by Organizations are increasingly finding it imperative to improve returns on investment, in order to stay competitive. Traditionally, accounting norms were viewed only from the financial perspective and were applied to all departments ranging from marketing, production, distribution, etc. HRM was limited to salary and administration and, while doing so, it was analysed from the perspective of provisioning and expenditure.
However, in today’s competitive scenario, it has become essential to analyse HRM activities and assess their contribution in a more systematic and methodical manner. The Indian industry has aggressively adopted various innovative systems, such as HR audit and balanced scorecard, with a macro perspective of balancing performance management across all organizations.
Human Resource (HR) Audit is not only a tool for evaluating the personnel activities of an organisation, but also an important aspect of the human resource management. It is a great deal of attention from Human Resource Practitioners.
It basically review the effectiveness of human resource practices. It gives feedback about HR functions not only to operating managers, but also the HR department about how very well operating managers are meeting their HR duties.
Therefore, audit is the key word, which control and check the Human Resource activities in a public organisation and an evaluation of how these activities support overall organisational strategy. In the opinion of Gray “The primary purpose of personnel audit is to assess how various units are functioning and how they have been able to meet the policies and guidelines which were agreed upon and to assist the rest of the organisation by identifying the gap between objectives, lay-out and results achieved. The end product of evaluation should be to formulate plans for corrections or adjustment.”
Systematic audit can help build strong rapport between the department and operating managers. Further, audit creates discipline in personnel staff and encourages them to move away from intuitive techniques to a more rigorous assessment of the likely benefits to be achieved.
This aims at the following:
- Introducing the theoretical framework behind concepts such as HRA, HR audit and balanced scorecard.
- Explaining the strategic framework behind their implementation in international vis-a-vis the Indian context.
- Presenting case studies to drive home learning.
Rationale
A very famous watch-manufacturing company ventured into eye-care business. They needed, besides other staff, optometrists at every eye-care retail outlet, across the nation. A good optometrist is a vital link between the company and the customers. Many times it is the optometrist who coverts a potential to an actual customer.
The company had a very good hiring team in place and was confident that it would be able to hire very able personnel for their eye-care division as well. Their primary targets would be various students graduating from different optometrists colleges in India. They had been following these processes for quite some time for their watch-division.
The company went ahead with its plan of expansion. Later, when the hiring team visited the colleges to hire optometrists, to their dismay they found that most of these graduates were not employable. They had requisite knowledge but did not have very high level of skill that would be required in this profession.
They had hardly any time to train them now. Left with no option, they hired optometrists from competitors at a very high market price. Obviously the acquisition cost went-up that was least expected when the company was expanding into a new business.
In retrospect they should have ‘audited’ their hiring process in light of the new business and seen whether they needed to incorporate any changes. This would have forewarned them about the real state of talent demand and supply situation and they could have organized some pre-hiring training for the various graduating optometrists.
This way they would have not only been able to keep their hiring cost under control but would have also been successful in sowing a greater degree of loyalty among their new recruits. A timely audit would have saved the company a lot and made their process more efficient.
The rationale of the audit hence can be outlined as:
- Audit increases the efficiency of the HR team.
- It helps in saving a lot of cost.
- Helps in achieving internal and external benchmarking.
- Helps in compliance issues to various quality initiatives in the company.
- Helps in legal compliance.
- Improves managerial performance.
- Improves supervision and leadership at all levels of the organization.
- Helps to retrospect and reflect upon various practices from a practical stand-point.
- Audit extends HR business partner’s role and helps it make quantifiable contributions in business.
- Helps in making the HR department more effective and credible.
