Why an HR audit will pay dividends

The term “audit” conjures up concern, even fear, in the heart of many a manager. Bad enough that we have to face financial audit, without the possibility of having to endure the rigour of audits in other aspects of working life.

This may be the view held by many HR managers but as much as over-stretched personnel and training departments would like to keep their need for accountability low-key the likelihood is that, at some time in the near future searching questions will be asked about the HR function.

Notes and queries

These questions will centre on the cost and size of the function. But other queries are likely to relate to quality and speed of delivery – particularly regarding recruitment and training.

If we raise our head above the parapet and take the initiative in setting standards, the HR function will grow in stature. This requires setting quality standards, training staff, planning implementation and measuring achievement against the standards.

The first rule is to "learn from others" and this is where benchmarking comes in. Wouldn’t it be helpful to know what the key metrics – ratios and percentages of staffing of the function – are across your industry sector?

Most organisations participate in some form of salary or reward surveys. This is a form of benchmarking that is most often used at a basic matching’ level. But it is under-exploited by organisations.

Where do the standards we have to meet come from? There are the externally established professional, best practice and legislative requirements and there are internally stated standards that our staff, managers and directors expect of us.

So, the agenda for benchmarking is quite substantial. It could be argued, though that much of what has been described so far in this article already occurs – but in an unstructured manner in most organisations.

This is where the HR audit comes into its own. By establishing standards and then measuring against these we are, in effect, auditing our function.

Audit tools

The audit tools that are readily available to corporate heads of HR include an audit of personnel activities and costs and audit of personnel service effectiveness. These can be conducted on a "self-audit" basis by trained internal auditors or as a full professional external audit.

Whether you are faced with a demand to justify staffing levels or costs, ineffective training, the threat of a takeover or outsourcing of the function, an HR audit is likely to help clarify and resolve the situation. By conducting your own assessment, you will be well equipped to challenge those who expect HR to shoulder the blame.

By Derek Burn, Partner, MCG Consulting Group


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