Enhance your HR operations with sales audit procedures for HR

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hello and welcome thank you for joining us on an exciting webinar today regarding conducting a successful human resources audit I'm joy Deus I'm the partner in charge of Sikich HR consulting and I will have the pleasure of leading you through this today so our learning objectives for today is why actually conducting an HR audit is a good practice we'll dig into the various different kinds of HR audits we'll look into the actual audit process once you engage in that and what to include in your audit and at the bottom of the slide you'll see really overall the goal of this process is to ensure compliance and increase effectiveness of your HR policies and procedures so why would we conduct an HR audit oftentimes I think individuals think of an audit as a very tactical type procedure and yes there are tactical tasks associated with that that we'll talk a little bit more about as we further ourselves in the presentation also though an HR audit can be viewed as a very strategic roadmap where is your HR function today where would you like to go in the future how does it align with the goals and objectives of your organization those are all things that we'll take a look at as we work through our presentation today as an HR professional I'm sure there's many things that keep you awake at night but when you're looking at your world of HR is a compliance is it if the Department of Labor is going to come in and audit your i-9s that are not up to date or is it contractive organizational culture to engage your employees what about sourcing the right candidates to come to your organization and join your team how do you retain that talent once you have it or is developing leaders and managing your skills gap at the top of your mind all of these items are very relevant to the HR world and are things that keep probably most of you up at night as we engage upon the audit presentation we'll learn more about how an HR audit can help alleviate these items and get you a good night's rest here are some recent statistics from the EEOC the Equal Employment Opportunity Commission and what you'll notice here is that EEO charges and claims of varying degrees are on the rise and some of the reasons that these are on the rise are one the e is to file a claim you can simply go on the EEO website and it says right there did you work for ABC company during this time period do you feel you were unnecessarily terminated or retaliated against if so click yes there's actually even mobile apps now available where from the ease of my smartphone I can file a complaint against my employer or former employer at this point in time there's really no sign of these opportunities to file claims and the frequency of claims to slow down engaging on the HR audit process can really give you a feel and a pulse for where your HR function is today and how to prohibit opportunities for employees and past employees to file claims there's a lot of internal and external forces that play into this outside of the HR world and you'll see that out of number of issues certain legislation has come to be certain guidelines have come to be at this point in time by engaging in an HR audit process you can hopefully be compliant you will sleep well at night and you'll be able to prohibit your organization from being unnecessarily targeted for issues that could be rectified and identified easily through an audit process one of the key contributors to the HR audit is really the importance of human capital within your organization realistically human capital and the people that you employ are your most valuable asset it's the most important piece to an organization it drives business success it allows for opportunities to grow to become a better employer an ideal place to work all of these items through compliance product tivities sustainability and profitability are leaked linked back to the human capital function when you're looking at that as we get into the audit presentation you'll learn how exploring each of these areas can be beneficial to your bottom line so let's talk a little bit about specifically the HR audit so what is actually an HR audit it's really an objective and systematic evaluation of your entire human resources function that looks at a number of different areas and provides assurance that you are one compliant with any legal or government regulations to that your business and talent management objectives are being successfully executed and met three that your human resources management risks are fully identified assessed and managed not always rectifying the risk but helping you and the organization understand what level of risk you have and the comfort level with taking on that type of risk and of course identifying how and where the organization's human capital is able to add value and make the organization more strategic and strong one of the greatest benefits to conducting an HR audit is it really gives you a pulse as to where your HR functions stand today its provides a road map in which you are able to take a look at where you are today where the organization is going and how HR can drive those efforts to move forward it allows you to look at compliance regulations and company policies and ensure that their living and breathing appropriately within your organization and that there's no opportunity for unnecessary litigation through faulty or unnecessary or inadequate policies it's ensuring that the alignment of your HR function is with the organization's goals mission vision values and the things that the management team within your organization values it allows you to assess the outcomes projects that you have started initiatives that you have launched what is the outcome of those have you been successful have you drove the efforts that you intended to drive with those programs it allows you to establish an early warning system is there an opportunity where you are vulnerable to litigation where you are vulnerable to items that could reflect negatively from a PR perspective on your organization identifying those understanding them either accepting them or rectifying them is now an option through the HR audit procedure are you effectively utilizing your Human Resources function is it truly simply a tactical function of paper pushing and filing or are you truly utilizing that valuable HR resource as a strategic partner within the organization through the audit process you can identify opportunities to streamline or improve your different processes that you work with this is a great opportunity to evaluate how things are executed who is executing them is work being done at the right level at the end of the day we only have so many hours to work with and are we utilizing those hours to the best possible way that we can to forward our HR function and thus forward our organization as I previously mentioned the audit process provides a roadmap and a screenshot as to where you stand from an HR perspective at that point in time this then subsequently allows you to measure continuous improvement on initiatives or drivers or goals that come out of this process of course always maintaining and enhancing the organization's reputation in the community are you eligible to win certain awards such as a top workplace are there opportunities to give back through volunteerism programs are you measuring the usage of these programs and are they a good use of time and accurately engaging your employees bettering your company image as a whole and of course instilling a sense of confidence in human resources this is really a great opportunity to showcase all the wonderful things that you are doing from a human resources perspective that those individuals may not even realize that you're actively contributing to or helping to move that needle forward there's varying degrees and types of audits you can obviously engage in all of these audits simultaneously or you could select certain areas of focus and begin with those the first is of course compliance are you complying with federal state local regulations whether it's are you using the most recent I nine form are the I nines properly filed are your employee files up-to-date are your workplace posters properly updated and posted those are really the low-hanging fruit in which if you are negligent in those type of regulations the Department of Labor or any other affiliated agency could come in and easily assess fines and penalties for negligence best practices is another great area to look at what is your competitive advantage have you identified other organizations that have exceptional HR practices recruiting techniques retention techniques are there things that you're doing really well that you want to keep doing are there programs that you're investing in that you should stop putting resources and dollars to and what do you want to start doing to really improve your advantage as a top employer among your competitors from a strategic perspective really looking at Human Resources as a strategic partner and how the initiatives and the items that you're driving forward aligned with the company's strategic plan you may have the best Human Resources efforts processes and strategic plan but if it's not aligned with the goals and objectives objectives of the company it is not going to be successful so really understanding where the company is and how Human Resources plays into that next we have the function specific are there certain areas of human resources that need to be focused on is a payroll performance management your records retention is there an area that's been neglected that you know needs some additional attention and a deeper dig on an audit so when's a good time to audit we recommend an annual spring cleaning annually take a look at your audit function from an HR perspective see what's changed in the last year for example we talked about aligning with the strategic vision of the organization did you acquire another company at that point which has changed the value and the way that human resources are delivered that's a perfect time to take a look at it has there been a major regulation or a legal change that has impacted your HR function that you now need to make certain that you are compliant certain employment thresholds have you crossed 50 employees and now your FMLA eligible have you crossed a hundred employees are you multiplying your employee base and now operating in states that perhaps you haven't previously operated in that may have different regulations laws or expectations from a Human Resources perspective if you're looking at issues related to employee morale high turnover you're getting very negative feedback from an exit interview process you're having excessive disciplinary action these are all great opportunities to look at your Human Resources function and determine what is going on and where you can support the organization and those initiatives to reduce time spent on items that are not bettering the organization if you are having some sort of government audit coming up or you're going to be subject to litigation it's a good time to take a look at your practices see what you had previously done that could be corrected or rectified going forward and of course anyone taking over the HR function starting a new position with an organization that is a wonderful time to take a look at the HR function via an audit process truly understand where it stands today and how you want to drive those efforts so let's talk a little bit about actively conducting the HR audit process the best place to start is with a plan who is going to conduct the audit are you going to do it internally are you going to retain an outside subject-matter expert who is non bias and doesn't have a vested interest in order to conduct that what parts do you want to audit we talked previously about the various parts whether its compliance strategic are you going to do a full-blown audit or only look at portions of your HR function what type of tools are you going to use to execute that audit how will the process be rolled out we'll talk in a minute about gaining by in and gaining trust and the blessing from the leadership to execute this once you actually complete the audit how are the results gonna get reported and delivered is it a full comprehensive written report is it charts and graphs who's going to get those results and how are they going to be used in this planning stage it's very important to implement a timeline as well I can appreciate the fact that if it's not on fire screaming at you from an HR perspective sometimes it takes a backseat if you begin the audit process and you don't see it from start to finish at that point in time if you attempt to revisit it say six or eight months later you're basically having to start over because the HR process is so fluid and ever-changing that what you audited six months ago is most likely no longer valid prior to engaging in the HR audit process it's key to get buy-in from the top leadership you really want the individuals to understand why you are embarking on this process or why you're bringing in a sub matter expert in order to execute it you want people to understand that you want to protect the organization from unnecessary litigation you want them to understand policies procedures and laws you want an opportunity to showcase really what your human resources department does and how you contribute to forwarding the organization you want to engage in a process to understand best practices and procedures in your industry and in your demographic reach of course we're always attempting to avoid time-consuming and costly litigation by being compliant and then really demonstrating that you are a strategic partner from an HR perspective you want to align your function with the organizational goals mission vision and values what are some things that you would include in your audit obviously we're gonna take a look at each of these in greater detail but they include the foundation managers and supervisors various processes your stakeholder input and of course workforce analysis and HR metrics starting with the foundation really bucketing your key human resources areas those usually include recruitment and selection training and development compensation performance management record-keeping and reporting leave Administration workplace practices and benefits those are the core beings of human resources and when you look at those this is really where you're going to be focusing your various energies on a strategic and a tactical means it's key not to indicate and not to execute the audit in a silo evaluating managers or individuals who are actively partaking in the human resources function or perhaps owning parts of it so for example managers could be handling complaints of harassment before they get to you helping managers and supervisors understand the difference between exempt and non-exempt what are they talking about when they receive an employment verification call what are they doing if an employee approaches them and says I need to take a leave of absence because I'm going to be having surgery oftentimes these frontline supervisors are the first ones to deal with human resources and actively involving them interviewing them and understanding how they are handling these various issues related to HR prior to them getting to your desk is key this is really the biggest portion where you have opportunity and vulnerability because you don't have control of that process and each manager you may discover is handling these situations differently which opens you up to litigation for inconsistency it's key to ensure that managers understand why you are engaging in this process educating them and what the benefit of the HR audit is and letting them know that your hope is if there are inconsistencies or if there are compliance issues that they will be rectified and proper training will be provided to these individuals to prohibit that from happening in the future you want to take a look at any HR process that you have whether it's a form a policy a handbook how are we I'm boarding people how are we processing payroll what are we doing with our benefits what happens when an employee off boards or terminates what do we do if leave administration or attendance issues these are all opportunities where there can be multiple hands in the pot it's a good time to take a look at the policies that you have written if they are true and accurate and the way that they present themselves in your employee handbook or the way that they're being executed you can have the most legally sound and perfectly written policy or handbook and if you are not properly executing that to those guidelines it's as good as garbage because at that point you've opened yourself up to litigation by saying one thing and doing another looking at your HR internal customers so many times in HR we think well we don't service external customers we don't have quote unquote customers you do have customers those are your internal customers those are your employees your managers and supervisors your leadership team anybody who comes to you for things it's an opportunity to put yourself out there and be vulnerable to the feedback how do they think you're doing from a recruitment standpoint are you accessible are they happy with the way their benefits and their salary increases are being executed really looking at is HR effectively meeting their needs and if not what to do in order to execute that in a better fashion now of course we recognize that there may be feedback that is not valid but opening yourself up to this gives your internal customers an opportunity to rate you and you to address that feedback appropriately taking a look at your workforce analysis and your HR metrics if you are within an organization that values metrics this is a great opportunity to showcase some of the wonderful things that you've done to reduce time cost and enhance that baton line I will give you the caveat that if you work for an organization that does not value metrics this is probably not the best use of your time if you're producing time to fill reports turnover rates cost for hire and you're not seeing the leadership value those perhaps you need to find another way in order to communicate your successes however if you're in an organization that does value that these are great tools and easy metrics that you can track year-over-year to show efficiency to show good use of time and to show that you're continuing to keep a focus on the bottom line from an HR perspective once you've decided what you're going to assess you want to develop an audit questionnaire and if you visit our HR Network website the is a sample audit questionnaire there for you that you're welcome to download at that point in time there's other resources as well obviously you're part of our network so you're able to partner with Sikich to download that the Society for human resources management has some great tools the Department of Labor the EEOC these are all government websites that you can go ahead and download checklists audit questionnaires and take a look at what you're doing with them to make sure that the things that you're looking at are the things that a government agency is going to audit in the event they come and knock on your door once you've gathered and analyzed your information you really want to get your audit toolkit together there's a lot of preparation that goes into this and you want to make sure that after you have the leadership blessing you have your plan that you have the proper tools who are you going to be interviewing what are you going to be servicing as far as surveys and tests are you going to conduct a focus group how are you going to do document review and file reviews are you auditing everyone are you taking a sampling how are you determining that sampling what questionnaires are you going to use what reports are you going to use this is all information that you should have prepared in your toolkit prior to beginning the audit process once you've gone through and you've successfully executed the audit process the next step is to provide a nice executive summary I'd like to think of this as the package with the ribbon and the bow that's ready to go look at your organization what do they value if you have a visual leadership team don't produce a 20 page written report they're not going to value that if you have a visual organization a chart or graph of what you've discovered and then your priorities what's high priority high importance widths low priority low importance you want to assign risk level to different items you want to state the facts you want to avoid your opinion remember you've opened yourself up from an HR perspective to be vulnerable and at that point there may be some feedback in there that you don't agree with or has personally affected you you need to keep a non-biased attitude toward it and avoid opinions oftentimes I do recommend perhaps bringing in an outside source to do this because that does prohibit any type of bias or negative reflection if there's items that need backup or additional feedback provide those and make sure that all the departments involved are circled back to really looking at an action plan so out of this process what are you going to do this is a very lengthy and large engagement for you to undertake and really breaking it down into bite-sized pieces and an action plan is going to be key so recommend one or more strategies for improvement identifying action items and who owns those is it someone with an HR is it someone without HR exposure who's going to help lead that charge have realistic priorities if you complete your audit in July and that is the most busy month for your organization that's probably not the time to begin launching new HR initiatives let's wait until the business slows down and of course setting a time frame and follow-up you need to have a champion for this process who's going to own the results of the audit one thing that often happens is the entire audit process is gone through the report is delivered and there is somewhat of an action plan but if it's not strong detailed and hold people accountable it falls by the wayside and as we previously mentioned HR is a fluid ever-changing area what happened this morning an HR could be totally different from what happened this afternoon if you don't start taking immediate action on that plan and hold yourself and individuals accountable you're going to have to restart the entire audit process in addition you've dedicated time effort you've made this process known to your internal customers your employees your managers or supervisors if you don't take action on that plan and they don't see deliverable results you lose credibility as well as the HR audit process so what are some pitfalls obviously lack of management commitment so if your leadership team is not seeing value and you conducting an HR audit at that point in time I would not engage in that process until you have their blessing and their understanding of the process oftentimes when you're up against a brick wall that's a great opportunity to bring in an outside subject-matter expert to talk through the value of that process choosing too great of a scope so throw in your net out too far and taking on too much in your action plan being overly aggressive with your goals and your commitments under estimating the time commitment of the actual audit process as well as the subsequent timeline deliverables and items that need to be addressed some organizations try to take a no news is good news style of management at that point in time they don't want to uncover they don't want to peel away the onion if that is the opportunity if we're going to just put our heads in the sand the Department of Labor or other agencies are going to come looking for us and we are going to fall victim to issues of negligence regarding compliance and the way that we're executing our HR function as with any type of audit whether it's an audit of your finances your accounting the findings and recommendations from the HR audit are only as good as the information provided if the information you're gathering is not entirely honest objective and true the purpose of an audit is totally void so setting those expectations early and making certain that everyone understands it is a safe environment in order to help enhance and ensure your HR function is compliant a word of caution HR audit reports are increasingly being used to report audit findings to a wider audience outside of your four walls this could be investors major stockholders venture capitalists government agencies if you're going to acquire an organization they may ask for that if you're going to be acquired they're going to ask for that plaintiff attorneys so keep in mind that these audit reports do include proprietary and confidential information however it is also discoverable so you want to make certain that what you're writing in that report is true accurate and that you're keeping your legal compliance hat on when you're drafting that in closing really the goal of the hrl audit is to optimize the outcome and take HR to the next level communicating that to your leadership team and your employees that you want to get a huge pulse on what is going on in the organization you want to have well-educated individuals on the HR function you want to have a nice baseline to understand where your HR function is today and where you want and need it to go to be a strategic partner to your organization my contact information is at the end of this slide deck as well as on our website feel free to reach out if you have any questions or comments regarding this presentation today and again if you're looking for further tools regarding your HR audit process you can look that up on our HR Network website and download tools or checklists in order to help you execute that I thank you for your time today and if you have any questions please feel free to reach out to me thank you