by Human Resource Audit is a comprehensive method of objective and systematic verification of current practices, documentation, policies and procedures prevalent in the HR system of the organization. An effective HR audit helps in identifying the need for improvement and enhancement of the HR function. It also guides the organization in maintaining compliance with ever-changing rules and regulations. HR audit, thus, helps in analyzing the gap between ‘what is the current HR function’ and ‘what should be/could be the best possible HR function’ in the organization.
Though HR auditing is not mandatory like financial auditing, yet, organizations these days are opting for regular HR audits in order to examine the existing HR system in line with the organizations policies, strategies and objectives, and legal requirements. HR auditor can be internal or external to the organization. Generally, HR consulting firms render the service of external HR auditors.
Need
According to Yoder, the need for personnel audit is largely influenced by several conditions.
- Organisational Structure: Continuing feedback is facilitated if an organisation has a personnel department.
- The Number of Employees: Very small units, because of the very small number of persons they employ, require comparatively little in the way of a formal audit.
- Communication and Feedback: An effective two-way communications system often reduces the need for a formal audit.
- Status of an Industrial Relations Manager: If he participates in the top management plans, reports, discussions and decisions, the need for a formal audit may be less frequently felt.
- Location and Dispersion: The need for a formal audit is directly related to the number of isolated plants.
- Administrative Style: The greater the delegation of authority and decentralisation of power, the greater the value of a regular and formal audit.
Significance
In modern times, personnel and industrial relations audits have been widely accepted as tools with which managers can control the programmes and practices of the personnel and industrial relations department.
- The changing role of the government, which intervenes more often and more extensively now, to control manpower management by an organisation with a view to protecting the interests of the employees, providing them with better working conditions and ensuring their economic security.
- A change in managerial philosophy and theory, as a result of which a management now feels that employees’ participation in the activities of an organisation, and their identification with it, have a tremendous influence on the working of that organisation.
- The rising wages, changes in the skills of technical and professional workers, and the increasing expenditure incurred on the industrial relations department these are the factors which have influenced and encouraged the trend in favour of a personnel audit.
- The increasing role played by trade unions and their strength, as a result of which they often question managerial competence in industrial relations.
