What You Don’t Know Can Hurt You: The Value of an HR Process Audit

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What You Dont Know Can Hurt You: The Value of an HR Process Audit. Presented by Kathleen Kappy Lundquist, Ph.D., and Toni S. Locklear , Ph.D. About APT Metrics. Global Talent Management Solutions Provider Comprised of: Ph.D. industrial/organizational psychologists - PowerPoint PPT Presentation


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What You Dont KnowCan Hurt You:The Value of an HR Process AuditPresented by Kathleen Kappy Lundquist, Ph.D.,and Toni S. Locklear, Ph.D. APTMetrics, Inc.#

About APTMetricsGlobal Talent Management Solutions Provider Comprised of:Ph.D. industrial/organizational psychologistsHuman resource consultants Information technology specialistsWhat Sets APTMetrics Apart:Professional integrityEvidence-based approachTechnical expertiseCustomer serviceDiversity Supplier Certified as a women-owned business by WBENCCertified as a women-owned small business by the US SBA

Global Strategies for Talent Management.#111APTMetrics, Inc. is the only human resource consultancy that builds world-class talent solutions and is nationally recognized for its employment litigation support services. This combination ensures that the talent management programs we deliver to our clients are fair, valid and legally defensible.

Our Areas of Expertise

Leader AssessmentEmployee SelectionLitigation SupportDiversity Strategy & MeasurementJob AnalysisCompetency ModelingPerformance ManagementStaffing for Mergers & AcquisitionsOrganizational SurveysPublic Sector Services Global Strategies for Talent Management.#222Our Web-Based Solutions Platform #3APTMetrics U.S. Offices

#Why conduct an HR Process Audit?Can this information be protected legally? How?How should an HR process audit be conducted?What support is needed to make the audit and follow-on changes stick?HR Process AuditsThe Whys:

The Hows:

The Wherefores:#The Presenters

Kathleen LundquistToni LocklearPresident & CEO, APTMetricsOrganizational Psychologist30+ Years ExperienceExpert WitnessCourt-Appointed SettlementExpert/MonitorManaging Director,APTMetricsOrganizationalPsychologist20+ Years ExperienceExpert Witness#Why are you most interested in HR process audits?a. Collecting general informationb. Preventing litigationc. Continuous improvementd. OtherQuestion:#Why Conduct an HR Process Audit?RISK-OPPORTUNITY CONTINUUMBASIC COMPLIANCE LEVERAGING FOR SUCCESS To review legal compliance To utilize human resources effectively To assure a well-managed HR function prepared to meet challenges#Basic Compliance: Identifying and Mitigating RisksRISK-OPPORTUNITY CONTINUUM Are there specific known risks? Are you prepared to address them swiftly and effectively? Are you prepared to learn from an audit in order to become a strategic partner in support of your organizations mission and objectives?#Recent Class Action SettlementsSettlementsInjunctive ReliefCoca-Cola $192mmNovartis $175mmBoeing $79mmMorgan Stanley $54mmAbercrombie $42mmEastman Kodak $21mm

Modify HR Practices and Procedures Monitor HR Practices Mandatory Training of Supervisors and Employees Compensation for class members Attorneys Fees and costs for class counsel#Performance AppraisalCompensation/FLSASelection/PromotionSuccession PlanningGlass CeilingGlass WallsAccess to DevelopmentFocus of the Class Actions

Fair procedures and treatment can make up for negative outcomes.# The regular check-up The extraordinary event, e.g., acquisition or restructuring The launch of an enterprise-wide initiative, e.g., diversity initiativeLeveraging for SuccessRISK-OPPORTUNITY CONTINUUM# Any audit or self-assessment will identify problems and challenges Until addressed, such problems pose risks If identified and never addressed, such problems pose bigger risksHoweverProtecting the Confidentiality of the Audit Results# Attorney-client privilege Self-critical analysis privilege Work product privilegeProtecting the Confidentiality of the Audit Results#Protection was necessary to defend against litigationMade to counsel acting as counselAt the direction of corporate supervisorsWhile the employees were aware of the legal natureand purpose of the communicationsConcerning matters within the scope of the employees dutiesTo permit the corporation to obtain legal advice with the expectation that the material would remain confidentialWith the corporation in fact keeping the material confidentialAttorney-Client Privilege:Specific Requirements#The privilege extends to communications by a client to non-lawyer agents of an attorney when the purpose is to assist the attorney in rendering legal advice to the client and is made in confidenceConsulting firm should be retained by an attorneyOutside counsel preferableRetained for the specific purpose of assisting in rendering legal advice vs. general business adviceAttorney-Client Privilege andNon-lawyer Consultants#Lawyer must be acting as a lawyerWhere both business and legal advice, the legal advice must predominateDont give up the privilege unintentionally!Protecting the PrivilegeImportant Considerations#What is your biggest concern about conducting anHR process audit?

Use of the information against you in litigation.Concern that management will not take corrective steps.The cost of auditing.I have no concerns.Question:# Examine the rigor and structure underlying HR processes, especially where there is managerial discretionScope of the HR Process Audit Look for similarities and differences Determine the actual nature of Corporate involvement in operating units HR systems advisory or directive#How the processes differ across various functions or departments within the operating company(e.g., Sales)How the processes differ for different levels of employees (e.g., Officers vs. Managers) within the operating companySignificant distinctions in policies or practices from one facility to the next within the same operating companyDifferences to Investigate inHR Processes#Performance ManagementStaffing; i.e., Selection/PromotionCompensationSuccession PlanningWhat HR Processes Should be Audited?#Examine DocumentsInterview Key StakeholdersAnalyze Data (e.g., analyze performance ratings foradverse impact)HR Process Audit Methodology#Basic Audit QuestionsSystemWhat system is in place?TrainingWhat training was provided to implement this system?Is there refresher training? Is the training mandatory?LinkageIs the process linked to other HR processes? How?ValidityHas any validity information been collected to ensure job relatedness?What is the quality of this evidence?OversightWhat managerial oversight is part of the process?Is there ongoing monitoring?Policy VarianceDoes the actual use of the system differ from the stated policy? How?Facilitators & ConstraintsWhat are your biggest concerns about the use of the system?What are the key facilitators and constraints of the system?#Where HR processes are inconsistent or exceptions are allowed:Examine the rationale for inconsistenciesConsider the uniqueness of the operating unit and the job demandsDetermine if process variation is tied to job-related or business-related factorsUnderstanding Exceptions in HR Processes#What Makes HR Processes Defensible?

ValidityImplementation Based on job analysis Standardized Consistent Validated Training Ongoing monitoring Appeals process Communication#Validity: Make HR Processes Job RelatedExisting HR Processes may need to be adjusted as a result of work analysis outcomes.#Does your organization have sufficient workanalysis information to defend the validity of yourHR processes? A. YesB. NoQuestion:#Validity: Using the Work Analysis DataContent for Structured InterviewsUniform Standards for PromotionsPerformance Evaluation ContentTechnical Training ContentRaw Data for Restructuring JobsGrouping Jobs for Market PayJobJobJobWORK ANALYSISTasks PerformedScope and Effect of WorkTechnical Skills RequiredCompetencies RequiredEducation RequiredExperience Needed

Automated Content for Job Posting# Evaluate competencies that are critical to job success Determine evaluation standards in advance Reinforce the use of safeguards to protect against excessive discretion and ensure good decisions Use of review processes within systems/checks and balances Training, education, communications, written guidelines, etc. about processes Procedural controls (e.g., exception reports) Rules/procedures followed in response to policy exceptions Appeals processes Emphasize employees involvement in the HR process ( e.g., mutual goal setting, self-assessment )Validity: Structuring Subjective Decision-Making#Standardized and uniform process for all within a job groupTraining of ratersEmployee self ratingsUse of multiple, diverse andunbiased ratersIndependent reviews of ratings by next management levelFormally communicated in writing to employeesIn Performance ManagementPlaintiffs and Courts Look forTimely feedback, includingnotification of deficienciesand opportunity to correctRating of managers onexecution of performancemanagement, diversityresponsibilitiesFormal appeals processMonitoring of system fordiscriminatory practicesor abuses#Rater by Ratee Interactions

Mean RatingAfrican AmericanWhite2.52.452.42.352. Nature of Content Number and type of factors considered in determining an employees performance rating Written narrative summaries versus rating scales How the overall performance rating was determined Number of points on the performance rating scale Process Source of information for rating Procedural controls such as supervisory ratings with next-level review versus calibration meetingsDifferences Specific to PerformanceManagement Systems#How is the overall rating determined?Displaying Differences

SALES NON-SALESNo InformationAvailable36%Weighted Averageof Ratings29%Qualitatively Derived35%No InformationAvailable20%Varies bySupervisor7%Qualitatively Derived60%Weighted Averageof Ratings13%#ImplementationValidityRecruitingWhat efforts are made to recruit high-quality, diverse talent into positions?NAPre-ScreeningAre all applicants invited to take an assessment as part of the selection/ hiring process? If not, can you explain how one determines who is invited to complete one of the assessments?Is the validity of the tool/ processconsistent with the requirementsof legal and professionalstandards: Uniform Guidelines (1978) APA Standards (1985, 1999) SIOP Principles (1987, 2003)AssessmentHow consistently are the assessments used during the hiring process? Under what circumstances is the tool used/not used?HiringAssuming that two or more candidates are equally qualified based on the results of the assessment, what criteria are used to identify the person who will be hired?Sample Staffing Audit Questions# Staffing Differences in accessibility of job postings to interested parties Level of positions routinely posted Under what circumstances vacancies were posted Different selection processes Practices related to consideration of diverse candidates as part of the selection processDifferences Specific to Staffing Processes# Factors considered when: Setting initial compensation decisions Making merit increase decisions Making bonus decisions Making stock option decisions Internal vs. external frame of reference Different systems by job level and type Process such as constructing review groups, calibrationDifferences Specific to Compensation Processes# Rating process used e.g., supervisor ratings with next level review versus calibration ratings Criteria used to identify high-potential employees Factors considered in making succession planning ratings Level of incumbents included in the Succession Planning processDifferences Specific toSuccession Planning Processes# Training and Retraining Ongoing Monitoring Appeals CommunicationThe Wherefores: Support forthe HR Process Changes# Ensure consistency Observe performance Coach for Improvement Increase accuracy and decrease bias Maintain confidentialityTrain Managers to

Training and retraining, based on quality data (regularlymonitored) ensures ongoing effectiveness.# Need a technology infrastructure that tracks information electronically and integrates information from different internal IT systems Track and monitor real-time data on: Hiring rates Training completion Performance ratings Analyze potential adverse impact of key decisions such as performance ratings, compensation, and downsizing selections -- before managers make critical decisionsOngoing Monitoring:Data Collection and Real-time Analysis# Conduct consensus rating review meetings among peer raters Provide targeted training to individual managers based on audits and ongoing statistical monitoring Link evaluation, compensation and promotion of managers to satisfactory execution of HR process responsibilitiesOngoing Monitoring:Hold Managers Accountable# Beyond Open Door Monitor Results of Appeals Credibility of ProcessProvide Appeal Process# Provide transparency in the assessment process Communicate competencies/criteria against which people will be assessed Communicate the connection between HR processes (e.g., assessments and the reward structure) Permit and encourage a climate of two-way communication Promote organizations successes in recognizing and increasing diversity, fairness, objectivity, etc.Communicate With Employees#Survey of Diversity Climate


1. Take APTMetrics free, confidential online HR Process Audit survey


How Do I Get Started?#2. Act on your self-audit survey results

3. Proactively implement fixes that make your systems more efficient, valid and legally defensibleHow Do I Get Started?

#If you dont know where you are going, chances are you will end up somewhere else.- Yogi Berra#

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203.655.7779 TalentSolutions@APTMetrics.comwww.APTMetrics.com

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