The idea for a third party to perform an HR Audit can leave a sentiment similar to fright. In order to ensure that there won’t be plenty of problems to tackle, HR professionals tend to make their own prior to the official one.
However, what should be noted is that there are a variety of types of HR Audit. Some are focused on functionalities, others on compliance, other on records audit, and each one of them tackles their own issues.
Although an exhaustive and complete HR Audit is highly recommended, it’s not always necessary. If there are burning issues only in one domain, the best practice is to organize one of the aforementioned types of HR Audits. Now, let’s walk through all of the types of HR Audits and see what issues do each one address.
One of the types of HR Audits is the one that focuses mainly on stored records, such as:
Here, there are reviewed the employment contracts, to see if the files are compliant and complete and to see if they are properly stored and if there are any backups in case of incidents.
It is checked if the minimum wage is paid and if all necessary data is collected and submitted.
We talked in our previous article about the importance of having an employee handbook. During an HR Audit, the auditors will check if the handbook contains all the required policies, if they are compliant and if there is a need for any changes.
The second type of HR Audit, the HR functions, goes through all stages of recruitment, from:
To see if all the available jobs are accurate and current.
If there is a formal job posting and if the practices are compliant.
If there are any assessments involved and if each one of them is conducted consistently and in accordance with the law and/or internal procedures.
Tackles who is responsible, who makes the final decision, and if everyone is trained regarding questions to ask. Moreover, things such as the time frame from the job posting to hiring, the procedure for rejection and places where job applications are posted is taken into account.
All the steps that are taken during the first 90 days of a new employee, from sharing the handbook, the company’s rules to ensuring they are aware of what they need to do.
Here is taken into account if the company has benefits and if they are offered to all full-time employees. Also, in case there are benefits who can be offered to their dependents, they ensure if they are in legal parameters.
The HR Auditors will look to find if all the employees are paid at least the minimum wage and if the company pays a competitive wage for the industry. Moreover, they will also analyze the overtime – how is the extra payment calculated. Another thing they will look into is the criteria for wage increases.
Here the evaluating system of an employee’s performance will be analyzed – from how it looks like if the system is followed and if it is constantly reviewed. Moreover, another thing they will be interested is to find out if the employees have the opportunity to comment on their own reviews.
When it comes to ending contracts, the HR Auditors will look into factors that are taken into account for the termination decisions and the considered documents.
The termination process is a tough one, therefore the Auditors will be interested in finding out who will be the bearer of bad news – the one who informs the employee about the termination, if there is somebody else and who it is, and more importantly to see if the final paycheck is calculated properly.
This type of HR Audit focuses on the employment documents from a legal perspective. In a nutshell, they make sure that all the following procedures are legally compliant and up to date with the latest government regulations.
Although some of these aspects are analyzed in other types of HR Audit as well, in the Legal Compliance Audit focuses solely on the legal aspects.
What we wanted to illustrate by presenting all these types of HR Audit, is that it’s not necessary to perform an exhaustive one every time. There is also the option to focus only on the type that you believe it has potential issues that should be resolved.
Have you scheduled your HR Audit?