HR is an essential yet complex part of running a company with employees. If you don’t have your own HR department, it can be challenging to stay on top of the many components of HR, including:
- Policies and people practices
- Overall business processes
In this article, we’ll explain the benefits of an HR audit and the best way to conduct one.
Why Do You Need An HR audit?
Let’s start by explaining what exactly an HR audit is.
An human resource audit is a comprehensive method used to review various components of your business. An HR audit is most useful for:
- Measuring the overall effectiveness of your business
- Reviewing the strength of your human resources practices
- Identifying areas for improvement and enhancement of your people practices
Your business needs a regular HR audit to ensure that you are proactive and consistently performing at your peak. An HR audit evaluates processes in your business from a short-term, medium, and longer-term perspective, and assists with your implementation plan.
What are the Benefits of a Regular HR audit?
An HR audit benefits your business, employees, and overall bottom line. To illustrate, here are the top five benefits of an HR audit:
1. You’re always up to date with current HR practices
An HR audit assures you achieve best-practice baseline standards for HR within your business.
For example, let’s say you run a construction business, and a slight change in worker safety regulations requires your HR department to take action. Getting caught not abiding by these new regulations may be detrimental to your business.
However, if you perform an HR audit regularly, checking the HR best-practices in the construction industry becomes a routine, and you’re quickly able to catch any changes in regulations.
2. You stay familiar with HR practices
Another benefit of regular HR audits is that you become more familiar with your company’s HR practices.
When you can memorise certain HR practices, or at the very least keep them top of mind, you can run your business and save time on verifying policies.
It’s practical to have information on common issues such as HR services readily available if an employee has an impromptu question. You won’t need to search for it or call HR leaders.
While there’s no reason to become an expert on HR practices (you can depend on your outsourced HR professionals, such as HRonHand, for that), you will feel less overwhelmed by your HR practices if you are familiar with them.
3. Create an HR plan based on your priorities
One of the top consequences of HR auditing is that it helps you build a strong HR plan that works for your business.
A comprehensive human resources audit will lead you to establish an HR plan that focuses on your highest priorities and aligns with your business plans. For a construction company, for example, the highest priority may be training, as that affects other HR areas such as safety and compliance.
After each HR audit you conduct, you will only further strengthen your HR plan and save time.
4. Know the current state of your human resources
An HR audit is vital for many reasons and several components go into it. A good HR audit will determine whether your human resources are adequate, legal, and effective.
A human resources audit may reveal that your construction company’s employee retention rate is lower than acceptable, causing you to lose revenue and spend excessive time on hiring and training.
HR auditing will highlight these improvement areas to help you form a comprehensive plan to enhance your business.
5. You reduce your liability
Finally, the last benefit of an HR audit is that you will reduce the risk of being liable for ‘unfair employment practices.’
Legal issues and conflicts can be extremely costly and detrimental to your business, sometimes through bankruptcy or being forced to shut down entirely. For example, you don’t want to land yourself in a heated lawsuit because your construction business’s safety practices weren’t up to standard and caused one of your employees to get injured.
You will minimise the costs associated with compliance issues, not only keeping your employees safe but protecting your business.
Conclusion: What Should a Good HR Audit Include?
Now that you know all the benefits of an HR audit, there’s nothing left to do but conduct one for your business. That said, there are several components to a successful HR audit.
Here’s a breakdown of what exactly a good HR audit should include:
- Employee relations and engagement – recruitment, selection, and induction
- Workplace behaviour
- Employee/independent contractor agreements
- Work health and safety
- Performance management, employee training, and development
- Work-life balance
- HR planning and administration: payroll, employee/contractor documentation, and record keeping
- Termination of employment, redundancy, resignations, and stand-downs.
With so many moving parts, it can be challenging to keep track of everything that needs to be done yourself. Luckily, the HR experts at HRonHand are here to help.
Ready to engage our HR consultants to do an effective HR audit for your business? Click the link, and we’ll do the rest.