HR Audit Common Questions

Answering The Most Common Questions About HR Audits (Including Are They Worth It?)

July 17, 2024

Answering The Most Common Questions About HR Audits (Including Are They Worth It?)

By Jeff Mignault

Director, Customer Experience, AugmentHR Consulting

Do you know what you’re missing when it comes to your HR practices? I suggest you don’t wait for the next compliance emergency to occur. As an HR consulting company that has done audits for dozens of companies, we know it's way easier to deal with issues sooner than later. Being proactive with audits can help you see potential issues before they become real problems for your business.

Regularly assessing your HR practices helps ensure a thriving team environment, reduces legal risks, and keeps your organization compliant. While you could do an internal audit, it's often more effective to have one done by an external consulting firm to examine your HR policies and procedures to identify efficiencies.

Below, we’ll discuss these 7 topics:

What is an HR audit?
What are the objectives of an HR audit?
Different types of HR audits
What HR audits include
HR audit costs
How often you should get an audit
HR audit benefits

What is an HR audit?

An HR audit comprehensively evaluates a company's human resources policies, practices, procedures, and systems. An HR audit aims to identify improvement areas, ensure compliance with legal and regulatory requirements, and align HR practices with the organization's strategic goals. HR audits are a necessary process to identify potential issues and take proactive measures to mitigate threats to the organization.

What are the objectives of an HR audit? Why do one?

An audit is an essential HR service that serves an important purpose. The objectives of an HR audit are multifaceted, aiming to enhance the efficiency, compliance, and overall effectiveness of the HR function within an organization.

The outcome of an HR audit typically includes a report detailing the findings, identifying strengths and weaknesses, and providing recommendations for improvement. By conducting regular HR audits, organizations can proactively address potential issues, improve their HR practices, and create a more efficient and compliant work environment.

What are the different types of HR audits?

There are a lot of different ways you can audit your human resources practices. Generally, HR audits fall into one of five categories:

Compliance audits: This is the most common. This involves ensuring you comply with all laws and regulations.
Policy audits: This is a review of internal policies to look for ways to improve them.
Functional audits: This is about analyzing HR systems and tools to identify if upgrades or changes are needed.
Culture audits: This is an assessment of company culture to identify areas for improvement.
Strategic audits: This involves reviewing the impact of potential business strategies and how they could affect the organization.

What does an HR audit include? Core elements to look for:

An HR audit is a comprehensive review of an organization's human resources policies, procedures, documentation, systems, and practices. Here are the key components typically included in an HR audit:

Compensation and Benefits: Analyzing the company's compensation and benefits programs to ensure they are competitive, equitable, and compliant with legal requirements.
Coaching and Development: Assessing the effectiveness of training and development programs in enhancing employee skills and career growth.
Performance Management: Review the performance management system to ensure it is objective, consistent, and linked to the organization's goals.
Recruitment, Hiring & Succession Practices: Evaluating the effectiveness and fairness of recruitment and hiring processes, including job postings, interviews, and selection criteria. And ensuring there is a clear succession plan in place for positions throughout the organization.
Compliance Check: Ensuring that the organization is following all relevant labour laws and regulations, including those related to employment, health and safety, benefits, and payroll.
Onboarding & Team Building: Assessing the effectiveness of onboarding, training and development programs in enhancing employee skills and career growth. And ensuring there is a program to build team spirit & company culture.
Health & Safety: Ensuring that the workplace meets health and safety standards and that employees are trained on safety procedures.
Anti-Harassment: Assessing the company's HR policies and procedures to ensure they are up-to-date, compliant with current laws, and effectively communicated to employees.

How much does an HR audit cost?

The cost of an HR audit can vary greatly depending on the size and scope of the analysis and your organization. Extensive audits can cost thousands of dollars. There is not a fixed price per audit.

There is no charge for the AugmentHR audit. It’s been put together by HR veterans and will help you evaluate where your organization stands in the eight key areas listed above. Once the audit questionnaire is completed, our team will have a call with you to review the current HR state.

How often should an organization conduct an HR audit?

HR audits should be conducted regularly. It is recommended to perform an audit once per year. It is also common for organizations to conduct smaller audits throughout the year to ensure compliance. A developing trend or emergence of an issue within your company could also trigger the need for an audit. Here are 9 signs you need to perform an audit:

Employee complaints
A significant change to operations or the workforce
A significant change in your workforce
An increase in employee turnover
Add a significant number of employees
A change in leadership
Repeated mistakes
Identification of inefficiencies
Considering layoffs or downsizing (you could also benefit from outplacement services

Any of these situations could require you to revisit your HR policies and to ensure they are still current, effective, and legally compliant.

What are the benefits of an HR audit? Here are 12 reasons to get one!

An HR audit provides several benefits to an organization, contributing to improved efficiency, compliance, and overall effectiveness of HR functions. Here are some key benefits:

Compliance Assurance: Ensures the organization adheres to labour laws and regulations, reducing the risk of legal penalties, fines, and lawsuits.
Identifying Gaps and Risks: Helps uncover weaknesses, gaps, and potential risks in HR policies, procedures, and practices, allowing for proactive resolution.
Enhanced Efficiency: Streamlines HR processes by identifying redundant or outdated practices and recommending improvements for better efficiency.
Improved Employee Relations: Enhances the handling of employee grievances and disciplinary actions, fostering a fair and positive work environment.
Strategic Alignment: Aligns HR practices with the organization's strategic goals, ensuring that HR contributes effectively to overall business objectives.
Better Recruitment and Retention: Evaluate recruitment and retention strategies to ensure the organization attracts and retains top talent.
Performance Management: Improves performance management systems, ensuring they are objective, consistent, and linked to organizational goals, thus enhancing employee productivity.
Competitive Compensation and Benefits: Ensures compensation and benefits packages are competitive and equitable, helping to attract and retain employees while maintaining compliance with legal standards.
Training and Development: Assesses the effectiveness of training programs, leading to better employee development and career growth opportunities.
Data Accuracy: Ensures that employee records and HR data are accurate, complete, and up-to-date, supporting better decision-making.
Workplace Safety: Confirms that the workplace meets health and safety standards, reducing the risk of workplace accidents and promoting employee well-being.
HR Technology Optimization: Reviews and optimizes HR information systems and technology, ensuring they effectively support HR functions and improve data management.

A final word about HR audits

HR audits should be an integral part of your HR strategy. By conducting regular HR audits, organizations can maintain a high standard of HR practices, foster a compliant and positive work environment, and strategically support overall business goals while minimizing the very real risk of lawsuits and fines.

Jeff Mignault is the Director, Customer Experience of AugmentHR, a Toronto HR consulting firm providing HR outsourcing to services to a wide range of clients from startups to blue chips. Jeff has 15 years experience in the HR outsourcing world and oversees a full team of veteran HR consultants providing a range of HR services on-demand from compliance to compensation.