Human Resource Audit – Meaning, Definitions, Need and Benefits

Human Resource Audit

Meaning, Definitions, Need, Objectives and Benefits

Human resource audit

HR records and reports provide information regarding the utilisation of human resources in an objective way. However, in most cases, this is not sufficient. A critical evaluation of manpower programmes might be required to find out the areas where improvements are needed and to set things in order. Audit is an important test of managerial control. It involves examination and verification of accounts and records. HR audit implies critical examination and evaluation of policies, programmes and procedures in the area of human resource management. It is a systematic assessment of the strengths, limitations, and developmental needs of its existing human resources in the Context of organisational performance.

Typically, the HR audit deals with a broad set of questions, including the following:

i. Is the turnover rate exceptionally low or high?
ii. Are the people quitting the organisation efficient employees who are frustrated in their present job or are they marginal performers?
iii. Is the enterprise receiving a high return on the money it spends on recruitment, training and pay-for-performance plans?
iv. Is the enterprise complying with government and statutory agencies?
v. How well is the enterprise managing employee diversity?
vi. Is the HR department providing the services that line managers need?
vii. Arc HRM policies, programmes and practices helping the organisation in attaining its long-term goals?


According to Dale Yoder
Human Resource Audit refers to an examination and evaluation of policies, procedures and practices to determine the effectiveness of personnel management.

Need for Human Resource Audit

Human Resource Audit is require for following important reasons:

i. Changing managerial philosophy, which has come to regard employee’s participation and identification as having a powerful influence on motivation of employees at work for the success of the organisation, has recognised the need for personnel audit.
ii. As an organisation grows the need for such an audit increases. A continuous feedback is necessary to improve, for example, the performance of the personnel and this is possible only by way of personnel audit.
iii. Expansion of unions of employees and of bilateral determination of employment policy with frequent criticisms of managerial competence has made it necessary to conduct personnel audit.
iv. Rapidly rising wages and salaries, with higher labour costs and greater opportunities for competitive advantage in the management of people is another cause which compels management to conduct personnel audit.
v. In order to protect employee’s interest, Central and State governments intervene more often and more extensively. Human resource audits can be helpful in avoiding such intervention.
vi. The changing mixture of skills with growing proportions of technical and professional workers, who present more difficult managerial problems, has also made it essential for the management to use personnel audit.

Objectives of Human Resource Audit

The basic objectives of HR audit are as follow:
i. Reviewing the efficacy of organizational system in attracting, developing, utlising and retaining human resource in the organization.
ii. Evaluating the effectiveness of HR department in implementing the organisation’s HRM objectives, polices and programmes.
iii. Reviewing the HRM system in comparison with other organizations and suitably modify and fine-tune it to meet the emrging challenges of human resource management.

Areas of Human Resource Audit

Personnel audit can be conducted in every aspect of management of people in the organization. It may be directed at the following:
i. Results, including both accomplishments and problems regarded as effects of current management.
ii. Programmes, including the detailed practices and procedures of which they are composed.
iii. Policies, both express and implied.
iv. Philosophy of management, its priorities in values and goals.

Benefits of Human Resource Audit

Some of the major benefits that emerge from HR audit include the following:

i. It identifies the contribution of the HR department to the achievement of organisational objectives.
ii. It improves the professional image of HR department.
iii. It encourages greater responsibility and professionalization among members of HR department.
iv. It clarifies the duties and responsibilities of the HR department.
v. It stimulates uniformity of human resource policies and practices.
vi. It identifies critical human resource problems.
vii. It ensures timely compliance with legal requirements.
viii. It reduces HR costs through more effective procedures

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