Human Resource Auditing – The Foundation of a Corporation’s Growth

Human Capital is one the vast assets of either a small-scale or a huge corporate enterprise. Because of this it is one of the main focuses of companies, and different changes have been put in place to address needs to cater Human Capital’s progress. One of the changes is tools that have been evolving regarding Human Resources audit.

Human Resources audits set different rules for strategic management. Because of this, it is imperative that they use technologically advanced tool for auditing products and services. HR auditing is a process that should be objective, systemic and independent. It assures legal compliance are abided by to meet government’s standards. HR auditing manages business objectives are met through talent management. The most important is they identify risks, assesses what needs to be done and makes sure these risks are managed.

These tools are becoming progressively complex and multi-faceted. Their objectives are:

- Ensure that HR management is aligned with employment practices and the entire business’ mission and vision.

- Assess the results of the organization’s employment guidelines, policies, activities, and outcomes.

- Develop human capital’s drive to achieve goals while making sure that practices to perform on these goals are done in favor of diversity and benchmarking best practices.

- Identify liabilities and assets, opportunities are acted upon and possibility of risks are given possible measures of correction.

- Develop HR auditing processes that will cater to the ongoing change in the market and employee behavior.

- Deal with employment-related fraud.

Regulatory requirements are influenced by:

Securities and Exchange Commision. They require corporations to “…exercise reasonable management oversight.” Due diligence is implied to because if Human Capital is the largest asset of a company, so it will also be their largest expense. When HR audit is put in place effectively management is reducing risks that can be brought about by simple oversight.

Sarbanes-Oxley. This law was put in place to require effective internal controls within the enterprise that will be conducted by HR auditing. Employment-related claims and litigation can lead to negative impact that will reduce earnings per share. Consequently, this will reduce the organization’s value that will negatively impact an organization’s long-term capacity.

Governmental agencies also look on systemic non-compliance by different organizations. For example, the OFCCP requires self-assessment among employees to be conducted. This is a best practice that needed to be conducted by corporations. The EEOC encourages employers to conduct HR audits based on sophisticated tools that will watch out for systemic discrimination. The US DOL is very strict on wage and hour self-audits. The DHS and immigration lawyers encourage employers to make audits regarding I-9s and hiring processes tin compliance with US immigration laws.

The US Federal Sentencing Guidelines implies to different corporations that they should take reasonable yet effective standards when implementing a culture of compliance. They require that monitors and audits should consider activities behavior and results. Legal compliance is consequent to ethical conduct and non-discriminatory practices within the workplace thus, Employment posters would be a big help.

It is also interesting that capitalist financiers, investors and stockholders are on the lookout for Human Resources’ management practices, process and guidelines, and results that are brought about by HR audits. They look in to the feedback that recognizes human capital asset, liabilities and performing due diligence when risks arise.

This regulatory compliance assures that the five critical components of HR audit process are met. One of the components is the activities that corporations conduct which encourage best practices regarding policies and procedures. This paves way to uncover the next critical component which is behavior. This is brought about by the prevailing culture in the corporation that will take into consideration values, equal employment opportunities, compliance and diversity.

Behavior leads to uncovering risks within the corporation which will identify the net critical component – assessing risks. This moves HR auditing closer to the management side. This tests how apt the corporation is to deal with these risks and what steps to do about it. They may be able to create the next critical component which is internal controls or processes, tests and assessments done and completed to assure corporate goals.

At the end of all the steps, this should lead the HR to evaluate on the last critical component that is outcome. This measures the qualitative and quantitative response of the entire process. This needs scientific interpretation of results in order to derive fruitful recognition of assets, liabilities, improvements and risks. This end step predicts what the corporation needs to do moving forward.