conducting hr audit mp-final
TRANSCRIPT
This course has been designed by Muaz Popatia [email protected] www.facebook.com/muaz.popatia.trainer
Conducting a HR Audit
By Muaz Popatia
2014
This course has been designed by Muaz Popatia [email protected] www.facebook.com/muaz.popatia.trainer
Rules of the House!
Phones on vibration / silent.
Take urgent calls only (leave on need basis)
No late arrivals.
First Tea at 10:30 am (15 Minutes),
Lunch at 1:00 (60 Minutes)
Second Tea at 3:30pm (15 Minutes)
Questions may be asked anytime (just raise your hand!)
This course has been designed by Muaz Popatia [email protected] www.facebook.com/muaz.popatia.trainer
Course Objective
To understand fundamentals of conducting an Audit.
To understand key concepts regarding HR Audit.
To review some basic check-lists regarding HR Audit
pertaining to selected HR sub-functions.
Give me your expectation also!
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ContentsUnderstanding the Fundamentals:The HR Cycle (Activity & Purpose Based)Understanding how the HR function becomes a Strategic Partner?Why is an audit required?Understanding the “mind-set” an Auditor should haveWhat is an HR Audit?The link between HR Audit and Other Audits.Purpose & Scope of the HR Audit (HRA)The HR Audit CycleThe benefits of the HR Audit
Planning to Implement:Planning the HRA (Timing and Implementation)Preparing for HRAHR Audit TOR (Terms of Reference)
Implementing to Conduct:Taking the “HR Temperature”Designing a QuestionnaireCollecting Information
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Contents
HR Functions to Audit:
Recruitment & Selection
Compensation & Benefits
Orientation & Placement
Training & Development
Performance Management
Analyzing to Recommend:
Analyzing the Data.
Identifying Areas of Improvement.
Preparing Recommendations.
Reporting to Present:
Documenting the findings.
Presenting the recommendations.
Preparing a HRA report.
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Understanding
the Fundamentals
Module - I
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Understanding the Fundamentals
Elections in the Jungle!
Monkey Won; Lion lost.
Lion threaded Lady Giraffe.
Giraffe went to Monkey for Help.
Monkey jumped from tree to tree.
On question from Giraffe.
Monkey said “Look how active & angry,
I became when you told me that the
lion threatened you.”
We need results not activity.
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Understanding the Fundamentals
The HR Cycle – Activity Based
Recruitment & Selection
Operations
Compensation & Benefits
Training & Development
Performance Management
Entry /
Exit
Short-listing, Hiring,
Interviewing &
Joining Formalities
Orientation to the
Organization and Job
Payroll & Budgets
Staff Training &
Development, and
Organizational
Development
Promotions &
Increments
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Understanding the Fundamentals
The HR Cycle – Purpose Based
Acquire
Maintain
Enhance
Reutilize
Recruitment & Selection
+
Operations
Compensation & Benefits
Training & Development
Performance Management
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Understanding the Fundamentals
How HR becomes a Strategic Partner:
Information
Analysis
Decision
HR Info in Time
HRIS
HRMS
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Understanding the Fundamentals
Audit:
Is an official inspection of an organization's accounts, typicallyby an independent body.
New Audit:
The new audit definition has gone to audit all other areas oforganizations as well, some of them are:
Job Audit:
Knowledge Audit
Skills Audit
Human Resource Audit
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Understanding the Fundamentals
Job Audit:
A tool used to classification of jobs, positions or tasks.
Revisiting Jobs to see if new classification or compensation
related matters is required.
Knowledge Audit:
A knowledge audit is an effort to understand where an
organization stands in terms of knowledge management and its
knowledge assets. (Knowledge management (KM) is the
process of capturing, developing, sharing, and effectively using
organizational knowledge)
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Understanding the Fundamentals
Skills Audit:
A skills audit is essentially a process for measuring and
recording the skills of an individual or group. The main purpose
for conducting a skills audit in an organization is to identify the
skills and knowledge that the organization requires, as well as
the skills and knowledge that the organization currently has.
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Understanding the Fundamentals
Why do we need an Audit?
Audit is supposed to help us in:
Identify Risks
Find Better Ways and Best Practices
Partner with you to identify solutions
Prevent problems.
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Understanding the Fundamentals
• Audit Notification
• Entry Meeting
• Audit Survey
• Fieldwork
• Draft Report
• Exit Meeting
• Management Response
• Final Report
• Follow-up
Steps in Audit
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Understanding the Fundamentals
Audit Notification
First letter / info to the head of the area to be audited.
Entry Meeting
First meeting with those who are to be audited, when and for what? Also to decide on the basics such as equipment and space provision.
Audit Survey
Auditors conduct research and observe the audit areas to enhance their knowledge of processes.
Fieldwork
Actual review and checking of the documents.
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Understanding the Fundamentals Draft Report
First report submitted on the what the Audit found out.
Exit Meeting Conducted with the same personnel who attended the first meeting. Focuses on
approval and agreement on the draft report. Changes may be made.
Management Response Response from the area-owners (within 30 days).
Final Report Along with reply from the area-owner, Audit submits the report to
Heads/CEO/Audit Committee.
Follow up After six to twelve months a follow-up is done.
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Understanding the Fundamentals
Who may conduct an Audit
Internal Auditors:
Internally Trained staff who understands the process.
External Auditors:
An external agency (organization) auditing another.
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Understanding the Fundamentals
Internal Audit:
Reasons:
Checking the value-addition (in our case – HR’s) to the
organization.
Conformance to Procedures.
Effectiveness processes and systems.
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Understanding the Fundamentals
External Audit:
Reasons:
Check compliance to key legislation & regulations.
Build customer confidence / employer of choice
To verify certain claims that you may have made.
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Understanding the Fundamentals
Understanding the Mind-set an Audit should have:
(Internal Auditor)
A catalyst (for improvement)
An advisor
A reported of Facts
An internal auditor can be a type of an internal
CONSULTANT for the HR Department
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Understanding the Fundamentals
Understanding the Mind-set an Audit should have:
Attributes of Highly Effective Internal Auditors (as Identified by the Institute of Internal Auditors) are:
i) Integrity
ii) Relationship Building (People Skills)
iii) Partnering (Service Oriented)
iv) Communication
v) Team Work
vi) Diversity
vii) Continuous Learning (Focused)
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Understanding the Fundamentals
What an HR Audit is?
Systematic Review of all HR Procedures / Processes.
It measures that current “performance” level.
It identifies the “way forward” to improve the HR practices
Reveals weaknesses and strengths of the department.
It is a diagnostic tool.
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Understanding the Fundamentals What an HR Audit is?
As per SHRM
An HR audit involves an objective look at the company’s HR policies, practices, procedures and strategies.
To protect the company, establish best practices and identify opportunities for improvement.
An objective review of the company’s “current state” can help you evaluate whether specific practice areas are adequate, legal and/or effective.
The results can provide decision-makers with the information necessary to decide what areas need improvement.
An HR audit can be structured to be either comprehensive or specifically focused, within the constraints of time, budgets and staff.
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Understanding the Fundamentals Types of HR Audit?
Compliance: Focuses on how well the company is complying with current
federal, provincial and local laws and regulations.
Best Practices: Helps the organization maintain or improve a competitive
advantage by comparing its practices with those of companies identified as
having exceptional HR practices.
Strategic: Focuses on the strengths and weaknesses of systems and
processes to determine whether they align with the HR department’s and/or
the company’s strategic plan.
Function-Specific: Focuses on a specific area in the HR function (e.g.,
payroll, performance management, records retention, etc)
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Understanding the Fundamentals Link with Other Audits?
Job Skills Audit
Knowledge Audit
Skills Audit
Gives you an in-sight into the utilization of your organization’s
“Human Capital”
Human Capital: The skills, knowledge, and experience
possessed by an individual or population, viewed in terms of
their value or cost to an organization or country.
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Understanding the Fundamentals
Purpose of HR Audit
The purpose of a Human Resources audit is to assess theeffectiveness of the Human Resources function to ensureregulatory compliance.
To look for potentially serious problems (time bombs)
To find areas needing improvement
To document processes for use in merger, reorganizationor inspection
To address compliance issues
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Understanding the Fundamentals
Scope of HR Audit
Can be conducted in all areas:
Recruitment & Selections,
Operations,
Compensation & Benefits,
Training & Development,
Performance Management or
Employee Relations & Industrial Relations.
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Understanding the Fundamentals
Human Resource Audit Cycle
Pre-Audit Decisions
Audit Planning
Conducting
The Audit
Data Compilation
& Analysis
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Understanding the Fundamentals
Ultimate Goal or Benefit of HR Audit:
To gain valuable information regarding current HR practices
and procedures & determine readiness to meet current and
projected organizational needs.
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Planning
to Implement
Module - II
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Planning to Implement
How often should an HR Audit be conducted:
You may decide based on your needs:
On-Going Review (Legally Active Areas)
Annual Basis
Every 6 months
Occasionally for certain “important” areas.
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Planning to Implement
Preparing for HRA
You need to decide on the following:
Who should conduct the audit:
Internal HR Staff
External Auditor
Internal Auditor
Cross Functional Team
Company Lawyer (especially for Legal Compliance)
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Planning to Implement
Preparing for HRA
You need to decide on the following:
Which areas will be audited and for what period:
Identify the specific area / sub-function. (Scope)
Identify the time period for which records will be audited
Identify the Contact Person – To resolve communication needs.
Last but not the least:
You may like to have a formal “Terms of Reference” signed.
TOR: the scope and limitations of an activity or area ofknowledge
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Planning to Implement
Preparing for HRA
Documents & Checklists to be reviewed:
Policies and Procedures (SOPs)
Records
Previous Audit Reports
Training Records
Personnel Records / Staff Files
Accounting Records
Disciplinary Records
ANYTHING that can prove that ongoing systems areoperating as intended and as required!
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Implementing
to Conduct
Module - III
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Implementing to Conduct
Taking HRTemperature
Before you ask someone (from the concern to-be-auditedArea) about their work. It is a good idea to have a candidmeeting.
This meeting should be focused around “breaking the ice”and letting the individual know that you are there NOTto catch their mistakes but you are there to correctthem.
You also need to show confidence in them that they arequalified for the job. Its just that your purpose is to helpthem improve.
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Implementing to Conduct Designing a Questionnaire
Identify the “risks” or what can go wrong with the function.
The more regulated the industry the more “detailed” your checklist needs to be.
Make sure you check validity of licenses and permits.
In cases of food related items, compliance with “expiry” dates is a must.
In factories safety is of prime importance.
Always address the “Information Security” perspective of the record-keeping & access.
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Implementing to Conduct
Steps in Conducting an HR Audit
Collect Information
Evaluate
Analyze
Correction Plan
All the steps need to be time-bound!
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Implementing to Conduct
Collecting Information
Keep the evidence grid (we studied) in mind.
All data collected should be acquired through the “focal”
point.
Always keep one contact person.
Keep your eyes and ears open for any observations.
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Implementing to Conduct
Evaluate
Give meanings / Try to make sense of the data given.
Note your disagreements.
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Implementing to Conduct
Analyze
Compare Against standards, SOPs, Best practice or Law.
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Implementing to Conduct
Correction Plan
Determine which categories need the “most” attention.
Have a Buy-in from concerned person / team.
Develop exact actions to be taken (time bound)
Have responsible persons identified to carry-out the action
plan.
Control, Monitor and Follow-up to verify.
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HR Functions to
Audit
Module - IV
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HR Functions to Audit
Which areas may be addressed:
HR Strategic Management
Workforce Planning / Budgeting & Selection
Training & Development
Labor Relations
Safety & Security
HRIS
HR Facilities & Equipments
HR Staff – JDs.
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HR Functions to Audit
Contd…
Communications
Technology
Termination
Legal Issues
Performance Management
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HR Functions to Audit
Recruitment & Selection
Compensation & Benefits
Orientation & Placement
Training & Development
Performance Management
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HR Functions to Audit
Recruitment & Selection
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HR Functions to Audit
Recruitment & Selection
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HR Functions to Audit
Compensation & Benefits
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HR Functions to Audit
Compensation & Benefits
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HR Functions to Audit
Orientation & Placement
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HR Functions to Audit
Orientation & Placement
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HR Functions to Audit
Training & Development
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HR Functions to Audit
Training & Development
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HR Functions to Audit
Performance Management
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HR Functions to Audit
Performance Management
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Analyze
to Recommend
Module - V
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Analyze to Recommend
Analyze Data
Data needs to be clear and error free
Evaluate if the right questions have been asked or not?
Check if all records and the overall record keeping process was inplace or not?
Note down any observations you may have.
Compare the results with standards or SOPs.
Make sure your recommendations are realistic
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Analyze to Recommend
Identifying Areas of Improvement
Determine the Areas that need immediate attention
For each area design an improvement plan with timeline andbudgets
Have the plan reviewed by the process owners
Decide on the interval of time and implementation & measureplan.
Design a follow-up mechanism.
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Analyze to Recommend
Preparing Recommendations
Results are best provided in the form of Charts or Heat Maps
(Refer to sample heat map)
Don’t forget the classic rule of keeping it simple for Senior
Management to understand
Include all and any resources required
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Reporting
to Present
Module - VI
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Reporting to Present
Documenting the findings
Make sure you obtain copies of all records / documents you reviewed
You must know the source of the document (from whom youreceived)
Ideally you should have a single point of contact and all details mustbe received through this point of contact only
Keep your checklist / note book handy
Make notes of any observations you may have
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Reporting to Present
Presenting the recommendations
Rather than TEXT, graphical representation of data is more
effective.
Have the recommendations run by the middle management (if
appropriate).
The report should be concise and interesting.
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Reporting to Present
Preparing an HRA Report
The report should have the following (IIA declared)
traits
Accurate
Constructive
Objective
Complete
Clear
Timely
Concise
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Reporting to Present
Preparing an HRA Report
Plan the Report (decide the basic sections that need
to be included)
Draft the Report (type out the text and check the
same)
Revise the Report (before submission)
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Reporting to Present
Preparing an HRA Report
Auditor (Writer) VS Reader Mindset
Auditor:
I want to show you lots of data!
Accuracy
Reasoning & Graphs
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Reporting to Present
Preparing an HRA Report
Auditor (Writer) VS Reader Mindset
Reader
I want a report that is easy to read & understand.
Accurate, Brief and to the point.
Bottom line first and details later.
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New Trends in HR
Human Resource Management is now becoming Human
Capital Management.
Human Assets are being viewed as good as Financial
Assets.
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This course has been designed by Muaz Popatia [email protected] www.facebook.com/muaz.popatia.trainer
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