Best practice Human Resources Management (HRM) Auditing principles, practice and tools

1. HRM AUDITING – PRINCIPLES,
PRACTICE AND PROCESS
CHARLES COTTER Ph.D. candidate, MBA, B.A (Hons), B.A
www.slideshare.net/CharlesCotter
IMPLATS, SPRINGS
21-22 SEPTEMBER 2017

2. 2-DAY, TRAINING PROGRAMME
OVERVIEW
• Introduction and Preview
• HRM Auditing – Principles and Practices
• HRM Auditing Process
• Case Study
• Conclusion and Review

4. HR/PEOPLE RISK MANAGEMENT

5. HRM AUDITING

6. INTRODUCTORY LEARNING ACTIVITY
• Refer to page 3 of the Learner Manual
• Complete the following statement by inserting one (1) word.
As a HR Manager, in order to effectively conduct a HRM
audit at Implats, I need to/to
be…………………………………………………………………..
• Jot this word down and find other learners who have
written down the same word.
• Write this word down on the flip-chart. Each learner will be
allowed the opportunity to elaborate on their respective
choice of words.

7. THE FUNDAMENTALS OF HRM
AUDITING
• Defining a HRM Audit
• The driving forces of HRM Auditing
• The purpose, objectives and functions of HRM
Auditing
• Benefits and costs (drawbacks) of HRM Auditing

8. ORIGIN OF THE WORD, “AUDIT”
• The word audit originates from the Latin word
‘audire’ which means to “listen”.
• An audit is a systematic, objective risk
management tool for how well the workplace is
complying with regulatory and policy requirements.

9. DEFINING HRM AUDIT
• An HR Audit as “an intensely objective look at the company’s HR policies,
practices, procedures and strategies in order to protect the company,
establish best practices and identify opportunities for improvement.”
(SHRM)
• A Human Resources Audit is a review of current Human Resources
practices, policies, procedures, documentation and systems and will assist
you to identify strengths and needs for improvement.
• It will provide direction and recommend the courses of action to be taken
to ensure compliance with ever-changing laws, rules and regulations.
• A HR audit is a way to diagnose problems in a company’s HR department.
• Auditing is evidence based.

10. DRIVING FORCES OF HRM AUDITING
• Alignment of HR strategies and practices with strategic objectives of the
organization;
• Managing employment practice liability risks;
• Government compliance (skills audit);
• Understanding and determining the impact of HR policies, procedures and
practices;
• People investments need to be quantified to demonstrate a return on
investment; and
• Roughly, over two-thirds of an organization’s money is spent on people.

12. PURPOSE OF HRM
AUDIT – V-C-R
• Value
• Compliance
• Risk

13. MAIN GOALS OF HRM AUDIT
• The goal is the independent and objective evaluation
of the efficiency and quality of a company´s HR
management, including its compliance with the legal
requirements of employment.
• Determine whether company's employment-related
materials and practices are complying with the law
and the employer's own policies; and
• Identify and bring into compliance, any area that may
not be in compliance. An audit should identify what the
employer is doing right or wrong, as well as grey areas
that could use improvement.

15. 5 C’s – THE KEY
BENEFITS OF A HRM
AUDIT
• Compliance
+
• Competitive
+
• Cash
+
• Credibility
+
• Competence
= Clean HRM Audit

16. V-I-P HRM AUDITING
• Valid (accurate & correct
Measurement)
• Interrogative (3rd degree)
• Protective (against HR, people &
reputational risks)

17. 8 CRITICAL SUCCESS FACTORS OF HRM
AUDITING
• #1: Organizational readiness for HRM Auditing
• #2: Adequate resources
• #3: The right people
• #4: The audit requires the support of all trade unions and key role players in the SBU
• #5: Guided by a policy
• #6: Under the supervision of a subject matter expert.
• #7: The auditing of HR should be put in the HR calendar and should synchronise properly
with other business processes in the organization
• #8: Senior management commitment and support and the general co-operation of key
stakeholders

18. 10 KEY PRINCIPLES OF HRM AUDITING
• #1: Need for independence;
• #2: Audit activities should be budgeted for properly;
• #3: Acknowledgement that there are many types of
audits;
• #4: Each type of an HR audit has its own purpose and
objectives;
• #5: Establish timeframes for every phase/step of the
audit;

19. 10 KEY PRINCIPLES OF HRM AUDITING
• #6: Training of auditors is a must;
• #7: Set standards for the HR Audits;
• #8: Agreement on reporting template;
• #9: Auditors should sign a confidentiality agreement;
and
• #10: Auditors should agree beforehand on
communication strategy.

20. LEARNING ACTIVITY
1
• Build a business case for efficient
and effective HRM Auditing by
performing a cost-benefit analysis
at Implats.
• By referring to the 8 CSF’s and 10
Key Principles, critically review and
evaluate current HRM Auditing
practices. Identify gaps and
recommend improvement
strategies.
• Present a summary of group
discussion

21. 70-20-10%
APPROACH TO
HRM AUDITING
• Primary - HRM Audit
conducted by HRM
department (70%)
• Secondary – HRM Audit
conducted by
internal/external audit
(20%)
• Tertiary – HRM Audit
conducted by external
verifier and/or
professional authority e.g.
SABPP (10%)

22. THE SCOPE OF HRM AUDITING

23. THE SCOPE OF HRM AUDITING
• Evaluation of the organization’s operational HR policies,
practices and processes and their effectiveness in achieving
strategic organizational goals.
• Assessment of current HR metrics for reasonableness and
results.
Efficient
Effective
Ethical
Economic use of talent to achieve organizational goals.

26. TYPES OF HR AUDITS
• Skills audits;
• Effectiveness audits;
• Performance audits;
• Value-add audit;
• Cultural audits;
• HR systems audit;
• Compliance;
• Best Practices;
• Strategic;
• Function-Specific

27. HR AUDIT
MEASURES
• Planning and staffing
• Recruitment efficiency
• Recruitment effectiveness
• Compensation measures
• Benefits
• Orientation cost per employee

28. HR AUDIT
MEASURES
• Counseling/disciplinary costs
• Lost time costs
• Turnover rates
• Training and development
costs/measures
• Organization development
measures

29. HRM AUDITING PROCESS

30. HRM AUDITING PROCESS
• Design and develop HR policies, procedures and
practices for your organization;
• Assess current HR policies, procedures and
practices against set criteria;
• Analyse the results from evidence; and
• Take action: to close gaps,
make recommendations/set improvement goals.

32. HRM AUDITING PROCESS - ILLUSTRATED

33. HRM AUDIT ACTION
PLAN
• Phase 1:
Foundational/Initiation
• Phase 2: Assessment
• Phase 3: Concluding and
Reporting

34. PHASE 1:
FOUNDATIONAL/INITIATION
• Audit set-up actions
• Audit planning actions
 Determine the purpose and objectives of the audit
 Determine the scope of the audit
 Determine the organizational components to be audited
 Determine the auditing tool to be used
 Determine costs and resources needed to perform the
audit
 Determine audit team governance

35. LEARNING ACTIVITY
2
• Apply phase 1:
Foundational/Initiation
of the HRM Auditing
process at Implats.
Audit set-up actions
Audit Planning actions
• Present a summary of
group discussion

36. PHASE 2: ASSESSMENT
• General comments
• Identify key organizational metrics - determine
employment issues accountability
• Formulating auditing methodology and tools
• Developing a checklist (Refer to Annexure A)

38. LEARNING ACTIVITY
3
• Apply phase 2:
Conducting the
Assessment of the HRM
Audit cycle at Implats.
• Refer to Annexure A
• Present a summary of
group discussion

39. PHASE 3: CONCLUDING AND REPORTING
• Report preparation
• Report presentation
Quantify your results - start with outcomes
Include an executive summary
Identify risks
Identify and prioritize solutions to problems identify. Where
possible, frame your solutions from a bottom line perspective,
i.e., Calculate the benefits and costs of proposed solutions
Evaluate and discuss the organizational, financial and employee
relations impact of action or inaction
• Develop a HR improvement plan

42. HRM ACTION PLAN (INTERVENTION)
TEMPLATE

43. LEARNING ACTIVITY
4
• Apply phase 3:
Concluding and
Reporting of the HRM
Audit cycle at Implats.
• Present a summary of
group discussion

45. CASE STUDY: STREAMLINING HRM AUDITING
AND RISK MANAGEMENT (24 HOUR FITNESS)
• Refer to and review pages 55-57
Timeliness of the reports
Accuracy of the information
Customer Service
Compliance
• “By working closely with our new partner, we finally
achieved what every HR team longs for: more time to
devote to meaningful strategic human resource
initiatives.”

46. LEARNING ACTIVITY
5
• Identify and discuss the
critical success factors
that 24 Hour Fitness
applied in terms of
HRM Auditing and Risk
Management.
• What HRM auditing
best practice guidelines
and lessons can be
drawn from 24 Hour
Fitness?

47. CONCLUSION
• Key points
• Summary
• Questions
• Training Administration
• Certification

48. CONTACT DETAILS
• Charles Cotter
• (+27) 84 562 9446
• charlescot@polka.co.za
• LinkedIn
• Twitter: @Charles_Cotter
• http://www.slideshare.net/CharlesCotter