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Conducting HR Audits to Protect and Propel Your Business
According to the HR Support Center’s April 2011 Poll of the Month, 57% of the respondents indicated they have not conducted any audits of their company’s HR function. Understanding what audits are, the purpose they serve, and the significance they provide can position a business to be compliant with various employment laws and sought after as an employer of choice. Remember; conducting an audit is not a one-time-it’s-all-done-and-over-with deal. Instead, effective audits are to be conducted, at minimum, regularly once a year.
Generally, there are four types of HR audits:
- Compliance: Evaluation of the company’s compliance with state and federal workplace laws as well as industry regulations.
- Function-Specific: Comprehensive assessment into specific areas of the HR function, such as Benefits, Compensation, and Safety.
- Best Practices: Comparative review of internal business practices with those of other businesses considered to be leaders in the industry or in the HR field.
- Strategic: Examination of the strengths and weaknesses of the company’s systems and processes to gain greater market competitiveness.
Examples of necessary reasons to conduct an HR audit include:
- State and federal employment laws and industry regulations,
- Company size in terms of number of employees,
- Business development into new areas including expansion into multiple states,
- Internal restructuring of the organization,
- Mergers and acquisitions, and
- Business cycles / seasons.
Moreover, federal and state agencies have been recently targeting certain industries (i.e. agriculture, hospitality, and manufacturing) to primarily audit for worker misclassification, wage and hour, and record keeping matters. Employee claims of unfair discrimination or practices in the workplace also can trigger a federal or state agency audit knocking on your door. So, be constantly prepared.
As discussed in the September 2010 newsletter edition, the U.S. Department of Labor’s Plan / Prevent / Protect strategic compliance enforcement initiative has already been in motion. Clearly, it is in the employers’ best interest to be “proactive” rather than “reactive” when it comes to proving their on-going workplace compliance efforts. Conducting regular HR audits remains a key ingredient in the process. One of the easiest ways is for your company to take the 3-minute HR Audit now available in the HR Support Center!