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What is an HR Health Check?

An HR health check or audit is a process of examining the organisation’s policies, procedures, documentation, systems, and practices with respect to an organisation’s HR governance; ensure compliance with employment law; eliminate liabilities, implement best practices and educate managers.

Purpose – is to reveal the strengths and weaknesses in the organisation’s human resources systems and any issues needing resolution – strategic, operational, administrative and resource optimization. This helps build a focus and overall alignment with the short and long term goals and objectives of the organisation.


Why is it Necessary?

HR needs to create models and processes for achieving effectiveness and competitiveness in view of Globalization

  • Growth of the organisation by increasing customer OR through acquisition and mergers
  • Building organisational capabilities by reviewing existing capabilities and aligning new capabilities with business strategies
  • Managing change by learning new skills and attitudes and unlearning a few
  • Making Technology viable by finding ways to make technology successful
  • Attracting and Retaining the best industry talent
  • Transforming the organisation by creating fundamental and lasting changes

HR Audit lays the foundation for all of the HR & Organisation Development strategies for implementation for sustainable growth and competitive advantage.


What is the Scope of Audit?

  • Corporate Strategy: Analyzing SWOT of the industry and gain a competitive advantage.
  • HR Function: HR Plans, Job Analysis Information, Compensation Management, Staffing and Development, Organisation Control, and Evaluation.
  • Managerial Compliance: Reviews how well managers comply with human resource policies and procedures, the audit uncovers there errors for corrective action.
  • HR Climate: To learn how well employee needs are met and the working culture.

Governing Principles

  1. Need for the independence of auditors
  2. Laying down the purpose and objectives
  3. Empanel qualified audit practitioners for the job
  4. Sign-off on a confidentiality agreement with auditors
  5. Adhere to pre-set standards and scope for the audit
  6. Agree on a communication strategy to onboard all relevant stakeholders
  7. Establish timelines for the process shared
  8. Agree on a reporting template

Methodology

1. Interviews

    • Individual and Group
    • Top Management
    • Key Internal Stakeholders
    • People Managers
    • HR & Compliance Teams
    • Task Force Leaders

2. Analysis of documentation, data and employee records

3. Survey of the employees (including exited staff)

4. Review of people-centric metrics- recruitment data, diversity data, attrition data, productivity loss due to conflicts/ absenteeism, learning tracker numbers, etc

5. Conduct the diagnostic on the management system, policies, and procedures

6. Assessment of the strengths and weaknesses/ lapses

7. Benchmarking against progressive practices

8. Gather evidence and verify findings

9. Validate audit findings and exceptions

10. Present Report with findings, inferences, recommendations, and improvement goals


Frequency

  • For organisations with a headcount less than 50, HR audit once a year or 18 months
  • For organisations with a headcount 100- 300, an HR audit once a year is mandatory
  • For organisations with a headcount 300+ and high growth rate, the audit must be conducted once every 6 months

Contributor: Susmita Sen, Head of HR Advisory


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