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January 27, 2023

What Is a Human Resources Audit?

Human resources (HR) professionals bear many responsibilities concerning a company’s long-term goals and day-to-day operations. Given this extensive variety of tasks, any additional optimization of even minor tasks could benefit overall productivity. Furthermore, a thorough analysis of a business’s HR functions may lead to the discovery of potential issues before they lead to a significant problem or incident. With these things in mind, it’s essential for companies to understand HR audits and how to conduct them.Man talking with HR

Understanding HR Audits

An HR audit aims to provide an in-depth and objective examination of a company’s HR operations. By analyzing all processes, policies and procedures, employers may identify problems early and discover opportunities to improve short- and long-term efficiency. It’s possible for businesses to direct their HR departments to conduct an internal audit or some may choose to enlist the assistance of an outside consultant.

What Is Included in an HR Audit?

Not all HR audits are conducted with the same goals in mind. Although a complete exploration of all HR functions may be the most thorough option, many companies may focus their audit on specific areas. In general, most HR audits examine one or more of the following:

  • Company practices—When an HR audit examines an employer’s current practices, it compares current operations to accepted industry standards. This may provide essential guidance for businesses regarding establishing employee expectations, increasing payroll and optimizing day-to-day tasks.
  • Employee performance—An employer may elect to audit the development of employees and manager feedback. By reviewing performance reviews and personnel files, a company may discover ways to improve its employee feedback processes and help ensure optimal growth.
  • Legal compliance—All businesses should make legal compliance a top priority. HR audits can help ensure employers abide by all local, state and federal laws and regulations before any noncompliance issues lead to potentially costly lawsuits.
  • Compensation packages—An HR audit may focus on how a business’s salaries, benefits and other forms of compensation compare with similar employers. This process may provide invaluable assistance for attraction and retention efforts amid a competitive labor market.

In Conclusion

Efficient and reliable HR teams are an integral part of a successful business. An employer can assess and address any inefficiencies or potential issues within workplace processes and practices by implementing an HR audit. Conversely, companies that allow suboptimal HR functions to continue may eventually face various consequences, including financial losses, employee retention issues, noncompliance fines and lawsuits.

At Burns Employee Benefits Insurance Services, our agents have nearly 30 years of experience helping businesses in the Oakland area optimize their operations. Visit our website or call us at 510-652-7609 for more information.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.

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