HR audit

Human Resources Audit

A Common Question

Human Resource (HR) professionals are often asked: “Which recruiting strategies are bringing our organization the greatest returns on investment?”  To be able to answer this question you need to be collecting data on an ongoing basis.  Leaders need this type of information to make important decisions.  

Essential Metrics

HR leaders who are on top of things share valuable information with your organization’s CEO, CFO, COO, VPs, and other executives.  To make crucial decisions, an organization’s leaders demand the following metrics from the HR Department: cost per hire, time to hire, source channel efficiency, assessment effectiveness, and new hire quality.  To make your HR leader look good at the C-level, the HR Department needs to collect the relevant data and have these numbers available upon demand.  

System Audit

There are many functions in an organization as well as many systems.  Organizations that practice strategic management frequently review all their operating systems to ascertain what is working well, what is lacking, and what can be improved or re-engineered.  The HR system is vital to an organization’s success.  

A system audit is defined as:

“… a disciplined approach to evaluate and improve the effectiveness of a system. Audits are carried out in order to verify that the individual elements within the system are effective and suitable in achieving the stated objectives. The system audit also provides objective evidence concerning the need for the reduction, elimination and most importantly, prevention of non-conformities”

(System audits and the process of auditing. Retrieved 24/02/2020 at 10.04 a.m.).  

HR Audit 

A human resources audit (hereinafter HR Audit) is a type of system audit.  It is a systematic process used to gather objective data to ascertain the “people” needs of an organization in keeping with its mission and functions.  

“Like any audit, the Human Resource Audit is a formal process, which is designed to examine the strategies, policies, procedures, documentation, structure, systems and practices with respect to the organization’s human resource management. It systematically and scientifically assesses the strengths, limitations, and developmental needs of the existing human resources from the larger point of view of enhancing organizational performance (Concept of Human Resource Audit.” ( Retrieved 24/02/2020 at 11.07 a.m.).”

Apart from ongoing data collection, HR Audits are recommended every three to four years.  During HR Audits it is common to find two or three jobs with different job titles but with identical job descriptions.  The longer the interval between audits the larger the number of problems that need to be solved.  

How is a HR Audit done?

A HR Audit examines the entire human resources management system and assets.  It looks at the existing human capital and the specific processes that affect it.  Specifically, a HR Audit evaluates the efficiency and effectiveness of the following HR functions: recruitment/sourcing, screening tools, selection decision making procedures, and placement criteria.  A HR Audit includes analyses of new hire quality, assessment effectiveness, source channel efficiency, time to hire, cost per hire, and other such key performance indicators used by the specific organization.  

Being a system audit, a HR Audit also includes analyses of 

  1. job descriptions with recommendations for improvements to meet the organization’s future needs
  2. employee relations management mechanisms
  3. grievance and disciplinary procedures
  4. human resources management policies, e.g., promotion criteria
  5. compensation, pay scale, salary grades
  6. the human assets and database management system (Human Resources Information System)
  7. the performance evaluation system. 

The HR Audit incorporates the use of both qualitative and quantitative data; hence it uses a mixed-methods research design.  At the start of the audit, basic text data from conversations with business leaders, interviews with executives, and documents such as job descriptions and job advertisements, are collected and analyzed.  

These data answer questions pertaining to: the business of the organization; how it conducts its business, i.e., what are the functions, operations and processes; its employees, i.e., the number of employees, positions in the organization and inter-relationships among them (includes review of organizational  chart); the hiring system, the employee relations mechanisms, health and safety, security, the sourcing channels, the screening process, the number and quality of the personnel selection assessments, the performance appraisal tools and process used with each job cluster,  the frequency of observations for coaching and skill improvement, the frequency of summative performance evaluations, and other data of interest to the HR leaders in the specific organization.  

The audit team also observes how business is conducted; who does what, when they do it, how they do it, what tools or equipment they use, the operating environment, the use of the chain of command, as well as employee interactions with each other, subordinates, superiors, and customers/clients.  These observations give insights into customer satisfaction/loyalty, the organization culture, work ethic, communication effectiveness, quality of collaboration, accountability, and productivity.  

The HR audit is a strategic intervention that requires the sponsorship of top leadership.  It also requires the sanction of the governance body (Board) and worker representatives (Union).  It must obtain cooperation of middle managers, supervisors, and the frontline professionals (production and service personnel).  

Communication with everyone in the organization must be clear.  Special care must be invested to avoid sending mixed messages or a message of impending organization demise or downsizing.  Even though downsizing may become a recommendation after the data is analyzed, a HR Audit is not designed with downsizing as a predetermined goal.  For the HR Audit to be successful, stakeholders must be comfortable to share their opinions honestly without fear of reprisal.  

Audit Process

As shown in Figure 1, the audit process begins with open, effective communication and then moves on to the technical procedures.  The numerous procedures start with the collection of data relevant to the business of the organization, what it does, who does what and the mechanisms that support personnel in completing their assigned duties.  

Research methods such as on-site observations, focus groups, interviews and surveys are used to collect qualitative data.  Numerical job performance measurements and productivity metrics facilitate quantitative analyses such as comparisons of production and targets or quotas.  In terms of production comparisons, the audit team may conduct gap analyses of the quantity and quality of goods produced per day and compare that data to the daily quotas.  During analyses data could be aggregated by month, quarter, or year.  

Figure 1

Once the data collected satisfies quality assurance standards such as reliability, the data can then be analyzed as required.  Results from these analyses are interpreted to formulate recommendations.  These recommendations are included in a written report and discussed with the organization’s leadership.  Later, it is a good idea to share findings with a cross-section of the stakeholders, particularly those who were involved in the focus groups, interviews, and surveys.  The outcome of the discussions with leadership as well as with other job clusters, will inform initiatives and proposed actions to be captured in an action plan for moving the organization forward.  

The duration of an audit depends on the size and complexity of the organization, the use of technology, and other relevant factors.  Typically, a HR Audit can be accomplished within three months to four months.  If the audit takes longer than six months then that is a signal that major organization re-engineering may be required.  


Cascio, W.F. 1992. Managing Human Resources: Productivity, Quality of Work Life, Profits. New York: McGraw-Hill.

Cummings, T.G. and Worley, C.G. 1975. Organization Development & Change. 6th ed. Soth-Western College, Cincinnati. 

About the Author

Dr. Kerry Sumesar-Rai is a Management and Organization Reengineering Consultant.  He leads program advisory services, audits, and workshops.  Armed with proven results and wisdom, he helps clients manage changes in public policy, leadership/management doctrine, and cultural re-engineering.  His record of improving internal systems in the public, state and private enterprise sectors demonstrates his ability to facilitate a collaborative approach among leadership teams. As author and life-long learner, his scope of interests which span Strategic Planning, Policy Analysis, and Operations Project Management, include completing a Leadership Ph.D.

Organization Reengineering_1

Organization Re-Engineering

When your goal is to remodel, change or develop an enterprise, you are interested in Organization Re-Engineering.  It starts with a strategic intervention and culminates with a new or re-engineered organization. 

A re-engineered organization is one that has undergone some combination of transformation, reformation, and sustaining.  The extent of the changes is based on the organization’s needs and goals.  Transformation is about significant change whereas reformation pertains to change in some aspects while the fundamental business, product and services remain unchanged.  The parts of the business that remain unchanged, are described as being sustained.

For instance, a transformation would be changing your organization from producing playing cards to producing cell phones.   In transformation the product as well as the target market changes.  Reform is like moving from the production of bread to boxed cereal.  The fundamental business and the targeted consumer remain the same.

You may ask: “Why include sustaining in a conversation about re-engineering?”  While re-engineering suggests widespread change, that goal is not always desirable nor achievable.  Re-engineering speaks to changes, modification, alterations, and even rationalization of processes, some systems, and operations. 

Changes may include the introduction of new technology and production systems or new skillset requirements for employees.  All of these affect the ways things are done and the outcomes produced.  Modifications and alterations may be realised in the work flows and resources used.  

Rationalization may come in truncating systems and processes, thereby reducing time in the movement of resources and inputs or reduction of the number of human resources involved. Rationalization includes what some call “right sizing.”  It is about producing the same or more output with less inputs. 

Re-engineering may not see every facet of production changed, some aspects of the organization’s operations, some functions may remain the same: e.g., procurement, financial accounting, records storage, communications and even some logistics.  The flow of resources to enable production and service delivery may remain the same or change.

However, it’s expected that a re-engineered organization does things differently, is more efficient, and is more effective in the use of resources, decision making, and the delivery of goods and services.  What the organization chooses to transform, reform, and sustain depends on the purpose of the organization (see Figure 1). 

Figure 1

The purpose of the organization defines the business and operations strategies, the objectives, and goals.  Organization re-engineering is geared towards changing or modifying outcomes, such as productivity metrics, and requires deliberate measurement and studies to evaluate the impact of the targeted changes.

The attempt to re-engineer an organization requires considerations of institutional strengthening and capacity building to enhance the capabilities, efficiency, effectiveness, and profitability.  An organizational diagnosis needs to be done so that the issues and problems can be defined and the organization development thrust can be properly positioned, focused, and validated. 

The organization development itself will be comprised of several initiatives accompanied by relevant studies and analyses.  These analyses and studies will require data capture. The data collected is then analysed to obtain an understanding of what exists and make decisions about what requires change.  The research may include gap analyses to discern issues and problems to be addressed.  The research tools used for this part include both qualitative and quantitative methods. 

Crucial to effective analyses is the capture and modelling of the existing processes and work flows.  Flow charts, maps and resource data are essential for the functional and task analyses.  Upon completion of the data collection and after the analysis phase the operational and other processes are remapped through redesign to properly orient the systems and methods of production or services.  Remapping requires documentation of the work flow or the production process: input, throughput, and output.  The analyst then seeks to rearrange or reduce the inflow and outflow steps to achieve greater efficiency and reduce use of resources.  

This phase is followed by another series of strategic actions (even inaction if such is warranted).  Job analyses are done, new jobs are identified, new job performance standards are developed.   The new job performance standards are used to set training performance outcomes, develop training materials, and provide professional skill development so employees are equipped to do their re-engineered jobs. 

These strategic actions lead to improved accountability, the development of improved assessments for personnel selection, and the creation of improved methods of performance appraisal.  For the organization to benefit from re-engineering endeavours the culture and production qualities must change to match the thrust and focus of the new entity. 


The re-engineered organization may have elements that were transformed, some that were reformed and yet other parts that were sustained.  Organization transformation is defined by a radical change in most aspects of an organization.  It can be the organization’s systems or business focus or both.  Reformation constitutes changes to parts of the organization but the raison d’être remains the same or slightly modified.  Sustain means that the systems or processes or some features and modus operandi remain the same.


Champy, J. 1995. Reengineering Management. London: HarperCollins.

Hammer, M. and Stanton, S.A. 1995. The Reengineering Revolution Handbook. London: Harper Collins.

Handy, C.  1993.  Understanding Organisations. . 4th ed. London: Penguin Books.

Manganelli, R. L. and Klein, M. M. 1994. The Reengineering Handbook. New York: American Management Association.

About the Author

Dr. Kerry Sumesar-Rai is a Management and Organization Reengineering Consultant.  He leads program advisory services, audits, and workshops.  Armed with proven results and wisdom, he helps clients manage changes in public policy, leadership/management doctrine, and cultural re-engineering.  His record of improving internal systems in the public, state and private enterprise sectors demonstrates his ability to facilitate a collaborative approach among leadership teams. As author and life-long learner, his scope of interests which span Strategic Planning, Policy Analysis, and Operations Project Management, include completing a Leadership Ph.D.