hr21: conducting a successful hr audit presented by joy...
TRANSCRIPT
Human Resources Conference for Legal Professionals
HR21: Conducting a Successful HR
Audit
Presented by
Joy Duce, SPHR
10/6/2017
The handouts and presentations attached
are copyright and trademark protected and
provided for individual use only.
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Conducting a Successful HR Audit
Joy Duce, SPHR
Partner-in-Charge
Sikich HR Consulting
Learning Objectives• Why conducting an HR audit is a good practice
• Different kinds of HR audits
• The audit process
• What to include in your audit
Overall goal is to ensure compliance and increase effectiveness
of your HR policies and procedures
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Why Conduct an HR Audit?
What Keeps You Awake at Night?
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Increased EEOC Claims
External and Internal Forces• Sarbanes-Oxley requires effective internal financial controls
• Securities and Exchange commission Guidelines require management to “…exercise reasonable management oversight.”
• The U.S. Federal Sentencing Guidelines require that management demonstrate that it took reasonable steps to engender an organizational culture of compliance and to “monitor and audit” compliance activities, behaviors and results
• Governmental agencies (EEOC, NLRB, DOL, etc.) are attacking systemic noncompliance.
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Importance of Human Capital
Human capital is becoming the single most importance factor in an organizations…a source of innovation and a driver of business success
• Compliance
• Productivity
• Sustainability, and
• Profitability
The HR Audit
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What is an HR Audit?• Objective and systematic evaluation that provides:
• Compliance and governance requirements are being met
• Business and talent management objectives are being
• Human resources management risks and fully identified, assessed,
and managed
• The organization’s human capital adds value
Benefits of the HR Audit• Compliance regulation and/or company policies
• Ensuring alignment of HR management
• Assessing the outcomes
• Establishing an “early warning system”
• Exploring effective utilization of human resources
• Streamline work process
• Measure continuous improvement
• Maintaining or enhancing the organization’s reputation in a community
• Instill a sense of confidence in the human resources
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Types of Audits• Compliance
• Focuses on how well the company is complying with current federal, state and local laws and regulations
• Best Practices• Helps the organization maintain or improve a competitive advantage
by comparing its practice with those of companies identified as having exceptional HR practices
• Strategic• Focuses on 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 (i.e. – payroll,
performance management, record retention, etc.)
When To Audit• Annual Spring Cleaning
• Merger or Acquisition
• Major regulations or legal changes
• Certain employment thresholds
• Business growth
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When to Audit
• New facility opening in another state or country
• Employee morale, high turnover, attendance or excessive discipline
• Prepare for potential government audit or litigation
• Taking over the HR function
Conducting an HR Audit
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Scope of the Audit• Planning Stage
• Who will conduct audit?
• What do you want to audit?
• What audit tools will you use?
• How will the process be rolled out?
• How will results get reported?
• Who will get the results?
Gaining Buy-In Stage• Explain the reason for it
• To protect them and the organization
• To help them understand policies, procedures and laws
• To gain a better understanding of their department
• To help them set best practice procedures
• To avoid costly and time consuming litigation
• Show managers the relationship of key indicators to the organization’s
goals
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What to Include in Your Audit• The Foundation
• Managers and Supervisors
• Processes
• Stakeholder Input
• Workforce Analysis and HR Metrics
Review Your Foundation• Recruitment and Selection
• Training and Development
• Compensation
• Performance Management Process
• Recordkeeping and Reporting
• Leave Administration
• Workplace Practices
• Benefits
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Evaluate Managers…• How to handle complaints of harassment
• Difference between exempt and non-exempt
• Giving employment references
• FMLA and other leaves of absence
• Consistency in applying policies and procedures
• Sick and vacation tracking
• Employee files
Review HR Processes
• Forms, policies, letters, approvals, workflow, etc.
• On-Boarding
• Processing payroll
• Administration of benefits
• Termination of an Employee
• Leave administration/Attendance Tracking
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Survey Your Internal Customers• What does management see as the department’s priorities?
• What do employees see as the department’s priorities?
• Is HR effectively meeting the needs?
• Recruitment
• Training and Development
• Employee Relations
• Open Door Policy
• Communications
• Salary Administration
• Benefits Administration
• Policies and Procedures
• Performance vs. Importance
Workforce Analysis and HR Metrics
• Diversity
• Employee Relations
• Job satisfaction
• Legal complaints or grievances
• Wage and salary market indicators
• Health Care Cots per Employee
• Incentives / Perks / Total Rewards
• Impact of compensation programs
• Cost per Hire
• Time to Fill
• Absence Rate
• Turnover Rate
• HR Expense Factor
• Training Expenses
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Develop the Audit Questionnaire• Partner with Sikich
• SHRM
• Department of Labor
• Equal Employment Opportunity Commission
• Equal Employment Advisory Council
Gather and Analyze Information•Audit Tools
• Interviews• Surveys / Test• Focus Groups• Document Review• File Reviews• Questionnaires• Samplings• Reports
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Findings and Recommendations• Executive Summary
• Assign risk level• Written report• State the facts• Avoid opinions• Provide back up
where needed• Departments involved
Findings and Recommendations•Action Plan
• Recommend one or more strategies for improvement
• Identify action items and to whom each is assigned• Establish realistic priorities• Set time frame for follow-up
Keep in mind resistance to change, but don’t be satisfied with
adequacy—strive for continuous improvement.
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Pitfalls to Auditing HR
• Lack of management commitment
• Choosing too great a scope
• Underestimating the time it will take
• “No news is good news” style of management … we do not want to “stir up trouble”
• Long tenure in the position
As with accounting audits, the findings and recommendations from HR audits are only as good as the information provided. If you are not entirely honest and objective, no purpose is served.
A Word of Caution• HR audit reports are increasingly being used to report audit
findings to wider audience• Investors• Major stockholders• Venture capitalists• Governmental agencies• Civil rights groups• Plaintiff attorneys
HR audits findings include proprietary and confidential
information and in many cases produce discoverable information
.
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Closing CommentsThe Optimal Outcome is to take HR to the next level
Embrace a well-executed HR audit as an important tool for creating, updating and executing HR strategies and best practices that are linked to and play a vital role in the company's strategic planning and execution
Questions or Comments?
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Joy Duce, SPHR
Partner-in-Charge
Human Resources Consulting Services
Sikich LLP
630.566.8454
Your opinion matters!
Please take a moment now to evaluate this session.
Thank You!
Human Resources Audit Guidelines
AUDIT OVERVIEW/INTRODUCTION
• Objectives/Concerns
• Introduction of the process to the appropriate leadership
l. RECRUITMENT & SELECTION
• Approval Process for Job Openings
• Employment Ads/ EEO Tagline
• The Employment of Application Form
• Applicant Policy
• Interview Process and Documentation
• Pre-Employment Examinations and Testing (Physical, Drug, etc.)
• Pre-Employment Reference Checks
• Pre-Employment Background Checks
• Offer/Regret Letters
• Employment of Minors
II. EMPLOYMENT ACTIVITIES
• Job Descriptions (compliance with Americans With Disabilities Act)
• On-Boarding Process
• Employee Handbook
• Complaint/Problem-Solving Procedure
• Disciplinary Policy and Process
• Anti-Harassment & Non-Discrimination Policy, Procedures and Training
• Exit Process
III. RECORDKEEPING
• New Hire Reporting
• Personnel, Confidential and Medical Records
• Controls to Limit Access to Employee Records
• Mandatory State and Federal Posters
• Form I-9 Procedures
• Recording and Maintaining Work-Related Incidents
• Affirmation Action Requirements
• EEO-1 Report
IV. BENEFITS AND LEAVES OF ABSENCE
• Group Insurance Benefits
• Documentation of Voluntary Refusal of Benefits
• Current and Available Summary Plan Descriptions
• COBRA Administration
• Family and Medical Leave Act (FMLA) Policy
• Family and Medical Leave Act (FMLA) Forms
• Family and Medical Leave Act (FMLA) Procedures
• ACA Compliance
V. WAGE & HOUR REQUIREMENTS
• Fair Labor Standards Act Exemption Status
• Equal Pay
• Payroll Deductions
• Employee Timekeeping Requirements
• Temporary Employees
• Compensatory Time
• Overtime Pay
• Paid Travel Time and Training Time
• Jobs Are Paid At Minimum Wage
• Final Pay
• Performance Management and Review Procedures
ADDITIONAL OVERVIEW The Human Resources audit is designed to highlight immediate concerns your organization may have meeting its obligations under basic federal and state employment laws. This audit process is designed to focus on basic compliance with federal and state laws and essential HR requirements. This will include mandatory government forms and filings, record keeping and retention requirements, and the administration of statutory programs, including COBRA and FMLA, as relevant. Upon completion of the audit, you should draft a full audit report that will assist in self-correcting issues that are surfaced during the audit. This audit report will help you identify the degree to which your organization is meeting its obligations under basic federal and state employment laws. It will lay the groundwork and provide a roadmap for the HR function going forward.