Wednesday, May 18, 2011

What are the bare necessary Human Resource Function’s data required by a manager for conducting Human Resource Audit and why?

What are the bare necessary Human Resource Function’s data required by a manager for conducting Human Resource Audit and why? Critically evaluate with you experience with the organisation you have been working with or any organisation you are familiar with. Briefly give relevant details of the organisation, you are referring to.


Audit is one of the important management control devices. HR audit is used widely to check the organisations performance in its management of human resources. To facilitate control, the audit reveals important facts such as absenteeism, labour turnover, employee grievances etc,. The primary objective of the audit is the critical review and evaluation of manpower management programme in the organization. HR audit is not limited to a review of the work of the personal department. All managers of an organization have personal responsibility. They all take part in developing policies and operate under there in handling their personnel responsibilities.

Therefore, HR audit goes beyond the limits of personnel department activities and considers the role of management in effective manpower utilisation.

“HR Audit refers to an examination and cultivation of policies, procedures and practices to determine the effectiveness of personnel management. It is an investigative analytical and comparative process. It undertakes a systematic search of the effectiveness of personnel programmes.

Personal audit is different from the measurement of employee moral. Attitudes and moral represent only a portion of the total facts and figures to be considered. HR Audit checks the indicators of the quality of leadership, motivation, communication, effectiveness of supervision etc.

From the above discussion it can be said that the HR Audit refers to :

(i) The measurement of the effectiveness of the human resource management’s mission, objectives, strategies, policies, procedures, programmes and activities.

(ii) The determination of what should or should not be done in the future as a result of such measurement.

According to “Gray”, “the primary purpose of personnel audit is to know how the various units are functioning and how they have been able to meet the policies and guidelines which were agreed upon, and to assist the rest of the organization by identifying the gap between objectives and results for the end product of an evaluation should be to formulate plans for corrections or adjustment.

Areas of Audit
The areas of HR audit include.
(i) Mission statement relating to human resource management
(ii) Objectives, goals and strategies of human resource managemen.
(iii) Accomplishments of human resource management.
(iv) Programmes of HRM including the detailed practices and procedures
(v) HRM policies
(vi) Role of HRM is total quality management.


Under following headings qualitative and quantitative indicators of HR Audit can be determined.

1. PROCUREMENT : Qualitative indicator for this function are personal inventory, replacement tables, organizational planning, job description and specification, source evaluation. Exit interviews and induction programmes etc. Quantitative indicators under procurement functions are turnover rates, selection rations, retrenchment, dismissals and lay-offs, recruitment time –lag and recruitment time langend recruitment ratios.

2. TRAINING AND DEVELOPMENT: Qualitative indicators: Training programmes, supervisory and management development programmes, systematic promotions career planning and formal appraisal.
Qualitative indicators: Time taken in training, Apprentice ratios, scrap losses, productivity increases.
3. COMPENSATION: Qualitative indicators: Job evaluation programmes, wage and salary surveys, complain from employees about wages and salaries.
Quantitative indicators: Wage and salary differentials benefit range and costs, number of employees earning bonus in excess of standard rates.

4. INTEGRATION AND MAINTENANCE : Under qualitative indicators are employee handbook, employee voluntary participation in option service programmes. Under Quantitative indicators are measured moral, measured communication, Absenteeism and turnover rates number of grievances, suggestions ratios, Accident rates.

5. LABOUR RELATIONS: Qualitative indicators: Labour management committees, contract interpretations, no strike clause. Quantitative indicators: Work stoppages grievances and their settlement, arbitrations, costs etc.

Certain records are statistics which are properly maintained for HR Audit include the following.

(1) Employment Statistics such as number of new hires, voluntary quits, forced separations, are number entering and leaving the organisations.
(2) Statistics describing characteristics of present work force such as age, length of service, education etc.
(3) Grievance Statistics including number of new grievances, number handled at each level of management etc.
(4) Miscellaneous statistical data such as absenteeism, suggestions, received and approved, average lowly rate etc.

After examining the various HR policies, practices and procedures and their results, the auditors provide written reports of their findings, conclusions and suggestions. Summaries and evaluation of factual information present the most common content of auditors report. The report should be based solely on the findings. Reports also include recommendations which may meet the primary needs of top management. The auditor should ensure that the following essentials are included in the report.

(i) Table of contents
(ii) Preface giving a brief statement of the audit
(iii) Summary and conclusions
(iv) The report proper, in which each major division or department is covered separately. Each department may be devoted a separated section.
(v) Summary – it is general nature and is relevant to all the persons concerned. It does not include the matters reported to the top management.
(vi) Appendix. This includes supporting data that might be too voluminous to appear in the body of the report.


HR Audit is given due consideration in the firm. The organization Ashok Leyland is premier manufacturing firm of Chennai and producing variety of motor vehicles. It not only caters to the national requirements, but also is exporting its products to the neighboring countries. HR Audit department carries out examination and evaluation of policies, procedures and practices to determine the effectiveness and efficiency of HRM.

HR auditors of the firm review the whole system of management programmes in which a management develops, allocates and supervises human resources.
2. They also seek explanations and information’s, that is, to get answers to such questions as “Why did it happen?” and “What happened?”.
3. One of the important function HR auditors do is that they evaluate the extent to which line managers have implemented the policies which have already been initiated.
4. They also evaluate the personnel staff and employees.
Thus in Ashok Leyland the HR auditors carry out specification of standards, collection and evaluation of information and preparation of audit reports.

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