Human resources audit: where to start?

pexels-fauxels-3183197

As a HR director or human resources manager in your company, would you like to carry out a human resources audit to gain perspective on your practices?

Your company is growing fast and your HR processes are becoming increasingly complex? Your organization is evolving: processes, payroll, takeovers – and you want to make sure your employees are committed? Are you simply wondering whether your practices comply with legislation and employment law?

Whatever your situation and whatever the size of your company (VSE, SME, ETI, large group),an HR audit is essential to identify your organization’s strengths and areas for improvement.

But what exactly does an HR audit entail? What are the objectives of a social audit? What are the steps to follow for a successful human resources audit?

Victory Orset
AUTEURE Victory Orset

Human resources audit: definition

 

Human resources auditing consists of analyzing all a company’s HR procedures in order to assess the practices in place and evaluate the risks, with a view to improving the company’s overall HR strategy and performance.

A human resources audit enables HR departments to take stock of the existing situation in order to :

  • take a step back from the way you work;
  • anticipate potential risks: legal compliance, payroll management, etc.
  • correct any malfunctions or risks.

The HR audit is based on three types of data:

  • Quantitative: turnover rate, absenteeism, type of contract.
  • Qualitative: corporate culture, management practices, well-being.
  • Legal: compliance with labor law, collective agreements.

After analyzing all the data collected, the HR audit aims to draw up an action plan to improve the company’s social and economic performance.

There are two main types of HR audit:

  • the legal audit, which evaluates administrative and legal aspects: safety, risk prevention, compliance, respect for social obligations, evacuation procedures, etc.
  • organizational audits to measure employee commitment, motivation, talent and skills management…

An HR audit is strongly recommended, even if it is not mandatory, as HR regulations and the HR context are constantly evolving.

The duration of the human resources audit varies according to the size of the company. This can range from a few days to several months.

 

Why carry out a human resources audit?

HR audits can be carried out on a preventive or curative basis.

In prevention, the aim is to carry out an HR diagnosis, an inventory of the company’s human resources processes. In this way, we can identify potential risks and areas for attention, as well as highlighting the positive aspects, and thus serve as a basis for implementing a new HR strategy.

In the curative phase, the aim will be to determine the action plan to be put in place to correct a deteriorating situation, secure HR processes and thus avoid any risk of litigation, dispute or crisis.

Human resources audit objectives :

  • Ensure that HR policy complies with the legal framework in force: control of payroll elements, employment contracts, safety, etc.
  • Evaluate the effectiveness and efficiency of HR practices and processes within the company;
  • Identify potential risks;
  • Identify HR department strengths and areas for improvement;
  • Suggest measures to secure HR processes;
  • Implement and deploy an HR strategy in line with the company’s values and culture;
  • Optimize HR costs: payroll, HR tools;
  • Improving the employee experience.

 

 

Who should you entrust with your human resources audit?

The HR audit can be carried out by an in-house team or by a specialized external consultant (recommended).

The external HR consultant is a human resources professional, generally with a legal background and extensive experience in labor law and collective bargaining agreements. This makes him an immediately operational resource, adapted to the audit assignment.

Using an external auditor to carry out the HR audit brings a fresh, unbiased perspective, unlike an in-house team which risks lacking objectivity, not to mention time.

The tasks of an HR consultant during an audit

 

As part of the
HR audit
audit, the external consultant will be responsible for :

  • Observe how the company works;
  • Compare HR procedures with actual practices;
  • Assess HR risks to propose effective corrective solutions ;
  • Carry out a documentary and field analysis.

 

To carry out these assignments, the HR auditor follows a five-step methodology: familiarization, assessment, analysis, recommendations and support. Each audit assignment is planned in advance, setting out the duration of each phase and the deadlines to be met.

 

Steps in a human resources audit

Phase 1: Getting to know each other

The aim of this phase is to understand the company’s environment so as to better analyze it. To achieve this, the HR auditor takes the time to discuss with the company manager or audit sponsor to understand the needs and define the objectives of the audit. Understanding the company’s context and history is key to proposing an appropriate action plan at the end of the HR audit.

Phase 2: Inventory

Once the HR audit framework has been defined, the auditor needs to collect all the documents needed to shed light on the existing HR context and processes. These HR-related documents include, for example:

  • company agreements, if any,
  • internal charters,
  • the latest HR memos or internal HR communications,
  • internal regulations,
  • compensation policy,
  • employment contracts (executive, non-executive, fixed-term, etc.),
  • the welcome booklet,
  • disciplinary proceedings,
  • the contract termination procedure,
  • minutes of meetings with employee representatives,
  • training plan,
  • mandatory company signage

Based on this (non-exhaustive) document base, HR auditors can begin to identify risks and perform an initial risk analysis, which will need to be backed up and confirmed by an on-site assessment.

This phase takes place at the audited company and aims to verify the reality of the HR risks identified in theory during the preparation phase. The field phase allows us to deepen our analysis by, for example, interviewing a representative panel of employees (seniority, seniority level, staff representative, etc.) or testing processes.

Based on the information gathered in the field, the HR auditors will be able to analyze all the qualitative, quantitative and legal data, and then move on to the reporting phase.

Phase 3: Analysis

The analysis is carried out by the auditor in the light of the company’s legal and contractual framework and good HR practices. During this phase, the auditor evaluates the company’s best practices and identifies risks.

Phase 4: Recommendations

The conclusions of
HR audit
 are detailed in a written report, which can be in paper and/or digital format. The audit report is ideally presented to the customer during a face-to-face meeting. It details the approach, the methodology and the results: the company’s strong points on which to capitalize, and points for optimization or even vigilance in the event of immediate risk.

The report includes recommendations and an action plan for the short, medium and long term.

Phase 5: Support

In most cases, an HR audit leads to the provision of support in implementing the recommendations contained in the audit report. The auditor then takes on the role of consultant.

 

Key points to remember

  • An HR audit helps to improve overall company performance.
  • TheHR audit is a strategic management tool.
  • Using a systematic HR audit grid ensures rigorous analysis.
  • Relying on external HR auditors gives you perspective

In conclusion

Whether you want to carry out a company-wide audit or specialize in HR auditing, theHR social audit is a powerful lever for aligning your practices with your business objectives. It is also an excellent basis for implementing HRIS projects.

Don’t underestimate the impact of a well-executed human resources audit!

 

HR AUDIT: WHERE TO START?

Contact us

RH devant un graphique

Laetitia M, HR Consultant and part-time HR Manager at Boost'RH Groupe

Laetitita

For our expert, it makes sense to carry out an HR audit right from the first employee. In fact, the whole set of obligations falls away as soon as an employee joins the company: single risk identification document, compulsory posting…. This means that all companies are required to carry out a social audit. What’s more, our expert advises companies of all sizes to keep a constant eye on legal developments, as HR legal obligations, collective bargaining agreements, branch agreements and case law mean that compliance is constantly evolving. As with the HR function audit, this monitoring can also be outsourced to an HR consultant.

In any case, to be effective, an audit must be accompanied by regular follow-up, and management should not hesitate to order new audits on a regular basis, depending on the company’s current situation. The full audit is carried out every 3 or 4 years, and also at key moments in the life of the company: strong growth in headcount, change management with internal restructuring, talent retention policy…

Find out more

To sum up

En 3 Questions

  • Why carry out an HR audit?

    A human resources audit enables the company to identify its strengths and weaknesses from an HR point of view, as well as potential risks linked to the legal framework. The ultimate aim of a social audit is to improve the company’s overall performance.

  • Who to call for an HR audit?

    The HR audit can be carried out by an internal or external auditor. The external auditor is generally an experienced HR consultant with a legal background. The external auditor guarantees the company expertise, neutrality, objectivity and time savings.

  • Is an HR audit compulsory?

    Conducting an audit of your HR function is not mandatory. It’s a voluntary process, designed to improve HR practices or meet compliance requirements. However, it is advisable to carry out a regular audit of your human resources, and to follow up between audit periods.