Conducting Human Resource Audits

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