Need and Purpose of Human Resource Auditing
The commonly understood audits are the established and regular accounting audits carried out in accordance with specific statutory regulations. However, in the case of human resource audits, there is no legal obligation, but enlightened managements have voluntarily accepted its usefulness depending upon the circumstances. The following circumstances may be cited as examples:
felt concern by top management,
compulsions of the external forces necessitating a situational audit,
business changing significantly influenced by international business decisions affecting human resource management, and
an urge on the part of human resource management professionals towards advancement of the practices and systems.
It is necessary to take a look at these and other questions. Human Resource audit is highly useful for the purpose
Does the organisation regularly forecast the supply of and demand for employees in various categories?
Do job analyses exist for all positions in the organisation?
Are all potential sources of recruitment identified and evaluated?
Are measurable selection criteria developed and used while filling up jobs?
Do effective training and development programmes exist?
Is there a performance evaluation system that helps assess past and potential performance?
Is the remuneration programme designed to motivate employees?
Is the plant unionised?
Does a grievance procedure exist?
Does the organisation have high quality of work life?
Does the HRM practice contribute to organisational effectiveness?
Does the management underestimate the capacity of HRM to contribute to organizational effectiveness?
Approaches to Human Resources Audit
The following approaches are adopted for purpose of evaluation:
Comparative approach
Outside authority approach
Statistical approach
Compliance approach
Management by objectives (MBO) approach
Comparative approach
In this, the auditors identify Competitor Company as the model. The results of their organization are compared with that Company/ industry.
Outside authority approach
In this, the auditors use standards set by an outside consultant as benchmark for comparison of own results.
Statistical approach
In this, Statistical measures are performance is developed considering the company’s existing information.
Compliance approach
In this, auditors review past actions to calculate whether those activities comply with legal requirements and industry policies and procedures.
Management by objectives (MBO) approach
This approach creates specific goals, against which performance can be measured, to arrive at final decision about organization’s actual performance with the set objectives.