Human Resource (HR) Audit - Meaning, Importance & Types

Published in Human Resources Terms by MBA Skool Team

What is Human Resource (HR) Audit?

HR audit is mechanism & detailed analysis to review the current HR policies, practices and systems to ensure that they fulfill all the rules and regulations. The HR audit also helps in identifying the gaps and the areas of improvement in the HR function. These audits are done regularly in the organizations to ensure that the human resources department is competitive and highly efficient.


Importance of HR Audit

For any business, it is critical that they have a highly talented and well motivated workforce. The various HR functions and policies need to be reviewed and updated regularly to ensure smooth workforce management. An HR audit covers various functions of human resources like recruitment, compensation & benefits, performance evaluation, job termination process and exit interviews etc. It is important that companies review these processes regularly to ensure high efficiency in employee management.


Types of HR Audit

Depending upon the kind of review, analysis and evaluation to be done, there are audits can be classified as the following:

1. Auditor based

Internal audits are carried out by the internal management teams whereas external audits are done by third party experts & consultants.

2. Frequency based

HR audit can be a regular or planned happening after a specific time period. Unplanned audits are the ones which happen on a request from the management to evaluate critical policies.

3. Goals based

HR audits are done to identify certain gaps and improve HR processes. Different types of audits based on goals are compliance, improvement, M&As etc.


Advantages of HR Audit

A properly conducted audit helps in the following:

1. To recognize strengths and best practices which help motivate employees.

2. To reveal problem areas which need to be addressed and improved.

3. Confirms compliance with latest regulations to ensure that all policies are compliant with legal requirements.

4. Ensures effective HR policies which provides the right work life balance and benefits to its employees.

5. Builds confidence in HR function to perform more efficiently by recognizing their contribution regularly.

Hence, this concludes the definition of Human Resource (HR) Audit along with its overview.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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