“Human Resources isn’t a thing we do. It’s the thing that runs our business.” — Steve Wynn

Modern organizations have to continually assess and refine their internal processes to remain competitive and responsive to employee needs.

One of the most effective tools for achieving this is the human resources audit.

It is like giving your HR department a little check-up, taking a closer look at how things are running—what’s working well and what might need some tweaking.

What Is an HR Audit and Why Do We All Need One?

At its core, an HR audit is an examination of an organization’s HR policies, practices, and systems.

It evaluates their compliance with legal requirements, alignment with organizational goals, and overall effectiveness.

For newly appointed HR professionals, such an audit can be an invaluable opportunity to gain a comprehensive understanding of the organization. It offers a chance to dive deep into existing policies and practices, identify strengths and weaknesses, and familiarize oneself with the organizational culture.

In organizations that undergo changes—whether through mergers, acquisitions, restructuring, or shifts in leadership—an HR audit allows you to assess how these changes have impacted HR functions and employee engagement and ensure that the workforce remains aligned with the new direction of the company.

Besides that, an HR audit provides a structured approach to analyzing employee complaints and managers’ observations.

Types and Goals of HR Audit

When it comes to planning and preparing for an HR audit, there’s no one-size-fits-all approach.

There are several types of audits, and each zeroes in on specific aspects of your organization’s workforce management.

The most popular choice is the general HR audit. It’s a broad evaluation allowing you to pinpoint which areas of your people management might need some TLC.

And if you’re after something more tailored to your organization’s unique needs, there are several types of HR audits you might want to explore.

However, before diving into the different kinds of audits you can conduct, it’s crucial to define your goal.

Start by assessing the current state of your HR practices. Consider conducting informal discussions with employees, managers, and HR staff to identify any pain points or areas needing improvement. Common areas to explore include:

  • Compliance with labor laws
  • Recruitment and retention strategies
  • Employee training and development
  • Performance management systems
  • Workplace culture and employee relations

These, empowered by the SMART criteria, will provide further direction for your audit and shape up its scope.

Type of Audit
Scope

Compliance Audit
Focuses on ensuring that your HR practices align with local, state, and federal laws.

Records and Data Audit
Involves analyzing employee records and various HR metrics—like turnover rates and training costs—to spot trends and make informed decisions for improvement.

Functions Audit
Assesses how well various functions (aka recruiting, onboarding, training, etc.) are performing and whether they align with organizational goals.

HR Technology and Systems Audit
Evaluates the technology and software systems used in HR processes, their effectiveness, efficiency, and integration of these tools within the company’s HR strategy.

If you’re ready to kickstart this process, grab an HR Audit Scope Template to make things easier!