What is an HR audit? It is a comprehensive assessment of the HR function. An HR audit evaluates the effectiveness and efficiency of how an organization manages its people, including recruitment, selection, performance management, and development phases.

Employment laws are constantly changing; therefore, organizations have to keep up with them to exhibit updated HR compliance. One of the many benefits of auditing is that it helps organizations identify areas for improvement and cost savings, such as improving leadership development programs or reducing turnover rates through improved performance reviews.

External auditors who specialize in human resources operations mostly conduct HR audits. However, internal HR professionals might also conduct them to see how their department stacks up against industry standards or benchmarks set by other companies within the same sector.

Some consultants recommend performing annual audits, while others say they should happen every few years, depending on organizational size and needs. 

Emerging legal requirements for employers regarding employee management practices compel the audit process to happen.

The first step is to collect as much data as possible. It includes any available industry averages as well as benchmarks for your organization; data from recent performance reviews and employee surveys; financial records of company growth or decline; statistics on how many employees left before they were given notice to quit (or are still employed there); and, details about hiring practices.

Once that is done, compare it with the best practices to see if they align. Wherever you see the gaps, you will have to resolve them for organizational improvement.

We have come up with a human resource audit checklist that asks a series of questions on critical areas of the HR department. You can use it to make your audit successful. Dive into the video to learn more.

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