Organizations must take steps to mitigate their impact on operations. The first step is to identify the risks by conducting an audit of HR practices to identify areas of potential loss. An audit identifies areas that are out of compliance with legal requirements or are in need of updating due to strategic changes within the organization and defines elements that are working well.

Today’s HR will review their client’s HR policies, practices, procedures and strategies to protect their company, establish best practices and identify opportunities for improvement. An HR audit can be structured to be either comprehensive or specifically focused, within the constraints of time, budgets and staff. There are several types of audits, and each is designed to accomplish different objectives.

Compliance:
Focuses on how well the organization is complying with current federal, state and local laws and regulations.

Best Practices:
Helps the organization maintain or improve a competitive advantage by comparing its practices with those of companies identified as having exceptional HR practices.

Strategic:
Focuses on the strengths and weaknesses of systems and processes to determine whether they align with the HR departments and/or the company’s strategic plan.

Function-specific:
Focuses on a specific area in the HR function (e.g., policies, payroll, performance management, records retention, etc.).