Auditing HR Processes: Tips For Maintaining Ongoing Compliance

It's time to dust off your HR processes and give them a thorough review. HR laws and guidelines are subject to change, and your HR policies must reflect those changes. Though auditing your HR procedures may seem like a hassle or something that can wait, if found noncompliant, you could incur significant penalties and reputational damage that can take months or years to set right. HR can be complicated and confusing to understand. We’ve compiled a short guide to help you start your audit.

Why Are HR Audits Necessary?

HR audits aren’t mandatory, but they can help protect your business and save you time and money in the long run. HR audits carefully examine your business policies and procedures as they relate to federal, state, and local laws such as the Fair Labor Standards Act (FLSA) and the Americans with Disabilities Act (ADA). They help find outdated policies misaligned with current laws or practices, and also identify areas negatively impacting employees that need improvement.

In addition, HR audits can:

Help improve your processes and policies. HR audits can highlight inefficiencies by thoroughly examining existing HR procedures, from recruitment and onboarding to performance evaluations and compliance with labor laws. Audits can help organizations foster a more engaging and responsive workplace environment, ensuring policies are not only compliant but also aligned with the strategic goals and expectations of employees.
Reduce turnover. HR audits can help you identify reasons employees are leaving and assist in developing a plan to boost retention. These audits examine various aspects, including job satisfaction, management practices, career development opportunities, and workplace culture. By gathering and analyzing exit interview data, employee surveys, and other relevant information, you can identify patterns and pinpoint specific areas for improvement.
Address and prevent harassment. Creating a safe and respectful workplace is a non-negotiable for modern organizations. HR audits can help ensure you have proper policies to prevent harassment or bullying affecting team morale, productivity, and more. They review existing policies, complaint procedures, and how past incidents are handled to assess their effectiveness. Through reviewing compliance with current laws and best practices audits can help determine areas for improvement and develop new strategies to better protect employees.
Improve workplace safety. HR audits can provide a comprehensive review of safety practices, incident reports, and compliance with occupational health and safety regulations. By analyzing data on common workplace injuries, such as when and where they happen; you can identify any underlying safety hazards, such as faulty equipment, fatigue, understaffing, etc.

HR audits can drastically improve areas of your business while ensuring you avoid lawsuits, fines, and reputational harm. Think of them as preventative care that keeps your organization healthy and capable of recovering from potential setbacks.

Types Of HR Audits

Beyond a general HR compliance audit, there are a few other audits to choose from: best practices, strategic, and function-specific. Each is helpful and can help safeguard your business.

Best practices audit

This audit examines your HR practices holistically and compares them to proven best practices. It helps identify areas for improvement while assessing your competitive advantage.

Strategic audit

Strategic audits are particularly helpful if your business is growing. They help identify strengths and weaknesses in your HR processes and ensure they align with your business’s strategic plan.

Function-specific

These audits focus on one or a few areas within your HR practices, such as payroll, hiring, and onboarding.

How To Conduct An HR Audit

Once you’ve selected the right audit for your business, there are a few critical steps to consider. First, determine who will be conducting the audit. While internal audits are possible, and you can run them yourself, partnering with a professional employer organization (PEO) can save you time and energy, ensuring you don’t miss any vital elements.

After determining who will conduct the audit, start planning the details, when it will take place, the type of audit, and your goals. Inform your team, including information about audit meetings, what to expect, questions they will be asked, or information they will need to locate.

Now that you’ve laid the groundwork to conduct your audit, consider the following:

1. Check federal and local laws and industry regulations

Start by reviewing employment laws. Ensure you thoroughly understand them and employee forms such as W-2, I-9, etc. Stay updated with your industry's specific regulations and review your department's practices for potential risks. This foundational step ensures your audit is grounded in the latest legal requirements and industry standards.

2. Evaluate current processes

Audits not only evaluate your policies and procedures but also their implementation. Technically speaking, your practices could be compliant and efficient; however, you could still have issues if poorly implemented.

3. Secure sensitive information

Audits go beyond reviewing employee handbooks; they often require examining employee paperwork. This means handling sensitive information, and you’ll need to ensure it stays protected, digitally or otherwise, throughout the process.

4. Create your audit report

Write up your findings. Include the specific areas you examined, any areas that need to be addressed, and the plan to manage them. Give this report to senior leadership and key stakeholders who must stay involved.

5. Communicate changes with your team

Transparency and communication are crucial to implementing changes effectively. Keep your staff informed about any policy or process adjustments resulting from the audit. Early and frequent communication helps to secure team buy-in, which is vital for successful implementation.

HR Audits With GMS

HR audits can get complicated quickly; you risk overlooking critical elements when handled internally. Partnering with a PEO like GMS can help. You’re an expert in your field but probably not an expert in HR. Our HR professionals stay up to date on employee laws and regulations. No matter what type of HR audit you need, with GMS, you’ll gain access to a dedicated HR specialist who:
• Takes the time to learn how your HR functions are currently being handled
• Drafts a comprehensive report that outlines your current HR status
• Provides recommendations on how you can improve your internal HR processes
• Offers recommendations on HR functions that can be outsourced

Posted in

Compliance , HR Audits , Fair Labor Standards Act (FLSA)

Return to Blog