| Every organization, whether it has one | | | | where policies are missing. Some of the |
| employee or 500 employees, should have an | | | | other areas to target in an HR audit |
| annual Human Resources Audit. An HR audit is | | | | include:Staffing: An audit of recruiting and |
| similar to an annual health check. It is a | | | | hiring practices can quantify turnover |
| means by which an organization can measure | | | | trends, reveal gaps in meeting needs and help |
| where it currently stands and determine what | | | | the organization predict future openings. It |
| it has to accomplish to improve its HR | | | | can also identify potential issues with |
| functions. An audit involves systematically | | | | discrimination or diversity.Compensation |
| reviewing all aspects of the human resources | | | | Employee Classification: An audit of these |
| functions. It also ensures that government | | | | areas includes reviewing compensation, |
| regulations and company policies are being | | | | overtime, employee classifications (exempt |
| adhered to and your organization is not at | | | | non-exempt), and time records.Federal, State |
| risk for fines and penalties. An audit is | | | | and Local Regulations: An effective audit |
| not only a "check up" - you should be | | | | examines compliance with applicable federal, |
| prepared to make the necessary changes | | | | state and local laws -- and can prevent |
| identified by the audit. A Human Resource | | | | lawsuits and fines. Incomplete or missing |
| audit can help prevent costly lawsuits and | | | | I-9 forms can result in an employer being |
| fines by identifying weaknesses and | | | | fined between $100 and $1000 for each failure |
| correcting them.Who Should Conduct the | | | | to accurately complete an I-9 |
| Audit?An HR audit can be conducted by your HR | | | | form.Administration: An audit of this area |
| staff, an outside consultant or an employment | | | | examines regular HR duties, such as benefits |
| law attorney. This individual must have | | | | administration and attendance tracking, and |
| significant HR experience and should use a | | | | checks the handling of personnel records and |
| checklist or structured method to assess a | | | | confidential files.Employee relations: An |
| company's risks and needs. In addition to | | | | audit of employee relations issues includes |
| bringing key advice and knowledge of all | | | | review of communication processes, discipline |
| pertinent laws to the table, an audit | | | | procedures, and performance measurements.By |
| conducted by an outside consultant can add an | | | | regularly auditing your Human Resource |
| extra layer of credibility to the findings of | | | | functions you will mitigate your risk. If |
| the audit. Records from a self-audit do not | | | | you have significant compliance concerns for |
| have the same credibility as audits done by | | | | your company, you may want to consider an |
| independent sources; however it is better to | | | | audit structured as an attorney-client |
| do a self-audit than not audit at all.What is | | | | privileged investigation. By having an |
| reviewed during an audit?Most audits are | | | | attorney conduct the audit, you can identify |
| comprised of a series of questions separated | | | | and correct problems and protect certain |
| by topic or functional area. A compliance | | | | information that may otherwise be accessible |
| audit is not a one-day project. It will touch | | | | to government investigators.The information |
| all areas of HR, and may require looking at | | | | provided in this article is based on general |
| documents and policies and interviewing HR | | | | human resource management fundamentals, |
| staff as well as selected employees and | | | | practices and principles and is not intended |
| managers in other areas of the company. The | | | | to be considered legal advice. Consult your |
| amount of effort required depends on the size | | | | employment law attorney for legal advice or |
| and type of company.Most audits start with a | | | | legal opinions.M.B. Catalfamo is a small |
| review of existing employee handbooks and | | | | business consultant who provides practical, |
| policy and procedures. This provides a | | | | comprehensive advice and support in the areas |
| starting point to assess needs and risks, | | | | of Human Resources, Business Start-Up, and |
| identify conflicts or outdated policies and | | | | Strategic Planning. |
| procedures and delete them, and fill gaps | | | | |