HR Audit

An HR audit, also known as a personnel audit or employee audit, is a process of assessing and analysing the level of employee competence and performance, as well as the effectiveness of current human resource management methods. An HR audit is therefore a diagnostic tool that allows for a multifaceted evaluation of human capital.

During a personnel audit, the work of rank-and-file employees, managers, department heads, recruiters, and other staff is verified. This review also addresses whether current guidelines, internal regulations, and applied rewards or penalties are clear and tailored to employees' current needs. The analysis performed helps identify the strengths and weaknesses of HR and human resources, and pinpoint areas requiring improvement.

An HR audit can encompass various areas of human capital management, such as recruitment, organisational culture, training and development, remuneration and benefits, organisational structure, employee evaluation, company policy, and compliance with health and safety regulations, the Labour Code, Civil Code, GDPR, etc.

When to conduct a personnel audit?

A personnel audit can be conducted purely as a preventative measure, but also when a company is experiencing issues with service or product quality, punctuality, efficiency, or a high error rate. In the latter case, such an audit helps determine if the situation is due to, for example, improperly conducted recruitment leading to the hiring of individuals with unsuitable competencies, or perhaps the use of ineffective motivational tools or violations of labour law.

As a result of an HR audit, it often turns out that implementing minor staffing, process, procedural, or benefit-related changes is enough to improve the company's functioning.

Who conducts a personnel audit?

An HR audit can be carried out by an internal audit team or a single properly qualified employee (internal audit), but also by independent companies specialising in such assessments (external audit). After the necessary analysis, a detailed report is created, often accompanied by a plan to improve problematic elements or the entire enterprise.

An external audit may be more costly than an internal one, but it provides a much more objective assessment of the human resources situation than an analysis performed by individuals who are part of the audited organisation. Consulting firms also excel at knowing how to conduct a personnel audit to open the organisation's doors to noticeable error improvement or further development.

Types of personnel audit – example methods

An audit of HR processes and employees can involve a variety of tools that allow for a detailed assessment of the company's situation. The most popular methods used by auditors include:

• Documentation review – one of the elements of an HR audit that initiates every analysis, regardless of its scope. The auditor's task is to familiarise themselves with all relevant information regarding the functioning of the company or the audited department. This requires reviewing current regulations, guidelines, recruitment reports, employee personnel files, any complaints or disciplinary proceedings, and other documents, as well as data on the organisational structure, number of employees, size of individual teams, level of their responsibility, and so forth.
• Individual interviews – conversations conducted with employees, for instance, about HR management principles and practices, or employees' attitudes towards their duties.
• Psychological tests – questionnaires provided to employees for completion, based on which the level of motivation, engagement, job satisfaction, etc., of employees can be assessed.
• Observation – the auditor observes employees at the levels being examined in various situations, i.e., during work, smoke breaks and lunch breaks, internal training, and so on, and also attends current recruitment meetings.