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Is it time for an HR audit?

Thanks to coronavirus, the roles and dynamics of virtually every corporate function have shifted during the past year. HR is no exception.

In what has arguably been a mere acceleration of an inevitable evolution, HR has assumed an elevated status during the pandemic, charged with helping the organisation to innovate and strategise its way through the unknown. This is undoubtedly a positive step in the HR director’s pursuit of that elusive ‘seat at the table’.

That said, with firefighting being the main priority (getting to grips with furlough, maintaining health and wellbeing through homeworking, and now having to navigate the unchartered waters of vaccination), there are a number of core procedures that may have fallen by the wayside this past year. As such, an HR audit may be necessary in order to identify any areas where you may fall short of legal requirements, assess how you measure up against your competitors in terms of best practice, and identify opportunities for improvement.

How is an HR audit conducted?

By their very nature, audits are intended to provide a broad, detailed scope as to whether practices are adequate, legal, effective and efficient, and must therefore span each and every key area. On this basis, the first port of call must be to determine what type of audit is needed and which risk areas to audit within that type.

Broadly speaking, there are four core types of HR audit:

  • Compliance – ensuring that all processes and practices are in accordance with relevant laws and regulations (in HR, this is most likely to revolve around employment law and health and safety). In regards to employment law, not only are there annual changes to keep on top of such as increases to statutory rates of pay, but new case law is emerging all the time, so it’s important that this is reflected in the way you manage people.
  • Strategic – identifying the strengths and weaknesses of each process to determine the extent to which they track with the organisation’s overall goals.
  • Best practices – comparing processes with that of other organisations to ensure you maintain a competitive advantage.
  • Function-specific – scrutinising particular areas within the HR function, such as recruitment or payroll.

The scope of which risk areas to audit, however, can be far more granular, particularly in larger organisations. Some examples of this include:

  • Inadequate documentation and records
  • Inadequate assessment of particular metrics (such as employee happiness, engagement, wellbeing, etc.)
  • Prohibited attendance policies
  • Inadequate training procedures

The key points here are far more difficult to pinpoint from an objective standpoint, as specific risk areas are bound to vary across different organisations. Thus, it is crucial that from the outset, auditors work to determine the key weaknesses and vulnerabilities within the HR department, and use this analysis to inform the scope of the process.

Once this stage is complete, the audit questionnaire can be composed, and the data can be collected. This, however, is just the beginning. When it comes to the broader impact on the organisation (in both the short and long term), the process of benchmarking and providing feedback can begin. From here, the organisation can develop a comprehensive action plan to correct (or further bolster) any particular areas within the HR function, and begin tracking progress as time goes on.

This, inevitably, is where the holistic significance of the audit process comes to light.

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Why is an HR audit important?

Whilst HR audit is, strictly speaking, a bureaucratic formality, in many ways it is much more. From a more progressive standpoint, it’s a conduit for HR to improve and streamline its processes and practices in order to create a more functional, equitable, and forward-thinking workplace.

As many things in HR do, this will spark a chain reaction of better practices, happier and more productive staff, and ultimately greater revenue for the organisation.

But aside from this, there are of course some more immediate, tangible benefits – most notably reduced legal risk. In a world where employees are more aware of their rights and can bring Employment Tribunal claims at no cost to themselves, it pays to be proactive. An HR audit can help to protect your organisation by enabling you to take a thorough and systematic look at your current processes and exposing any shortfalls, gaps, or unlawful or outdated practices. It can also help you to diagnose issues before they escalate into bigger problems.

Needless to say, HR sits at the heart of this. From settling individual disputes, to maintaining a safe working environment, to ensuring day-to-day practices are compliant, the HR function is on the front line of safeguarding against legal (and thus, commercial) damage to the organisation. With this in mind, the need for a thorough and effective audit process is clear.

What’s more, with the added context of COVID-19, all of these issues become magnified. With a recession looming, it’s imperative that organisations avoid litigation for fear of further economic struggle. And with a return to the workplace imminent for many (and therefore, another major pivot in the business world), it has never been more pertinent to ensure that HR processes are as refined and focused as possible.

Strengthen your HR function with support from Ellis Whittam

An HR audit is an intensive exercise. If you don’t have the time or resources to undertake this task in house, we can assign seasoned HR Consultants to conduct a thorough, unbiased examination and evaluation that will provide confidence, clarity and reassurance.

If you have a specific challenge, our Employment Law and HR specialists can support you with everything from staying up to date with legal developments, reviewing your contractual documentation and delivering expert training to your team. For more information, call us on 0345 226 8393 or request your free consultation using the button below.

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