In this article we want to discuss the benefits of an HR Audit. An HR compliance audit can help ensure that HR practices in your company abide by the multitude of frequently changing laws and regulations. The compliance audit generally has two parts: an evaluation of the organization’s HR policies, practices and processes, and a review of current HR data. Indicators of potential problems include internal grievances filed, pending legal complaints and turnover and absenteeism rates.
An audit can help to avoid litigation. Most lawsuits can be traced to issues relating to:
Performance management, employee discipline or termination
Prohibited attendance policies
Inaccurate wage and hour or time records
Form I-9 errors
Outdated federal and state labor and employment law posters
Insufficient record retention
HR audits help determine how work can be done more efficiently or less expensively. For instance, the HR professional can help improve their company’s business position by comparing its HR practices with those of other companies.
Audits are particularly useful in identifying areas in which the organization can benefit from implementing technology or outsourcing certain functions to remain compliant.
It is important for the HR professional to understand what the potential risks are and then develop a business plan on the implementation of new technology or outsourcing functions that will help maintain compliance.
The best audits are done when you have control of your situation. The worst audits are those prompted by a dreaded letter from a government agency.
Once immediate needs have been addressed, an audit should be scheduled so as to head off future problems.
Once the problem areas have been identified clean up one issue at a time, making it the best you can make it, then move on to the next issue. Taking the time to get it right proves HR’s worth and adds value to the company.
Important areas to concentrate on when conducting an audit:
Mistakes in administering federal or state family and medical leave
Form I-9 Employee verification errors
Failure to pay employees properly for overtime hours
Failure to onboard and train employees adequately
Missing legal deadlines
Out-of-date employee handbooks
Self-audits are intended to be completely internal. However, a viable option for organizations to self-audit is to bring in an auditor from outside the organization. Doing so could be beneficial because it allows for a fresh pair of eyes to review the company information and look for errors. It isn’t always necessary but can be beneficial to gain an unbiased perspective on your organization’s activities.
Contact PMP if you have any questions.