Six Reasons to Conduct an HR Audit

An HR audit isn’t as scary as it sounds. Whether you’re getting by with one HR team member or have an entire HR department, you could benefit from taking a methodical look at your HR practices. An HR audit is simply a review of all aspects of your human resources practices that is typically done in checklist fashion.

Experienced HR auditors are going to roll up their sleeves and get to work documenting your HR processes. They’ll be looking taking a close look at your:

• Benefits & compensation
• HR Compliance
• Company forms
• Hiring and onboarding
• Job descriptions
• Performance evaluation process
• Employee files
• Termination process and exit interviews

As you can see, these items are fundamental to business and are likely a big part of your HR operations. Are you convinced you could benefit from evaluating your program? If not, here are 6 reasons you should conduct an HR audit.

1. To ensure you’re maximizing your human resources

Your human resources are the people who work at your company. Financially, they’re likely your biggest expense. If you’re not directing HR management dollars toward employee engagement and retention activities, you could be missing out. An HR audit can ensure your talent practices are as competitive as possible in the ongoing war for top talent.

2. To make sure your company’s administration is in compliance with HR rules & regulations

Because of the multitude of laws affecting each stage of the employment process, it is important to regularly conduct an HR analysis of policies and practices. This helps to identify HR compliance issues if they exist and avoid potentially costly fines and/or lawsuits, if otherwise ignored.

3. To bring more confidence to your management and HR functions

Leadership teams function better when they know they’re doing things right. An HR audit can reveal potential problems and allow you to fix them, identify gaps you may not have considered, and provide other feedback that only an objective review can uncover. Once you’ve “passed” the HR audit, you can move forward with total confidence in your HR function and upper management.

4. To maintain or enhance your organization’s reputation

Companies are being judged all the time, thanks to social media and word of mouth. Your community’s opinion of your can be based on a variety of features, such as how you responded to the pandemic, how you handle candidate experience, or the insight they may have in your organizational culture. Whether you need to improve your reputation or simply maintain the quality reputation you already have, an HR audit can help you identify areas that can support your goals. For example, focusing on hiring and onboarding alone will have a huge impact on your interactions with the public and those who decide to come on board and support your mission.

5. To provide a due diligence review for potential shareholders, investors, or buyers

If you’re considering selling your business or you want that to be an option someday, you’ve got to know your HR operations at least have parity with your competition. An HR audit can ensure your HR practices will hold up well under scrutiny, and display to potential shareholders, investors, or buyers that your organization is top notch—beginning with the fundamentals.

6. To give you a baseline for future improvements to your HR operations

Any business leader should be focused on continuous improvement, whether that’s to stay competitive, keep up with technology, or adapt to changes in the world and marketplace. Especially if you’re early in your development (having one or two employees), an HR audit can be a valuable benchmark to retain for the future. You can see how far you’ve come, and what changes you may need to make later on.

Still not convinced of the value of an HR audit? Let’s talk about it. Contact us to see how we can help you maximize what you’re already doing to manage your organization’s most important resource: the human resource.