What is an HR audit?

An HR audit is a self-evaluation HR departments perform to assess their functionality and compliance with government regulations. HR auditing generally focuses on two domains:

  • Current practices and processes. For example, revamping the organization’s training and development program to include a wider variety of learning options or refining the recruitment process by rewriting the job descriptions. 
  • HR KPIs. For instance, focusing on decreasing the absenteeism rate, time to hire, or time to fill.

Ideally, companies run one major audit annually and small-scale audits bi-annually. There are also different approaches to the HR audit process: It may be comprehensive, addressing various topics; conversely, the HR audit may be more in-depth, focusing on several specific areas. SHRM outlines the four categories of HR auditing: 

  1. Compliance: addresses how thoroughly HR currently adheres to pertinent government laws 
  2. Best practices: allow HR departments to benchmark with HR departments in other competing companies  
  3. Strategic: assesses HR practices and processes to foster alignment with organizational and business strategies  
  4. Function-specific: addresses particular functions such as payroll, benefits, or recruitment

Why should HR leaders care about an HR audit?

An audit is HR’s version of spring cleaning. The department formally analyzes its practices, processes, and compliance and identifies areas for improvement. While audits can be time-consuming, they are essential to maintaining a competitive HR department that’s compliant with state, federal, and international laws.  

How can HR leaders manage a successful HR audit?

HR leaders can achieve auditing goals by incorporating these measures:

Map out a plan

HR professionals have copious responsibilities and busy schedules, so efficiency is key. Creating a plan can help HR leaders focus on achieving their audit goals.

The auditing plan should include the following steps: 

  • Identify the type of HR audit
  • Establish the objectives and requirements 
  • Collect and analyze the data
  • Write a report that includes the results, and any gaps between the current status and established goals  
  • Create a timeline for addressing and correcting each problem  
  • Practice continuous monitoring to ensure progress 

Carve out time in advance

The audit can take several days, so it’s best not to schedule other work during the audit. Clearing out time for the audit enables HR leaders to focus their full attention and not be distracted by other duties or deadlines. 

Ensure executive support

Because each executive may define HR audit priorities differently, HR leaders must check in with company leaders to garner their support and approval.

Why should HR audits be part of modern HR strategy?

In the current world of work, companies have to cope with a complex tangle of laws and regulations. Whether these laws are local, state, federal, or international, compliance and proper legal conduct are essential to avoiding detrimental lawsuits. By consistently assessing and examining their practices, HR departments keep up with competitors and thrive in the fast-paced business world.