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What’s an HR Audit and Why Is It Important?

HR audits can help your business avoid personnel problems and reach greater success.

If you have even a single employee, you have to deal with human resource issues. From company policies to benefit packages to job descriptions to wages and salaries, everything that governs your employees fits under the umbrella of what an HR manager must address. And as the best business schools will tell you, proper management of human resources can be the difference between your business succeeding or failing. But how do you know if you’re handling human resources appropriately? That’s where an HR audit comes in.

What Is an HR Audit?

An HR audit is an objective examination of your business’s HR policies, practices, and procedures. The goal is to look for trouble spots and/or identify ways you can improve. You can hire an outside company to perform the audit or you can instruct your HR department to perform an internal audit.

What’s an HR Audit and Why Is It Important?

Are All HR Audits Created the Same?

No. There are multiple types of HR audits with differing goals. The two main types are risk mitigation and value creation. While you can conduct both types of audits simultaneously, they will focus on different aspects of your HR processes and policies. Risk mitigation will mainly look for areas where you can get into legal trouble or are leaving yourself open to employment-related lawsuits. Value creation will mainly look for areas where your processes and policies can be improved to maximize the value of your employees or attract better employees.

What Specific Areas Do HR Audits Examine?

When you conduct an HR audit you can look into one or more of the following areas, depending on your concerns, budget, and time frame.

Any human resource leadership team will want to know that they are compliant. An HR compliance audit focuses on how well your business is complying with current local, state, and federal employment laws and regulations. This is a risk mitigation audit. Your goal is to ensure you aren’t violating any laws or leaving yourself open to liability lawsuits.

Best Practices
Is your human resource management team at the top of their game? An HR best-practices audit compares your HR processes and policies with the accepted industry standards. This type of audit can be greatly beneficial to a growing company because it can help ensure you’re on the right track as you increase payroll, create handbooks, establish job descriptions, and set expectations for your new employees.

An HR performance audit involves a review of personnel files with the goal of evaluating the quality of feedback your managers are giving their staff. A lack of quality feedback can inhibit the growth of employees. A performance audit can identify problems with your review and feedback process before employee development suffers.

What kind of compensation packages have your HR managers put together? Are your wages, salaries, and benefit packages competitive? An HR competitiveness audit looks into all areas of employee compensation and benefits to assess whether your business is doing what it needs to do to attract the best-qualified employees. Even if you can’t compete on wages or salaries, a competitiveness audit can identify other areas (such as telecommuting opportunities and flexible work schedules) that can improve how attractive you are to applicants.

A function-specific audit is a kind of mini-audit where you examine just one area of your HR processes or policies. You might choose to investigate an area such as payroll management, employee review policies, record-keeping efficiency, etc.

Why Are HR Audits Important?
An HR audit is the only way you can fully assess whether your HR processes and policies are benefiting or harming your overall business. If you’re in danger of a lawsuit or criminal suit, if your HR systems are inefficient, if your employees aren’t developing, or if you can’t attract the right employees, your business will suffer. Improve those areas, and you can improve your chances for success.

How Can You Learn More About HR Management?

While HR audits are vital, managing human resources requires a lot more than simply examining your processes and policies. If you want to learn how to better manage your HR issues—or if you want to enter the HR field—one of the best choices you can make is to earn a degree or certificate, such as a Master of Business Administration (MBA), an MS in Human Resource Management, or a Graduate Certificate in Human Resource Management. Through programs such as these, you can gain the knowledge you need to start or advance your career in HR. And thanks to online learning, you can earn your master’s degree or graduate certificate without quitting your current job or moving to another city.

When you choose to earn your degree from an online university, you can take advantage of all the convenience and flexibility that online education provides—a great option for busy people like you.

Walden University is an accredited institution offering an MS in Human Resource Management, a Master of Business Administration (MBA), a Graduate Certificate in Human Resource Management, and other business and management programs online. Expand your career options and earn your degree in a convenient, flexible format that fits your busy life.

Walden University is accredited by The Higher Learning Commission,

Walden’s BS in Business Administration, Master of Business Administration (MBA), Doctor of Business Administration (DBA), and PhD in Management programs are accredited by the Accreditation Council for Business Schools and Programs (ACBSP). The MS in Accounting and BS in Accounting programs are also accredited by the ACBSP and have earned the organization’s separate accounting accreditation.