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An Internal Review of Human Resources – The HR Audit and Organizational Analysis

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Last Updated on April 14, 2021 / HR Strategy

The end of the year and beginning of the new year always seem to be a time of personal reflection and the same is true of our organizations! When we hear the word audit, most of us immediately think “finance” or “accounting,” not Human Resources.  However, as HR continues to evolve into the role of a business partner and strategic partner in organizations, the HR function is one that should be audited and analyzed.  A properly conducted review of your HR processes and systems can provide measurements that show support of the department’s objectives and shows contributions to the company’s bottom line.

What audits should I do and how are they different?

When you are involved in a review of your Human Resources function, there are typically two distinct components: the HR Audit and the Organizational Analysis.  Whether conducted together or separately, these reviews are different in their focus and yield highly actionable recommendations.

In the HR Audit, the focus is compliance and processes but should include all areas of HR such as:

  • Recruitment
  • Training and Development
  • Benefits and Compensation
  • Communications
  • Employee Relations
  • Recordkeeping
  • Health, Safety and Security
  • HR Compliance

Document reviews and interviews during an audit process will allow an auditor to review what an organization says it does (the policy/procedure), what it is doing (actual practice), and what should be done (best practices).

In the Organizational Analysis, the focus is on how HR contributes to the success of your company: checking the health of your HR function, diagnosing what’s getting in the way of the results you need and identifying specific interventions to make improvements in your system and the structure of how work gets done.  Information reviewed includes:

  • Company strategy and business goals
  • Current organizational structure and organization chart(s)
  • Information on all business sectors or partners
  • Historical information on the business.

What can I expect when I do an HR Audit and Organizational Analysis?

To begin either review, start with information gathering, including applicable HR policies and procedures, forms/templates, current organizational charts and other important documents.  The review will only be as good as the information you provide to the auditor so the results will be limited if you aren’t honest or don’t provide all of the information requested.  After a thorough document review, the interview process will begin and will include anyone involved in Human Resources including internal customers within your organization (such as hiring managers and C-level executives).

After the document review and interviews, the auditor will create a report that will show specific recommended actions.  For the HR Audit, the report should indicate the reason for the recommendation (compliance, best practice, etc.) and make suggestions on how to improve the area identified.  The report should allow you to organize the information and create priorities for areas of improvement.  Finally, the report should also include an overall assessment of the alignment of HR systems with the organization’s goals and recommendations for improvements in that area, if necessary.

For the Organizational Analysis, the report should include details on the findings regarding current functioning and recommend actions to enhance and improve your HR results as a key part of the organization.  The recommendations may include assessing design elements such as organization structure or addressing operating norms and potential root causes which need to be further evaluated and addressed to help improve operations.

We do annual physicals on ourselves.  Evaluating the physical health of our human resources function should also be done each year.  Overall, these reviews will provide your organization with an objective evaluation of the Human Resources function as well as a road map for growth and continued improvement.

Thank you to Patti Dunham, MBA, MA, SPHR, SHRM- SCP and Brianne Waugh, MA for sharing their insight on HR Audits and Organizational Analysis. If you would like to learn more about an HR Audit for your organization, you can Request an HR Audit Quote.  Or, if you would like help getting started with your Organizational Analysis, give us a call at 513.697.9855 or contact us online.