Human Resource Auditing

HR Cost, HRD activities, Health, Environment and Safety, Legal Compliance, 
Quality, Compensation & Benefits

This evaluation helps the organisation have a clear understanding of the lacunae and better align the HR processes with business goals.

HR Audit is done for the following reasons:-
To make the HR function business-driven;
Change of leadership; 
To take stock of things and to improve HRD for expanding, diversifying, & entering into a fast growth phase;
For growth & diversification;
For promoting professionalism among employees & to switch over to professional Management; 
To find out the reasons for low productivity & improve HRD strategies;
To become employer of choice.

HR Audit can be done in any size of the organization provided the company has reached some level of maturity and people have accepted the HR within the organization. It also helps to find out gaps/ discrepancies within the HR role.

The audit itself is a diagnostic tool, not a prescriptive instrument. It helps in identifying what is missing and needs to be improved, but it can’t tell what one needs to do to address those issues. It is most useful when an organization is ready to act on the findings. 

ROLE OF HR AUDIT IN BUSINESS DEVELOPMENT: A healthy HR practice in an organization is as important as the physical and mental well being body. 

HR Audit helps to get a clue about the overall status of the organization and also to find out whether certain systems put in yielding any results.
It helps companies to figure out any gaps or lapses.
It compares the plans and implementations.
Improvements in HR systems.
Increased focus on human resource and human competencies.
Better recruitment policies and more professional staff.
More planning and more cost-effective training.
Streamlining of other management practices.
TQM interventions.

The methodology used in HRD audit by and large has the following steps:-

Individual Interviews
Group Interviews
Questionnaire Method
Analysis of Secondary Data
Analysis of Reports, Records, Manuals, and other Published Literature


The concept of HR Audit has emerged from the practice of yearly finance and accounting audit, mandatory for every company, to be done by the external auditors. This audit serves as an examination on a sample basis of practices and systems for identifying and ensuring that sound accounting principles are followed. Similarly, an HR audit serves as a means by which an organization can measure the health of its human resource function.


The audit itself is rarely a failure. Most HR failures are due to failure of implementation. Sometimes HR audit can also be used against the HRD department. It can be used to get rid of some staff in the department. Such a decision can have an adverse effect on the overall HRD of the company subsequently.

HR audit does not give evaluations of individuals but focuses on units and systems

Environment and Safety Legal Compliance HR audit Change of leadership Diagnostic tool Business development Accounting audit Limitations of HR audit

About the author

Arun Kumar Davay

16K+ | Media/TV Talk Shows | Senior Management


Hundreds of Television Shows on Entrepreneurship, Business, Marketing, Sales, ECommerce, Finance, Human Resource, Government Policies, Economic Scenario, Women Empowerment.

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