your performance appraisal system? iii. How would you critically evaluate the job rotation in your company? iv. What are the strengths and weaknesses of your training policies and practices? v. What three objectives would you use to describe the promotion policies as they exist in your company?

IV. QUESTIONNAIRE METHOD:

Feed back about various dimensions of HRD, including the competency base of HRD staff, the styles of line managers, the implementation of various HRD systems, etc are obtained through a detailed questionnaire from individuals or groups for H.R. Audit. This method helps in benchmarking. The process is as follows: a. Detailed questionnaire is prepared by H.R. Auditor. b. Individuals or groups are asked to assemble in a room or hall are explained the objective and process of HR Audit. They are then given questionnaires. c. They submit the questionnaire, duly filled in, to the HR Auditor. d. The HR Auditor compiles the feedbacks, makes observations, conclusions and recommendations. e. Audit Results are informed to the Participants before the report is submitted to the top management.

POINTS TO REMEMBER FOR WRITING REPORT

A. SIMPLE LANGUARE SHOULD BE USED. B. IT SHOULD BE SHORT AND PRECISE. C. BULLET FORM HIGHLIGHTING THE STRENGTHS AND WEAKNESSES,SHOULD BE USED.

MODEL OUTLINE: HR AUDIT REPORT

EXECUTIVE SUMMARY CHAPTER-1 INTRODUCTION CHAPTER-2 CURRENT STATUS OF THE HRD FUNCTION; SOME FACTS. CHAPTER-3 GENERAL OBSERVATIONS CHAPTER-4 CAREER SYSTEMS CHAPTER-5 WORK PLANNING CHAPTER-6 DEVELOPMENT SYSTEM CHAPTER-7 SELF-RENEWAL SYSTEM CHAPTER-8 HRD CULTURE CHAPTER-9 HRD FUNCTION TABLE AND APPENDICES

1. INTRODUCTION (BRIEF DESCRIPTION ABOUT)

COMPANY LOCATIONS, PRODUCTS AND SERVICES, MANPOWER, TURN OVER, AND MAIN CONCERNS AND TOP MANAGEMENT. DATE AND REASON FOR UNDERTAKING THE AUDIT. METHODOLOGY ADOPTED FOR THE STUDY: DETAXILS OF SAMPLES, AND AUDIT METHODS USED: * Questionnaires administered, * Number of individual interviews, * level-wise records and reports examined,

FRAMING OF INTRVIEW QUESTIONNAIRE, BASED ON SAID DIMENTIONS FOR INTERVIEW WITH HRD CHIEF:

What are the objectives of your department? When and how was it set up? What are the significant milestones and contributions of the department? What are it's current activities? What is the organizational structure? How are the strategies of hr and hr plans formulated? what is the role of the department in strategic planning? What are the main competencies of HRD staff? which are the competencies they need to develop? What are the styles of Top and Senior level Managers? To what extent the styles are helpful in developing learning culture? What are the main blocks in developing learning culture? How are the line managers supporting their juniors in developing? What needs to be done to make them more supportive? What is the extent of support given by Top Management to HRD? Is there a separate budget for HRD? How the same is allocated and what is the support of Top Management? What is the HRD philosophy and values? What the core competencies of each department and of the organization as a whole? What is relationship between Personnel and HRD Departments? Is there need for further strengthening Integrating or differentiating the functions or activities of the two? What the strengths and weakness in the following systems of your organization: i. Performance Appraisal. ii. Counseling. iii. Training. iv. Career Planning and Development. v. Succession Planning for strategic roles. vi. Job Rotation. vii. OD and Team Building interventions. viii. Research and System Development. ix. Mentoring. x. Culture- Building Exercises. xi. Quality improvement interventions. .

Professional Summary of Mr. Gajendra Khare

Article By: Mr. Gajendra Khare (M.Sc. (Maths), DIMS, MPA) Founder Siddhartha Consultancy Services) Former HR and Administration Manager, Apparel Group UAE; Mr. Khare has about 14 years of working experience with many prestigious organization of the country and overseas in the field of Human Resource Development (HRD), Administration, Liasoning, ISO-9000, MIS (Management Information Systems) and others. He has worked on a number of HRD and quality related assignments of various organizations. He has also worked in the area of Management Information Systems and implemented ERP modules in industries. He has been a member of various professional organizations in the fields of HR and quality etc. Mr. Khare has developed and implemented various HR solutions to the industries successfully. He has also implemented ISO9001:2008, ISO 13485:2003 CE and WHO: GMP certification and also handled various administrative assignments and completed successfully. gkhare@scsuniversal.com; gajendra.khare@gmail.com, web: www.scsuniversal.com

Thank You