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Think about your human resources department. What impact does it have on your business?

Unfortunately, many businesses and organizations have no idea whether or not they have human resources issues. Whether it’s due to blind trust, laziness, or lack of awareness, companies that don’t conduct regular HR audits can significantly harm their business. In fact, human resources can make or break your organization.

Many companies conduct yearly audits of their financial statements, but HR responsibilities, such as recruiting, training, and pay-for-performance are rarely given the same scrutiny. We highly recommend you pay as much attention to human resources audits as you do to your financial audits. That means completing at least one HR audit every year.

What Is an HR Audit?

A Human Resources (HR) Audit is the process of examining your human resource policies, procedures, documentation, systems, and practices.

While you can have your HR department conduct an internal audit, the best way to evaluate the impact of your human resource practices is by hiring an outside Professional Employer Organization (PEO) firm to conduct an HR audit for you.

The purpose of an HR audit is to find out the strengths and weaknesses of the human resource system you are using, along with recommendations for any areas that need improvement. Not only will you learn which processes and policies are helping or harming your overall business, you can also find out if you’re in danger of a lawsuit or criminal suit.

8 Ways an HR Audit Can Benefit Your Business

1. Add Value

HR audits can help identify ways for you to improve your return on investment (ROI), operational effectiveness, resource optimization, administrative efficiency and contribution, as well as uncover reasons for low productivity.

Additionally, by understanding where information systems and communication channels are or are not working, your organization gets a road map for creating the momentum necessary for smooth and effective communication systems. An HR audit will pinpoint areas where you can save time and transform your organization.

2. Learn from Best Practices

An HR audit compares the current state of your HR department with best practices and industry standards. By juxtaposing your HR practices and procedures with the best of the best, you can learn how to improve employee handbooks, job descriptions, severance plans, promotion guidelines, and much more.

Gain a competitive advantage and stay up-to-date by comparing yourself with the best HR departments in the nation.

3. Review Current Compliance

HR audits are essential for making sure your organization is complying with local, state, and federal laws and regulations. Since safety, compensation, and labor laws change all the time, it’s important to keep up with the changes.

Avoiding costly fines, penalties, and lawsuits is one of the most important aspects of an HR audit. Instead of waiting to hear from a lawyer or the Department of Labor (DOL) that you’re in violation of some law or regulation, take the time to conduct timely HR audits.

4. Instill Confidence

Don’t be afraid to question HR policies or practices. Your HR department wants to be knowledgeable and well prepared to meet potential challenges and opportunities. HR audits help instill a sense of confidence in your HR department, giving them the knowledge and tools necessary to create a more efficient and effective department.

5. Keep Tabs on Required Documentation

It can be extremely difficult to keep track of all your employee files and required documents. An HR audit analyzes human resource information systems and helps you pinpoint areas where you need to more reliable, complete, and secure records and documentation.

One way to do this is by using an efficient electronic system. Go paperless by using scanning automation tools and other electronic formats. This way, you can easily access all the documents you need in a fast and efficient manner.

6. Attract Top Talent

Learn how to improve your recruiting process, prescreen job applicants, and identify competencies needed for success. HR audits can also help identify opportunities to improve your interviewing and onboarding process.

You can also significantly improve your bottom line by making sure you have a competitive benefits package to attract and retain top talent. Instead of simply accepting whatever your insurance agent offers you, make sure you are researching benefits packages and designing one that works for you and your employees.

7. Increase Employee Retention

Another benefit of an HR audit is to identify trends in turnover which can ultimately help you improve employee retention. By improving the culture of professionalism, having clear promotion guidelines, and conducting employee surveys and face-to-face exit interviews, you can reduce turnover rate and incentivize employees to stay on board.

8. Improve Workplace Safety

HR audits identify trends and patterns in which injuries and accidents occur, including time of day, departments, faulty equipment, understaffing, and more. By identifying the root causes of workplace accidents and injuries, you can work toward developing solutions to boost safety for everyone.

If you want to ensure business success, invest in an HR audit from Resourcing Edge. Not only can we perform a comprehensive evaluation of your compliance, policies, and practices in order to build a better HR department, we can also become your HR department. By signing up with a PEO, you can outsource your HR responsibilities so you can focus on growing your business.

As a Professional Employer Organization, Resourcing Edge will maintain HR compliance and mitigate risk, as well as provide Fortune 500 benefits and access to industry-leading integrated HR and Payroll systems.

By signing up with a Professional Employer Organization like Resourcing Edge, you can remain confident that your HR department has the tools and expertise to make your organization succeed.

Shellie Rich

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