Employers should consider an annual audit of their HR management practices.  The audit will identify areas of noncompliance and ineffective management practices.   

Just the mere mention of the word “audit” makes most employers uncomfortable.  While most employers see the value in auditing their financials, most do not consider the risks related to noncompliance to labor laws or inconsistent HR management practices.  A HR audit is a quality control check on the HR management activities in a company and to determine how well the activities support the organization’s overall strategy. In other words, the audit should answer the question, "Are your HR practices in compliance and are they helping, hindering or having little impact on what your organization is trying to accomplish?"

The HR audit process includes several key steps.

1. Develop the Audit Questionnaire
   Develop a document that identifies the key areas of HR management practices with a list of specific questions related to each area.

2. Collect the Data
   Collect and review all pertinent written documents, forms, communication materials, and personnel files. 

3. Conduct Interviews
   Gather input from the management team regarding their HR needs, issues, challenges and their day to day management practices of HR and employee related issues.  

4. Summarize the Results
   Consolidate the information collected. Benchmark the results with market data. Determine which practices are good and which practices need improvement.  Recommend specific solutions for improvements.

5. Obtain Approval from Senior Management
   Present the preliminary results and recommendations to senior management individually. Point out how these recommendations will support their needs.  Obtain their support and approval.

6. Create Action Plans
   Create an implementation plan so that there is actually something that will result from the audit.

7. Foster a Climate of Continuous Improvement
   Commit to constant observation and continuous improvement of the company’s policies, procedures and practices.

HR management practices can make a significant difference in a company’s business results. Human resource audits, like financial audits, are essential to keep your organization running effectively, and are valuable if they help you defend against legal challenges and aid in the achievement of the company's goals.   A human resource audit of your company will provide a clear “roadmap” for developing and implementing effective human resource strategies, practices and policies to further the overall goals of the company.

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