An HR audit is like an annual health check, says EJ Sarma. It plays a vital role in instilling a sense of confidence in the management and the HR functions of an organisation
A healthy HR function in an organisation is as important as the physical and mental well being of a human body. Typically the basic reason why organisations prefer to conduct an HR audit is to get a clear judgement about the overall status of the organisation and also to find out whether certain systems put in place are yielding any results. HR audit also helps companies to figure out any gaps or lapses and the reason for the same. Since every company plans certain systems and targets, an HR audit compares the plans to actual implementation.
The concept of HR audit has emerged from the practice of yearly finance and accounting audit, which is mandatory for every company, to be done by external statutory auditors.
This audit serves as an examination on a sample basis of practices and systems for identifying problems and ensuring that sound accounting principles are followed. Similarly, an HR audit serves as a means through which an organisation can measure the health of its human resource function.
Organisations undertake HR audits for many reasons:
1 To ensure effective utilisation of human resources.
2 To review compliance with tons of laws and regulations.
3 To instill a sense of confidence in the human resource department that it is well-managed and prepared to meet potential challenges and opportunities.
4 To maintain or enhance the organisation’s reputation in a community.
An audit is a systematic process, which examines the important aspects of the function and its management, and is a means to identify strengths, weaknesses and areas where rectification may be warranted. An audit is done on sampling basis. And in sampling, not every instance or situation can be examined.
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