CEOs – HR Audit

Do’ and Don’ts for CEOs on HR Audit

  • Always get you CHRO to initiate and commission HR Audit so that he/she is fully involved and ensures the maximum benefit out of it
  • Make the purpose clear from the beginning whether you like a full comprehensive Audit (covering HR strategies, structure, systems and practices, HRD competencies of all stakeholders (HR staff, line managers, workmen, top management etc.) HRD and organizational Couture, and HR’s impact on Business (talent, intellectual capital and financial variables) or you like to have only select subsystems audit.
  • Get the qualifications and experience of the audit team and make sure you have qualified auditors. Preferably have a prior discussion before commissioning audit
  • Start the audit with a note to be circulated explaining the purpose of audit and the outcomes expected and how you plan to use them
  • Start the audit with a talk or address by the auditors the senior and top managers explain the methodology and scope of audit and seek their cooperation. Normally no line managers should be required to give more than a 2-3 hours time with auditors but the HR staff should be required to give more time.
  • Get the competencies of HR Managers tested by consultants as it will help the organization prepare development plans for HR staff. Assure them the criticality of their function and the need for their won growth.
  • If you do not wish to be consultant dependent there are simpler methods of like large scale interactive process workshops and audit workshops for conducting audit. They are harmless. Recent experiences on a Nationalised bank suggests that audit can be conducted using workshop method very effectively where even consultant’s report of specific systems like manpower planning, succession planning can be subjected to audit.
  • Make sure that the audit findings are presented in an informal way to the top management team or at least the CEO and CHRO together before finalising the report to ensure all your concerns and context are taken adequate note of y auditors
  • Insist on a HR improvement plan as a result of audit and preferably an implementation plan with phases from the auditors.
  • Remember the main difference between HR audit and F&A audit is that the former relies stats with documentation and f goes on to rely heavily on people, their feelings and experiences while the alter relies exclusively on documents and feelings and opinions don’t normally matter. Hence all audits require compulsory involvement of employees and interviews with them etc. Questionnaires can tell the truth if anonymity is assured and ensured.
  • A good time to conduct audit is when your CHRO has left a new CHRO or HR Director is to be appointed or is about to take over. It gives and implementation agenda to the new CHRO or HR Director.
  • Audit can be done at any time, when things are looking up and you are doing well or when chips are down or when you have some free time. There is no specific timing for audits. Your need and context determine the audit scope and methodology.

Dos and Don’ts for a CHRO

  • Always involve the CEO and top management by circulating some literature on HR and HR audits. Unless they are involved the implementation becomes difficult
  • Be prepared to face some criticism from the audit reports. No one is perfect and NO HR department has ever been fully mature. All people matters are continuously evolving and developing and hence there is no need to be apprehensive
  • A audit that says only good things and ahs no improvement plant may not be a good audit
  • Open yourself fully, totally and express your views opinion and desired improvements fearlessly as audit is a way for you CHRO to get many things done to maximise the impact of your function and role.
  • Insist on a presentation of the methodology to the top management once a the audit begins and ensure all the Dos and don’ts mentioned above for CEOs are followed meticulously to the extent possible
  • Avoid employing your friends as auditors. It creates difficulties for theme as well as to you.
  • Get HR staff roles reformulated and competencies development plan outlined on the basis of the audit. You could also get your budgets rationalised or enhanced to invest on intellectual capital building and higher impact of HR
  • Read literature on HR audit and get yourself prepared. The scope of audit to be decided after careful thought and familiarity of what audit can yield what it cannot.

Simpler methods of audit
Simpler forms of audit have been sued when SAIL announced HR awards for its Golden Jubilee year celebrations. IIMA team developed a comprenehcive audit questionnaire and obtained detailed responses from companies. It is said that the lengthy questionnaire itself made many organizations to think and reflect about their HRD. This required a self audit. The questionnaires responses were graded and select companies were visited by a c team of experts from IIMA and SAIL to do a mini audit.

A similar methodology was adopted by the Khadndelwal committee for which consisted by Prof. T   . V Rao along with Prof. D. Pathak from IIT Mumbai, M V Nair Chairman of Union bank, and a senior official from ICICI Bank.

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