Does Your Company Need an HR Audit?
Many business owners bristle at the word “audit,” but an annual HR audit is important to the smooth operation of any company. An HR audit is an assessment of HR practices, policies, and procedures and identifies what HR management practices are effective and ineffective within an organization.
“Companies do audits when it comes to their financials, or they might do a security audit. It really is a good idea for companies, especially growing companies, to take a look at where they are from a compliance standpoint for their HR management practices,” Kelly Mitchell, Principal at impactHR, LLC, said. “By not being compliant, with all of the ever-changing regulations, there is a high-level risk for employers because there is a huge gap between what they’re doing and what the law says they should be doing.”
To conduct an HR audit:
-First, a company should determine whether it has the internal resources to conduct the audit. This includes not only manpower, but also expertise. “Many smaller companies will bring in third party companies to conduct a compliance audit. This is for a number of reasons, including that it is an unbiased party coming in to look at your files and interviewing the management team about policies and procedures to determine what’s working and what’s not,” Mitchell said.
-Next, a company should determine what the audit will focus on. “Will it focus on strictly the HR pieces, such as record keeping, policies, procedures, or will it also include management practices and seeing if those are consistent with the policies and procedures in place?” Mitchell said.
-Developing questions and conducting interviews are the next steps to determine what may be missing or require changes. “The types of questions can vary but many would be related to record keeping; there are various regulations about record retention, questions about how to keep personnel records, questions as to what to keep in confidential files. It can be as simple as ‘are the labor posters posted?’ There needs to be consistency between what is required by the regulations and what the employer is actually doing,” Mitchell said.
-After the information is collected it should be summarized and put into an action plan. “The action plan will rely on what is determined during the audit. Again, it could be as simple as posting the required posters for employees and applicants. It’s sort of a road map that helps the employer identify ‘what do we need to do, and what have we already done?’” Mitchell said.
Mitchell said resources are available to help guide companies through HR audits and that it is important for every company to consider conducting one annually.
“Statistically, the amount of claims employees are filing against employers is growing, so it’s really in the employer’s best interest to assess how they are doing with their compliance issues through their practices, policies, and procedures and to identify the gaps and make a good effort to close those gaps and make sure they are being compliant,” Mitchell said.
For more information about HR audits from impactHR click here.