The theme of auditing is a regular one within the business world, allowing companies and organizations to understand more about themselves, their operations and where they can improve. There are several areas where this sort of process may be carried out, and one of the single most notable and important for many businesses is within the human resources (HR) department.
At Integrated Companies, we're happy to help with numerous HR employer solutions and related services throughout Utah, from payroll solutions and CPA programs to employer insurance, financial planning and many other areas. Whether you're looking to completely outsource your HR needs or simply get some assistance for your existing department in certain areas, we're ready to take your call and work with you. What is an HR audit, what are some specific types of HR audits you might consider, and what's the major value of carrying out these sorts of programs? Here's a rundown.
What is an HR Audit?
First and foremost, the broad term "HR audit" refers to any sort of comprehensive review or analysis of a company's HR policies, procedures, processes and/or practices. This could be an internal audit carried out by your organization's management team or an external audit provided by a third-party company like Integrated Companies.
HR audits can include a number of particular areas, including your hiring practices, your compensation plans, your employee benefit offerings and more. The specific elements of an audit will depend on the goals of your company and what you're looking to achieve with the process.
Value and Reasoning for HR Audits
There are several important reasons why HR audits are often carried out, including:
- Ensuring compliance: One of the most important values of an HR audit is to ensure that your company is compliant with all state and federal laws, regulations and guidelines. This includes everything from employment law to anti-discrimination measures.
- Boosting efficiency: An audit can also help you to identify areas where your HR department or processes might be inefficient. This could involve improving communication between employees and managers, reducing the amount of time needed to fill vacant positions or improving your company's onboarding process.
- Improving morale: A well-run HR department can play a major role in boosting employee morale and engagement. An audit can help you to identify areas where your company might need to make improvements in this area.
- Reviewing resource allocation: For many companies, an HR audit is also an opportunity to review how your company's resources are being allocated within the department. This could involve anything from evaluating your current payroll system to determining whether you're making the most effective use of employee benefits.
- Due diligence for investors or shareholders: Facing pressure from investors or shareholders? An HR audit can provide valuable due diligence in this area, helping to ensure that your company is meeting their expectations.
Types of HR Audits
There are a few different types of HR audits you might want to consider for your business. Here are some of the most well-known:
- Policy audits: A policy audit involves reviewing your company's HR policies and procedures to ensure that they're up-to-date and compliant with all applicable laws. This could include anything from your company's Equal Employment Opportunity policy to its sexual harassment policy.
- Benefit audits: Benefit audits typically involve a review of your company's employee benefits offerings, including health insurance, retirement plans and more. The goals of a benefit audit might include reducing costs, improving compliance or providing more comprehensive coverage for your employees.
- Compensation audits: A compensation audit is designed to evaluate your company's compensation practices, including salaries, bonuses and other forms of payment. The goal of this type of audit is typically to ensure that your company is paying its employees fairly and in accordance with industry standards.
- I-9 audits: For companies with employees who are not U.S. citizens, an I-9 audit may be necessary to ensure compliance with the Immigration and Nationality Act. This type of audit involves a review of your company's I-9 forms to verify that they're complete and accurate.
- Compliance audits: A compliance audit is designed to ensure that your company is complying with all applicable laws and regulations. This could include anything from employment law to environmental regulations.
- Hiring or training audits: A hiring or training audit is focused on your company's practices in these areas. The goals of this type of audit might include reducing turnover, improving the quality of new hires or increasing the effectiveness of your company's training programs.
- Safety audits: Finally, a safety audit is designed to ensure that your company is complying with all applicable safety regulations. This could involve anything from reviewing your company's safety policies to conducting on-site inspections of your workplace.
Determining Whether You Need an HR Audit
Does your business need an HR audit? There's no one-size-fits-all answer to this question, but there are a few factors that can help you make the decision.
Consider whether you're facing any pressure points: Are you facing pressure from shareholders or investors? Are you dealing with high turnover rates? Are you concerned about potential compliance issues? If you answered yes to any of these questions, an HR audit might be a good idea.
Think about your goals: What are your goals for your business? Are you looking to improve employee morale? Reduce costs? Improve compliance? Once you've identified your goals, you can decide whether an HR audit is likely to help you achieve them.
For more on the vital area of human resource department audits, or to learn about any of our HR solutions for Utah businesses, speak to the team at Integrated Companies today.