HR Audit, Records, Research, HRIS

HR Audit, Records, Research, Human Resource Information System

Human Resources Audit: It is a systematic formal process to review or examine the current human resources policies, procedures, documentation and systems to identify needs for improvement and enhancement of the HR function as well as to assess compliance with ever-changing rules and regulations.

The American Accounting Association’s Committee on Human Resource Accounting (1973) has defined Human Resource Accounting as “the process of identifying and measuring data about human resources and communicating this information to interested parties”.

An HR audit also goes beyond looking at the hiring process into areas like employee retention, budgeting, training, employee compensation, employee relations and virtually any process or practice within the company that affects its people. Human Resource audits may accomplish a variety of objectives, such as ensuring legal compliance; helping maintain or improve a competitive advantage; establishing efficient documentation and technology practices; and identifying strengths and weaknesses in training, communications and other employment practices.

It involves a systematic analysis and evaluation of the efficiency and effectiveness of the HRM function and its contribution to the achievement of the organisations strategic business objectives.

It is an activity used to evaluate HR practices and performance. It investigates about HR functions.

A Human Resources Audit is a comprehensive method (or means) to review current human resources policies, procedures, documentation and systems to identify needs for improvement and enhancement of the HR function as well as to ensure compliance with ever-changing rules and regulations and establish the best practices. An Audit involves systematically reviewing all aspects of human resources, usually in a checklist fashion.

The purpose of an HR Audit is to recognize strengths and identify any needs for improvement in the human resources function. A properly executed audit will reveal problem areas and provide recommendations and suggestions for the remedy of these problems. Some of the reasons to conduct such a review include:

  • Ensuring the effective utilization of the organization’s human resources
  • Reviewing compliance concerns with a myriad of administrative regulations
  • Instilling a sense of confidence in management and the human resources function
  • Maintaining or enhancing the organization’s and the department’s reputation in the community
  • Performing “due diligence” review for shareholders or potential investors/owners
  • Establishing a baseline for future improvement for the function

Other purposes of a HR audit

  • To examine and pinpoint strength and weaknesses related to H.R. areas and Skills and Competencies to enable an organization to achieve its long-term and short-term goals.
  • To increase the effectiveness of the design and implementation of human resource policies, planning and programs. To help human resource planners develop and update employment and program plans.
  • To insure the effective utilization of an organizations human resources.
  • To review compliance with a myriad of administrative regulations.
  • To instill a sense of confidence in management and the human resources function that it is well managed and prepared to meet potential challenges.
  • To maintain or enhance the organizations and the departments reputation in the community.
  • To perform a “due diligence” review for shareholders or potential investors/owners.


Steps in HR Auditing Process

 Step 1: Briefing and orientation: Key staff members meet:

  • To discuss particular issues considered being important
  • To chart out audit procedures
  • To develop plans and program of audit

Step 2: Scanning Material Information:

Scrutiny of all available information pertaining to personnel, personnel handbooks and manuals, guides, appraisal forms, computer capabilities and any other related information.

Step 3: Surveying Employees:

Interview with the key managers, functional executives, top functionaries in the organisation and the employees’ representatives if necessary.

The purpose is to pinpoint issues of concern, present strengths, anticipated needs and managerial views on human resources.

Step 4: Conducting Interviews:

What questions to be asked are developed during scanning of information?

It is better for H.R. Audit if clarity about the key factors of H.R.M. selected for audit and the related questions that need to be examined.

Step 5: Synthesizing:

The data gathered is synthesized to show the current situation, priorities, staff pattern and issues Identified.

Step 6: Reporting:

The results of the audit are discussed with the managers and staff specialists in several rounds. Important issues are identified for inclusion in the formal report.

Audit of Human Resource Function

Areas/ Topics for covered for HR Audit in each HR function

Information :Coverage, source, adequacy and gaps

Forecasting: Methodology, reliability, testability, budgeting, time orientation, technology perspective

Training and development: Need assessment, selection criteria, levels covered and frequency, internal vs external training, quality consciousness, changing needs and climate for self-development

Performance Appraisal  : Validity of appraisal process, benefits and/or draw backs/problems, know-how of appraising, uniformity in process, underlying benchmarks, consistency in ratings, linkages with pay, feedback to employees

Succession Planning:Policy formulation, identifying key positions, availability of successors, matching future needs, responsibility for grooming and developing and handling non/poor performers

Compensation: Appropriateness of policies, company philosophy, adequacy of rewards, nature of job descriptions, flexibility in job evaluation systems, control over costs, rationale of reward system and opportunities for improvement

Methods of HR Audit

Individual interview method:

Top level management and senior managers are interviewed, individually. Union leaders, departmental heads, some strategic clients and informal leaders are also interviewed, individually.

It helps in following:

  1. knowing their thinking about future plans and opportunities available for the company.
  2. knowing about their expectations from the HR audit.
  3. getting sensitive information pertaining to working styles and culture.

Group interview method

Group interviews and discussions with the employees and/or executives of the company. It facilitates collection of information about effectiveness of existing systems. Ideally group of 4 to 8 employees should consist of same or similar hierarchy from cross functional areas.

Workshop method

30 to 300 participants can be asked to gather in a room and divided in small groups. They are asked to work either around systems, subsystems or around different dimensions of HRD and do SWOT analysis. All the groups thereafter give presentations.

The HR auditor compiles the views of all groups, makes own observation, conclusions and prepares a report. The HR auditor announces the audit results before submitting the report to top management.

Questionnaire method:

Feedback about various dimensions of HRD, including the competency base of HRD staff, the styles of line managers, the implementation of various HRD systems, etc are obtained through a detailed questionnaire from individuals or groups.

 Audit of Employee Satisfaction

An Audit of Employee Satisfaction can be done by employee opinion survey which can provide valuable insights to strengthen the organization in the areas where employees feel there are opportunities to improve.

The various areas which are audited for employee satisfaction are as follows:

  • Overall Job Satisfaction
  • Satisfaction with the Work
  • Pay & Benefits Satisfaction
  • Promotions/Career Advancement
  • Supervisory Consideration
  • Internal Communication
  • Personnel Policies
  • Concern for Employees
  • Physical Working Conditions
  • Job Stress

Ethical Issues in HRM

  • Hiring without any discrimination: Selection on any employee should not be based on any one single competency, gender, religion, caste.
  • Appraisal without any biases: Role of HR should never be compromised over the line manager’s decision on appraising any employees.
  • Equal remuneration between genders: Compensation and benefits rendered to employees should be based on a criteria which is applicable to all
  • Managing disciplinary issues: The HR should lay down his/her independent decision rationally before finalizing any disciplinary proceedings.
  • Solving industrial disputes: The HR should never come under any pressure from the union or the management in terms of solving any industrial disputes.
  • Justified suspensions and terminations: Integrity should be placed above any other justifications in case of employee separations.
  • Fair promotions and transfer: : Critical decision making regarding internal mobility should be based on core facts and justified rational
  • Maintaining data privacy of employees: Data integrity is in the hands of HR since they have an access to most confidential data regarding all employees of an organisation


Records refer to the informational documents utilized by an organisation to carry out its functions. There can be conventional record systems through file system or can be modern record management system through soft wares

Importance of record management:

  • To supply information required by the management
  • To identify training needs
  • To use them for succession planning
  • To know validity of employment tests and interviews
  • To take personnel decisions like transfer, promotions etc.
  • To maintain up to date data about everything in the organisation.

Essentials of good record:

  • Objectives for maintenance should be clearly and adequately stated
  • Consistent with requirement
  • Easily available and accessible
  • Economical and safe
  • Periodical revised and updated
  • Easily identified and differentiated
  • Avoid duplication of entries
  • A person entrusted with responsibility to maintain
  • A procedure manual

Principles of Record Keeping:

  • The purpose for which the record is kept must be justifiable
  • Records must be classified
  • Records must be precise
  • Records must be produces and maintained at reasonable cost
  • Records must be capable of verification

Essential points to achieve the record maintenance objective:

  • Simplicity
  • Accuracy
  • Economy
  • Usefulness

HR record refers to all data relating to employees working in an organisation

Purpose of Personnel/ Employee Records:

  • Stores all relevant employee data
  • Provide an evidence of events
  • Useful for taking important decisions
  • Helps to know everything about the employee at one glance
  • Facilitate evaluation of performance
  • As provisions under industrial and labour laws

Examples of HR Record:

  • Employee turnover record
  • Personnel inventories
  • Accident record
  • Grievance record
  • Absenteeism record
  • Cost of training record
  • Payroll record
  • Health record
  • Suggestions record
  • Employee use of services records such as gym, canteen

REPORT:  A report is an account or statement describing in detail an event, a happening or evaluating an enterprise or product etc.

Essentials of a good report:

  • Should deal with a specific objective
  • Should dwell on the issues referred
  • Data collected should be interpreted easily
  • Should make specific recommendations
  • Should be timely
  • Should be clearly worded
  • Should be reader oriented

HR Report: It is a document stating a particular fact with regards to any human resource function.

Some of the examples of HR report are:

  • Manpower Availability report
  • Daily Sales VS. Employee Cost Report
  • Attrition Analysis Report
  • Recruitment Analysis report
  • Uniform Stock Report
  • Monthly Performance report
  • Employee Grievance report
  • Statutory Deadline Report
  • Talent Transformation Report
  • Payroll Input report


It is a systematic and scientific process of collecting information, analyzing the information and drawing conclusions for better decision-making in HR function.

Various HR Research’s that can be conducted in an organisation are:

  • Effectiveness of recruitment and selection process.
  • Wage and salary administration research or compensation bench marking research
  • Impact of Employee Benefits on the productivity of employees
  • Employee Engagement survey
  • Employees perception on the performance management practice of the organisation
  • Research on attrition cause analysis
  • Training effectiveness survey
  • Employee Satisfaction survey

Ways to conduct HR Research:

Most research is conducted by using one or more of the following methods.

  1. a) Interviews: Interview though time consuming provide very valuable information. It refers to a face-to-face discussion with managers and other employees to get information on a particular issue. Interview has several advantages.
  • It provides an opportunity to verify information
  • Information relating to motivation and commitment can best be sought by interview.
  • It provides an opportunity to explain.
  • It is a two-way interaction and hence provides one opportunity to get in-depth information.

Interviews of employees and managers offer research teams a powerful tool for collecting information about HR activities and identifying areas that need improvement. Criticisms and comments from interviews can help pinpoint perceptions and causes that can form the basis for departmental action. Likewise, suggestions by managers may reveal ways to provide better service.

One useful variation of interview is Exit Interview. Such interviews are conducted when the employees has decided to leave the organizations. At this time the employees can very openly discuss problems issues and concerns because now he /she is not afraid of reprimanded by the authorities. Some extremely useful information can be gathered through exit interviews, which can be very handy in reviewing HR policies, identifying training needs and examine behavioral problems that are not easily identifiable.

  1. b) Questionnaires: Since interviews are time –consuming and costly and often are limited to only a few people, many HR departments use questionnaires to broaden the scope of their research. Also, questionnaires may lead to more candid answers than do face-to-face interviews. Besides being less costly questionnaires provide an opportunity to collect large amount of date in short period of time as they could be administered to a group. Questionnaires generally consist of a list of statement / items to which respondent responds by either saying yes or no or showing varying degrees of agreement/disagreement. However one major disadvantage of questionnaire is that it assumes that respondents can read and write in language used in the questionnaire. Hence they can be given to only literate people.
  2. c) Secondary Source of Data: Both interviews and questionnaires require human beings to provide information. If the focus of research is to collect historical data perhaps the best source could be what is called as secondary source. Where data is available in published documents, government reports, journals and magazines, house magazines, minutes of the meetings and achieves etc. Such data can be extremely useful to examine trends in terms of growth or otherwise. Needless to say secondary source of data can be very handy method to collect specific information.


HRIS: Human Resources Management System (HRMS) or Human Resources Information System (HRIS)

INTEGRATION between human resource management (HRM) function and information technology

Software or online solution for the data entry, data tracking, and data information needs of the Human Resources, payroll, management, and accounting functions within a business.

  • Enterprise resource planning (ERP) software ( SAP HR & PEOPLE SOFT)
  • Payroll Software

Currently human resource management systems encompass:

  1. Payroll
  2. Time and attendance
  3. Performance appraisal
  4. Benefits administration
  5. HR management information system
  6. Recruiting/Learning management
  7. Performance record
  8. Employee self-service
  9. Scheduling
  10. Absence management
  11. Analytics

The payroll module automates the pay process by gathering data on employee time and attendance, calculating various deductions and taxes, and generating periodic pay cheques and employee tax reports. Data is generally fed from the human resources and time keeping modules to calculate automatic deposit and manual cheque writing capabilities. This module can encompass all employee-related transactions as well as integrate with existing financial management systems.

The time and attendance module gathers standardized time and work related efforts. The most advanced modules provide broad flexibility in data collection methods, labor distribution capabilities and data analysis features. Cost analysis and efficiency metrics are the primary functions.

The benefits administration module provides a system for organizations to administer and track employee participation in benefits programs. These typically encompass insurance, compensation, profit sharing and retirement.

The HR management module is a component covering many other HR aspects from application to retirement. The system records basic demographic and address data, selection, training and development, capabilities and skills management, compensation planning records and other related activities. Leading edge systems provide the ability to “read” applications and enter relevant data to applicable database fields, notify employers and provide position management and position control. Human resource management function involves the recruitment, placement, evaluation, compensation and development of the employees of an organization. Initially, businesses used computer based information systems to:

  • produce pay checks and payroll reports;
  • maintain personnel records;
  • pursue talent management.

Online recruiting has become one of the primary methods employed by HR departments to garner potential candidates for available positions within an organization. Talent management systems typically encompass:

  • analyzing personnel usage within an organization;
  • identifying potential applicants;
  • recruiting through company-facing listings;
  • recruiting through online recruiting sites or publications that market to both recruiters and applicants.

The significant cost incurred in maintaining an organized recruitment effort, cross-posting within and across general or industry-specific job boards and maintaining a competitive exposure of availabilities has given rise to the development of a dedicated applicant tracking system, or ‘ATS’, module.

The training module provides a system for organizations to administer and track employee training and development efforts. The system, normally called a “learning management system” (LMS) if a stand alone product, allows HR to track education, qualifications and skills of the employees, as well as outlining what training courses, books, CDs, web based learning or materials are available to develop which skills. Courses can then be offered in date specific sessions, with delegates and training resources being mapped and managed within the same system. Sophisticated LMS allow managers to approve training, budgets and calendars alongside performance management and appraisal metrics.

The employee self-service module allows employees to query HR related data and perform some HR transactions over the system. Employees may query their attendance record from the system without asking the information from HR personnel. The module also lets supervisors approve O.T. requests from their subordinates through the system without overloading the task on HR department.



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