October 1, 2019
HR health check: How to do an effective HR audit
What is an HR audit?
An HR audit is a systematic review of all your human resources processes. Carried out by an independent HR expert, it’s intended to identify exactly how healthy your human resources function is right now, as well as analysing what you need to do to get better. You can use an HR audit to identify any non-compliance, highlight any HR related risks and see how you stack up against best practice. That means it should serve as one of the foundations on which you can build your future HR and business plans and strategy. Here’s our guide to using an HR audit to make sure your human resources function is as healthy as it can be.
What’s included in an HR audit?
You can make an HR audit as narrow or as broad as you like. But the more comprehensive it is, the more effective it’s also likely to be.
That said, we understand that time and money won’t always allow you to do everything you’d like. There are, however, two main sources you should review in detail in any HR audit.
- Your policies and procedures. As a first port-of-call, you should go through every one of your policies and procedures. These should range from everything from your recruitment and selection criteria, through to workplace policies.
This isn’t as simple as just checking your written policies. Policies and procedures can also be informal too. All those unspoken rules and customs that have built up over time in the workplace culture will also count. Working out exactly what these are, though, is not always straightforward at all.
- Your employment documentation. How long has it been since you took a look over your employment contracts and other employment documentation? These are a vital cog in your HR wheel and a source of either certainty or exposure.
What to do with this information once you have it?
Once you’ve identified all of your policies and procedures, it’s time to measure how you compare. Generally, I recommend using it for one or more of three separate measures.
Legal and regulatory compliance
The most obvious thing to look for is whether you’re complying with the rules and regulations that apply. Again, this isn’t always as straightforward as it might seem.
For instance, if you’re like many employers – especially smaller ones – you’re probably using the same contract for all staff, regardless of their role or seniority. And yet, for many of your employees, the contract of employment is just the beginning. There are also the 10 National Minimum Employment Standards, which you can’t contract out of.
Beyond that, however, there are Awards, which are likely to provide for different terms and conditions of employment depending on the role employees perform. This can range from pay rates to dispute resolution procedures and pretty much everything in between. Not being across each of these Awards can leave your company exposed.
On top of this, the regulations frequently change and new laws are introduced. For instance, the rules and regulations on whistleblowers, flexible working and personal and carer’s leave entitlements have all changed or been clarified recently. Failing to keep up with these changes could land you in serious hot water.
Complying with the law may be the first step in getting things right, but what about finding out how you compare to your competitors?
After all, if your rivals operate more efficiently than you do or if they’re offering different terms and conditions to their staff, their HR practices could be giving them a competitive advantage over you.
By incorporating HR best practices into your HR audit, you can see how your human resources policies stack up to your peers and work out where you’re deficient and what you can do to improve. That way, you can use your HR to help get to the top of the pack and stay ahead.
The third and final way you can use the information you’ve gathered is to evaluate whether or not it’s helping you achieve your business goals. Human resources doesn’t exist in a vacuum. It’s a vital part of your operations and it should be used to support and achieve your strategic vision. This often gets lost in the day-to-day of doing business.
For instance, are you really promoting a positive workplace culture? Are you recruiting the right people? Do your employees feel energised and motivated? Do your KPIs and incentive schemes drive the right kind of behaviour?
By going back to your strategy and comparing how your HR processes help effect this, you can often make the tweaks and adjustments you need to get to where you want to be.
Our human resources policies can either hold our business back or propel it forward. By performing an effective HR audit you can give your human resources practices a real health check and give yourself a starting point for refining or even recalibrating your people-related policies.
Don’t have HR issues, have HR solutions. If you’d like to discuss how we could help your business with an HR audit, get in touch with the Catalina Consultants team today.