The HR Audit Checklist: Sample Questions to Get You Started
The human resources department could be considered the backbone of any company. They are the folks that deal with the underpinnings of employee relations to ensure that a company can function as it’s meant to. Running this multifaceted department is a big job–there’s recruiting, onboarding, and retention to see to, not to mention benefit management, employee morale, and the unpleasant task of occasionally needing to let someone go. Add to that the numerous intricacies and ever-changing aspect of legal compliance, and you’ll start to get a clear picture of the number of hats and HR professional must wear, usually all at once!
The last thing an employer wants is to let anything slip through the cracks, and that’s where the HR audit comes in. An audit is a tool that employers can use to get a detailed picture of existing HR practices, and like a financial audit, when done correctly it will highlight areas within the department that require improvement before a problem arises. It will also identify policies and procedures that could use improvement, take the overall pulse of employee morale, and pinpoint potential legal issues that could cause major problems to arise if not addressed. . The human resources department is almost like a business within the business it serves, and the company’s most valuable resource–its employees–are its product.
In that vein, and HR audit is very like any risk assessment within a company, and requires an understanding of risk management to take on. Taking an in-depth look at a broader risk management course is a great way to get into that frame of mind. Along with a comprehensive HR audit checklist, you can be prepared to get the most out of your company’s HR audit.
Why Do An HR Audit?
A company that uses the HR audit as a tool can expect two very important benefits from all of their hard work.
The first has to do with taking stock of employee concerns and morale. If you have had issues in the past with retention or turnover, doing a complete audit can nail down the reasons why. Perhaps you will notice that there are multiple common grievances that arise time and time again, and determine how to eliminate the source of that particular conflict.
Second, an HR audit goes straight to the bottom line: you want to ensure that the departments’ resources are being used to the greatest benefit. Turnover isn’t just indicative of employee upset, it can get very expensive. Similarly, failing to comply with state and federal rules and regulations can mean hefty fines, or in a worst-case scenario, a pricey lawsuit that can damage the company’s reputation and repel future candidates and clients.
The audit process is lengthy and involved, but you should never let that discourage you. It helps to have a team that can help you hit all of the points on your HR audit checklist. An information management system like Evernote will help you keep track of tasks and data.
We have provided a very basic sample HR audit checklist as a jumping off point, highlighting three areas of concern for a potential audit and some simple audit questions for each area. Remember that the actual audit must be thorough to be effective, and you will likely have much more ground to cover if you are conducting your own.
The Hiring Process
You can begin your audit with a deep look into your company’s hiring process. After all, this is the first interaction that employees will have with your company, and when it runs smoothly it sets the foundation for the rest of their time there. You also need to make sure that you are not using any potentially discriminatory practices in the hiring process.
Begin by gathering the documents that your company uses in the hiring process that you wish to check for federal, state, and company policy compliance, including:
- Sample job descriptions for positions within the company
- The job application that your company uses
- Any reference/drug testing/background check policy your company uses
- The internal job posting policy
- A sample rejection letter and new hire onboarding file
You can use these sample questions to understand what, if any, weak spots exist in your current policies and ensure that you are exercising the best possible practices going forward:
- Are your job descriptions clear and concise, with essential and nonessential duties outlined?
- Are rejected applicants notified in a timely manner?
- Do all drug and background checks comply with the law and company policy to ensure that the individual’s rights are not being violated and to limit the company’s liability?
- Is tax documentation consistent with federal and state regulations?
Vital to the daily operations of a company, no matter the size, is a clear communications policy that allows employees to access concise information regarding their rights and responsibilities both under company policy and the law.
Documents to gather:
- Employee Handbook
- Employee handbook acknowledgment of receipt form
- U.S. Department of Labor posters
- Sample performance evaluation policy and evaluation sheets
- Is the Employee Handbook up to date and accurate?
- Has each employee received either the handbook or information on how to access the handbook on their own?
- Are any federal posters displayed prominently as required?
- Is there clearly accessible information for the employee to file grievances, and is this information separate from the information regarding discrimination complaints?
- Are performance evaluations completed regularly and as described in company policy, and are there strategies in place to ensure that those evaluations are objective and fair?
Discrimination and Harassment
This section is one of the most important and tenuous sections on your HR audit checklist–don’t leave it out! Even the appearance of discrimination can spell big trouble for a company, but that shouldn’t terrify you. By staying on top of this issue with frequent and thorough audits, you can ensure that the workplace is a safe place for all of the employees there and eliminate potential issues be addressing them immediately. It is absolutely vital that everyone is on the same page in this respect, and that is especially true for HR staff. Part of your preparation should include a course regarding the diverse workplace and learning about harassment risks and prevention from an expert.
Documents to Gather:
- Samples of Harassment and Discrimination policy and procedure
- Signed employee receipt acknowledgment of those materials
- Records that indicate each employee has been trained to recognize, prevent, and report discriminatory behavior and harassment
- Training guidelines for managerial staff and HR employees on how any complaints are to be reported, investigated, and resolved
- Any existing internal or external complaints, documentation regarding their investigation, and action that was ultimately taken
- Is there a policy in place that prohibits any and all types of workplace discrimination as required by state and federal law?
- Have all employees been trained with regards to this policy, and is that training revisited as new laws and policy are enacted?
- Is there a clear avenue for reporting or filing complaints and are managers trained with regards to their obligation in this respect?
- Are complaints investigated and resolved in a timely manner, and are procedures in place to prevent retaliation?
- Are there any aspects of the current employment atmosphere–even unintentional ones–that could leave the company open to claims of disparity or discrimination?
- Are external complaints or complaints filed by former employees investigated to the same standard as internal complaints?
After the Audit:
These three sections only just begin to touch upon the various aspects of the workplace that should be investigated and included on the HR audit checklist. It is especially important to understand that where legal issues are concerned, the absolute best course of action to ensure that you are complying with the law is to consult either your company’s legal department or hire an outside attorney. When in doubt, it’s best to ask an expert.
When you have completed your audit, you will have a lot of information to sift through, and while that is potentially time consuming, it’s also extremely beneficial. After all, you set out to get a thorough picture of how you’re doing as a company. Now all you need to do is put the pieces together.
After you have disseminated the information you’ve collected, you’ll need to probe for weak spots. Are there any potential liability concerns? Are there areas that have caused contention with employee relations in the past? Or are there just some things that could be clearer or more accessible? Now’s your chance to outline a plan for improvement and tidying up as you move forward. Obviously, if you need to triage anything, that will take top priority. After that, you are free to move on to the areas that need long-term improvement.
The audit is the easy part; after that it’s up to you to use your human resources prowess and expertise to help the company reach its full potential by creating airtight policy that inoculates the employer against expensive fines and lawsuits while creating an environment where employees can thrive comfortably.
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