Learn why your company should be conducting regular HR audits.

The business world is constantly evolving, and any company that is looking to remain one step ahead of the competition should consider conducting a human resources audit.

Human resources audits have helped small business owners save thousands of dollars each year. A human resources audit involves a comprehensive review of a company’s HR policies, procedures and practices. Regular human resources audits or assessments can help a company maintain a competitive edge, avoid potential losses and improve human capital management.

Forbes reports that 36%-53% of small businesses are involved in at least one litigation in any given year and 90% of all businesses are engaged in litigation at any given time. A human resources audit is essential for businesses that cannot afford to take a loss from lawsuits. HR audits help companies identify whether their HR policies, procedures and practices are legal and effective. They ensure that a company remains compliant with federal, state and local HR laws.

A comprehensive human resources audit helps a company improve its HR strategy and ensure its resources are utilized effectively. HR audits also help a company determine any issues in its HR system. Human resources consultants and HR outsourcing firms offer solutions and suggestions which can be implemented to help a company become even more successful and profitable. Companies can use the results of the audit to improve performance in all HR functions, from recruiting and onboarding to time management and payroll. Comprehensive human resources audits also help employers identify compliance issues and address them immediately, enabling them to stay one step ahead of organizational changes and workforce issues that may arise.

When should a company get an HR audit?

Regular audits are essential to a small businesses’ growth. It is highly suggested that a company completes at least one human resources audit each year. Not only do HR audits help companies keep up with the ever-changing business world, but they are also especially useful whenever a company experiences a merger or acquisition. A company should also consider getting a human resources audit before adding a significant number of roles or employees to its workforce.

What does the process of getting an HR audit entail?

The HR audit process generally begins with a comprehensive HR assessment. Examples of assessment questions include: Is a policy in place that prohibits workplace discrimination? How are complaints documented? Are complaints resolved in a timely manner?

Consultants at G&A Partners use the following six-step HR audit checklist:

1. Determine the scope
2. Develop a plan
3. Gather and analyze the data
4. Produce a report
5. Create an action plan
6. Evaluate the progress

[Check out the recap of our webinar, "The HR Audit," for more information about each of these steps.]

A great way to evaluate the process and ensure a business remains compliant is to benchmark the results of HR audits. HR consultants and HR outsourcing providers can benchmark the organization against itself over time or compare the results with similar organizations.