Human Resources

The Human Resource department of an organization has multiple responsibilities. It is responsible for employee selection, development, evaluation, compensation and employee relations. The role of Human Resource management is being increasingly affected and reshaped by the growing diversity of the workforce, global and domestic compensation, and complex legal and ethical issues. In short, the Human Resource department of an organization is faced with balancing its responsibilities towards the organization it serves as well as the society in which it operates.

A Human Resources audit evaluates the Human Resource activities in an organization with a view to their effectiveness and efficiency. It is done with a view to improve those activities, uncover shortcomings and address the deficiencies. The value of the audit is that it provides feedback both to the Human Resource managers and the organization about how well the Human Resource department is meeting its duties and responsibilities. Essentially, the audit is a quality control check on the Human Resource activities within a division or company and as to how well the activities support the organization's overall strategy. (Biles & Schuler, 1986)1

The Human Resource audit has many benefits. It can serve to remind members of the Human Resource department of their roles and contributions to the organization. It serves to create a more professional image of the department in the eyes of both management and the employees. The Human Resource audit can help clarify the department's role and lead to greater uniformity in practices across geographically scattered and decentralized Human Resource functions typical of large firms. Its most important contribution to the organization and its employees is that it can correct problems and ensure compliance with a variety of local laws and the strategic plans of the organization concerned.

The scope of the Human Resource audit extends beyond the activities of the Human Resource department. The success of the workings of the Human Resource department depends both on how well it performs and how well its programs are carried out by others in the organization. The reality is that people problems are seldom confined to the Human Resource department. The reason employees are disgruntled can be some management lapse, oversight or perceived favoritism. Often Human Resources is the last to know of such a problem since the problem is frequently not expressed until brought to the attention of the Human Resource department in the form of an employee grievance, legal action or an Exit Interview following a resignation. Human Resources is faced with the responsibility of playing a more pro-active role in finding the causes of employee dissatisfaction and mismanagement. The best option, therefore, is to widen the scope of the Human Resource audit so that it covers the corporate strategy, the Human Resource function, managerial compliance and employee satisfaction. (Werther & Davis, 2000)2

Human Resources has a definite role in meeting the organization's corporate strategy. Organizations are composed of people, and Human Resource is entrusted with the responsibility of finding the best people for the jobs so that the organization can gain a competitive advantage in the marketplace. Understanding the firm's corporate strategy has strong implications for planning, staffing, compensation, employee relations and other Human Resource activities. Human Resources is effective only when it contributes to the firm's strategic goals. The Human Resource department can learn about the firm's overall strategy through interviews with key executives, review of long range business plans, and systematic scanning of the environment to uncover changing trends. (Hooper, Catalenello &Murray, 1987)3

The Human Resource audit is a logical review of the workings of the Human Resource department. For the audit to be comprehensive, it must review all the major areas, including Human Resource Planning, Job Analysis, Compensation Administration, Affirmative Action, Recruiting, Selection, Training & Orientation, Career Development, Performance Appraisals and Labor Management Relations (Werther & Davis, 2000)4. Larger organizations perform Human Resource Audits much in the same manner as financial audits, designating a team of experts who are likely to have the requisite functional experience in one or more specific areas, although based in another location. The best place to begin the Human Resource audit is on the basis of past audit reports, or on the basis of functions carried out by the department, the controls in place and the policies and procedures followed in each case. The audit team will seek to identify who is responsible for each activity, determine the objectives of each activity, review the policies and procedures used, sample the available records to find if the policies and procedures are being followed, prepare an audit report commending proper objectives, policies and procedures, develop an action plan to correct errors in objectives, policies and procedures, and follow up on the action plan at a later stage, to see if it solved the problems found. (Berry, 1967)5

The focus on managerial compliance is to find out how well the managers in other departments comply with Human Resource policies and procedures. The audit should preferably uncover instances where managers have ignored or abused policies and violated laws. Compliance with laws is especially important, as the Government would hold the company responsible. In ensuring compliance, the Human Resource department improves its image, value and contribution to the company. Conversely, the Human Resource department will earn the respect of operating managers if it seeks their views relating to Human Resource needs in their respective areas. Acting on these discussions will increase its contribution to the organizational objectives, while also being seen as being more responsive to departmental needs.

The audit team will, in the process of the Human Resource audit, gather data from workers to find out how well their needs are being met. Employee feedback and information is collected on wages, benefits, supervision, career planning, and performance appraisals. Employee actions like turnover, absenteeism and unionism are more likely to occur when their needs are not being met. The effectiveness of the Human Resource department can be judged by its ability to meet the employee's needs while at the same time, serving the interests of the organization.

Just as there is some value to scanning the environment in making note of trends and changing business practices, there is also some value in using a research based approach to evaluating Human Resource activities. In a Comparative