A Measure of Success

Auditing human resources provides a roadmap to business success

Jennifer Wheatley, SHRM-SCP, SPHR

Who handles the human resources (HR) function at your laboratory? Is it a dedicated HR person, you, or even multiple people? The answer really isn’t the issue. The bigger question really is about the effectiveness of your company’s HR. Is the HR function adding value? Are there compliance issues that could be increasing your liability? The overall impact that the HR processes have on the success of your organization cannot be underestimated. From personnel files and I-9 forms to compensation practices, all functions that fall under the HR scope should be audited periodically to ensure that consistent practices and efficient processes are in place.

The word “audit” conjures up different emotions, most of which are usually negative. Instead of perceiving an audit as a negative process, look at an HR audit as a roadmap to success. An audit of your HR functions provides a starting point that allows you to assess the current state of your business and develop a plan for business growth for the short and long terms.

The type of audit can vary. It can be a relatively simple internal review of your processes or it can be a more thorough assessment conducted by an outside consultant. Either can be effective and should give you a clearer picture of your strengths and opportunities for improvement. There are some advantages to having an outside consultant conduct the audit. Those advantages include the consultant’s knowledge of the HR function, their ability to be objective, and their insight into human resources best practices. In addition, a consultant can be especially helpful if your laboratory does not have a dedicated human resource professional.

What type of processes should be included in your audit? Generally, you want to ensure you audit areas that involve legal compliance issues first, then policies and practices, and finally best practices. Obviously, any non-compliance issues can increase risk to your organization, so those issues need to be addressed first. For example, ensuring that your pay practices meet Department of Labor regulations should be a top priority. Not paying overtime appropriately, for example, could put your organization at financial risk.

What are some of the HR items that should be audited? Really, all your HR practices—from the recruiting and hiring phase all the way to the end of employment—should be reviewed.

The “Audit Considerations” presented below include a small sampling of the types of questions that would be covered in an HR audit. An effective audit will contain a thorough list of questions in every category and will provide the factual information you need to develop your plan.

Once the audit has been completed, the next step is to prioritize what needs to get done first. Legal compliance issues and payroll processes should be given top priority. Once the compliance-related issues are resolved, then you can focus on bringing consistency to your processes and focus on those items that will bring more value to your organization such as recruiting and retention, benefit offerings, and creating a great culture for your employees.

Investing in an audit of your HR policies, procedures, and processes will provide a clear picture of the state of your organization’s HR function and give you peace of mind in the event of a “surprise” audit by an outside agency. Reviewing and assessing your HR function can help you pave the way to organizational success.

Audit Considerations

Recruiting, Selecting, Hiring, and Onboarding

• How are you advertising and selecting your candidates?
• Are you casting a wide net to attract a diverse pool of candidates?
• Who is interviewing and selecting the candidates?
• Are these employees trained to conduct interviews?

Personnel Files, Including I-9 Forms

• Who is responsible for maintaining these files?
• Are they secure? Are there separate files for confidential information? Are the I-9s completed correctly?
• Do you have an I-9 for every employee who is required to have one?

Termination Procedures

• Who has the authority to terminate an employee?
• Is there a grievance process in place?
• Do you conduct exit interviews?

Payroll Processes

• Who is responsible for processing your payroll?
• Is this person up to speed on the applicable tax, wage, and hour laws?
• Are they ensuring that exempt-level employees are paid correctly and not having any inappropriate deductions taken?

Compensation and Benefits Practices

• How are the wages determined in your organization?
• Are employees being compensated fairly and equally based upon comparable worth?
• What are the organization’s policies on pay raises?

Employment Law Compliance

• Is your organization in compliance with all the applicable federal, state, and local laws?
• Do your current policies meet the requirements of these laws?
• Do you know what laws you must comply with based upon the number of people you employ?