By: Helios on August 3rd, 2021

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5 Signs That It’s Time to Conduct an HR Audit

Business Management & Strategy

Human resources professionals are the beating heart of every business. The right human resources team can help promote a positive culture, make employees feel valued, and extinguish conflict in the workplace. But, when things aren’t going well in your HR department, you could start to see problems across the entire organization.

How do you know if your HR team is getting things right? There’s one proven method: an HR audit.

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An HR audit is a comprehensive review of the policies, people and structure of a human resources team. HR audits are usually performed by an unbiased third party, such as a trusted HR consultant. The auditors can cast an eye over the entire department, compare your current processes against industry-standard best practices, and identify opportunities for improvement.

5 signs that you need an HR audit

It’s not always apparent that you need an HR audit. Here are five signs that might show it’s time to review your human resources team.

1. HR metrics are worrying

HR should be able to provide the leadership team with key human capital metrics, such as:

  • Employee engagement rates
  • Staff turnover
  • Cost-to-hire and time-to-fill for new recruits
  • Absenteeism
  • Qualitative data such as pulse survey results

Trends such as high turnover or absenteeism can sometimes point towards deeper underlying issues that you need to address urgently. An HR audit can help identify problems and suggest remedies.

If HR can’t provide this data, then that’s another cause for concern. The team might need new technology and processes to help them track progress. HR audits can help identify your HRIS needs.

2. You’re concerned about your current HR leader

HR leaders don’t always sit in the C-Suite, but they are key members of the organization’s leadership team. The head of HR provides vital insights to the executives, and they play a key role in implementing strategy. Finding the right HR leader isn’t just about picking someone with the right resume. You also need someone who can support your goals, your mission, and your culture.

An HR audit can help identify problems at the top and help your HR leaders to find better ways to support the executive leadership. It will also help identify structural and organizational problems that might hamper your team’s chance of success. The audit provides an objective assessment of your HR team’s strengths and weaknesses, allowing you to make an informed decision about next steps.

3. Legislation has changed and you may not be compliant

HR teams exist within a complex framework of local, state, and federal regulations. Staying compliant is a never-ending challenge, one that many companies fail. It’s surprisingly common for employers to face fines for issues like:

  • I-9 form errors
  • Affordable Care Act breaches
  • American with Disability Act violations
  • Terminations mishandled under COBRA rules
  • Fair Labor Standards Act (FSLA) record-keeping errors

On top of that, there are constant adjustment to the law at all levels. At the time of writing, the US government has just rejected the Paycheck Fairness Act, but many of the PFA’s provisions have been enacted at a state level. President Biden has also issued an executive order on noncompete clauses, although it’s uncertain how that will impact HR processes. The only way to be sure you’re staying compliant is by performing a thorough HR audit.

4. HR processes haven’t caught up with the new normal

Hybrid teams, Long Covid, The Great Resignation - we’re going through a period of profound disruption right now, and it’s having an unprecedented effect on HR policies. Employers have to find new ways of engaging and supporting employees, battle high turnover rates, and take advantage of new opportunities like remote recruiting.

HR professionals are doing their best, but many of them need some external assistance. An HR audit by an experienced consultant can help to identify problems that might have emerged during the pandemic and post-pandemic chaos. The audit will then help identify areas where your team can apply up-to-date best practices.

5. You haven’t had an audit in a while

Is everything humming along nicely in your HR team? Great! An HR audit offers demonstrable proof that your team are headed in the right direction. It’s helpful to have that kind of recognition for the team, plus there’s the peace of mind that comes from knowing your organization is structurally sound.

Regular HR audits can also help to identify problems before they become critical. If you make some small changes to working practices today, it could save a lot of pain in the future. An HR audit will help you locate improvement areas and make a plan to guarantee future excellence.

We all find it hard to be objective about our own teams. We miss red flags, simply because we’ve gotten used to seeing them. Or, we pour effort into fixing and improving things without asking if it’s the wisest use of our time. An external HR audit by a skilled consultant can get your team back on track, and keep your organization moving in the right direction.

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