Many lawyers suggest their clients conduct human resource audit regularly as it is an effective way of keeping the companies away from issues about legal matters, for example, unjustified termination litigation. Human resource audits are essential as they help in identifying the strength and weaknesses of the human resource department. A company should necessitate the human resource department to have a human resource audit every year, no matter it let the audit firms in Johor Bahru or its internal auditors to perform the audit. Then, it may use the audit result to improve the functions of the department and its workforce.
Ensure the quality of services of the human resource department
Human resource best practices recommend the companies to have regular audits so that the department can improve the services that it provides to the employees continuously. Human resource audits will bring substantial advantages to small businesses. They make sure that the organization is developing well as it grows and recruits more staff. The human resource department is responsible for tracking various internal customer services such as conflict resolution, payroll processing (Also see Procedures in Payroll Audit) and benefits administration. The quality of services the department offers to the company’s internal customers, which are the employees, have an impact on their job engagement, satisfaction and spirit. These factors may seem small, but they will affect the company’s profitability in the end. Human resource audits help ensure that the department fulfils the employee’s demands and maintain the standards of service level, which impact a company’s bottom line.
Assess for compliance
Most of the employers need to follow employment and labour laws. The human resource audit plays a crucial role in assessing compliance (Also see Types of Audit – Compliance Audit) as it helps in reducing a company’s risk of liability due to biased employment practices. If a company conduct such an audit regularly, it may prevent itself from suffering from potential losses which can be serious to it, especially when it only possesses limited capital and resources. A comprehensive audit is vital as it examines the company’s recruitment and selection processes, and the method it uses to manage retention, terminations and layoffs.
Review the performance of employees
In general, a human resource audit involves reviewing the employees’ personnel files. These files can tell whether the company’s managers and supervisors are giving feedback to the employees constantly and documenting their comments in the personnel files. This enables the upper management or the owners to see the quality of the feedback that the managers and supervisors have given to their workers. The audit results of the assessment of personnel files help the owners or the board of directors to know the performance of the company’s leaders (Also see Characteristics of Excellent Leaders) and determine whether they need performance improvement plans or leadership training.
Understand the company’s competitiveness in attracting talents
If a company assess its compensation and benefits practices in a human resource audit, it can get a better understanding of its competitiveness in terms of salaries and wages. Most job seekers tend to look for companies that offer comprehensive medical benefits or any benefit pertinent to work-life balance, for example, paid time off, flexible working hours, or telecommuting options. Hence, a company should examine its benefits package when they conduct a human resource audit as this measure its ability in attracting qualified applicants (Also see How to Attract and Keep the Right Talent?). Small business owners may struggle to attract the talents they want. Thus, having a human resource audit help them in assessing how good their compensation and benefits structure is when compared to other employers.