HR Audit

Personnel Research and Audit 373
29.2 PERSONNEL AUDIT

Let us first try to trace out the origin of the term 'audit'. The word 'audit is derived from the Latin
word'audire which means to hear. In the olden days, whenever the proprietors ofa business concern
suspected fraud, they appointed a person to check the accounts and to hear the explanations given
by the persons responsible for keeping the accounts. The audit during those days was interested in
whether the
ascertaining persons responsible for maintaining accounts had properly accounted for all
receitps and payments to his principal and to locate frauds and errors. Then, it was merely a cash
audit. The object of modern audit is not confincd to cash verification but to report on financial
position of the undertaking as disclosed by its Balance Sheet and the Profit and Loss Account.
Now, auditing has been used as a part of control function. It can be defined as the examination
and evaluation of policies. Drocedures and practices in all plhases of a business to achieve the most
effective administrat1on of the organisation". Let us define personnel audit
29.2.1 Meaning and Objectives

Extending the general meaning of auditing to the field of personnel management, personnel
auditing may be defined as the analysis and evaluation of personnel policies, procedures and prac-
tices to detemine the effectiveness of personnel/human resource management in an organisation. In
other words, personnel audit is a periodic review to measure the effectiveness of personnel manage-
ment and to determine the steps required for more effective utilization of human resources. Outlining
the need for personnel evaluation,Gordon" states that a major objective of personnel management is
to "improve productivity" of individual employees and thus increase "organisational effectiveness
by better utilization of a firm's human resources.
According to Gray,"the primary objective of personnel audit is to know how the various units
are functioning and how they have been able to meet the policies and guidelines which were agreed
upon; and to assist the rest of the organisation by identifying the gaps between objectives and
results, for the end product of an evaluation should be to formulate plans for corrections of adjust
ments."
The objectives of personnel audit can be listed in a more orderly manner as follows:
1. To review the whole organisational system of human resource practices, i.e., acquiring.
developing, allocating and utilizing human resources in the organisation.
2.
2. To evaluate the effectiveness of various personnel policies and practices.
3. To identify shortcomings in the implementation of human resource practices in the
organisation.
4. To modify the existing human resource practices to meet the challanges of personnel/human
resource management.
29.2.2 Scope
The scope of personnel audit is very wide. It represents the encompassing approach; that is, it
assumes that the management of human resources involves much more than the practice of recruiting,
hiring, retaining and firing employees. In other words, personnel audit is interested in all the programmes
relating to employees regardless of where they originate.
In this way, the areas personnel audit includes are recruitment, selection, job analysis, training,
management development, promotions and transfers, labour relations, morale development, employee
benefits, wage and salary administration, collective bargaining, industrial relations and communica-
tion. Further, the areas like leadership, grievances, performance appraisal and employee mobility are
also included within the scope of personn-l andit.
374 Human Resource Management
Dale Yoder has outlined the area-wise and level-wise scope of personnel audit as follows:
Table 29.1: Personnel Audit-Areas and Levels
Levels & Examples of Audit Data

Major Areas LevelI- Results Level I1-Programmes Level Ill- Policy
&Procedures
Planning Personnel shortages, | Time bound or net- Explicitstatement to

Forecasting & scheduling supplies, layoff, etc. work cost/benefit provide inclusive
to meet organisation & budget, etc. plans for present &|
personnel needs. future
Staffing & Development:

Defined requirements & Recruitment times costs; | In house & out house Let cream rise; non-
careers; sources, require- training times cost, training programmes, discrimination, etc.
ment, selection, training, labour turnover etc. guidance in careers,
promotions etc
Organising
Maintaining structures for Feedback, reader inter- Job definitions for |Encourage flexibil-|
co-ordinating, communi- est, extent of formal, | individuals, depart- ity,reduceresistance
cating, collaborating, etc. organisation, reports, | ments, task forces, | to change,effective
records, etc. house organs, etc. three-way communi-
cation, etc.
Motivation & Commit-

ment:
Individual & group moti- Productivity, perfor-| Job enlargement, |Gain high personal
vation, interest, effort, mance norms compara-| wage & salary admin- | identification, en-|
contribution tive costs, etc. istration;moralesur-sure wholeman sat- |
vey; exit interviews; | isfactions.
fringe benefits, etc.
Administration
Style of leadership and Suggestions, promo-Consultative super- | Style adopted to|
supervision; delegation, tions, grievances, disci- vision; collective | changing expecta
negotiation. pline, union-manage-|barganing, union- |tions; participative
ment coorperation. management commit-involvement, collec-
tees, etc. tivebargaining, etc.
Research & Innovation:

Experiments & theory test- Changes, experiments, | R&D approach in all| Test old & new|
ing in all areas. research reports, publi- | areas; suggestion theory; encourage|
cations. plans, etc. creativity in manage
ment.
Personnel Research and Audit 375
29.2.3 Process
The personnel audit should probe much
deeper, evaluating personnel programmes, policies,
philosophy and theory. For this, it is necessary to decide the appropriate levels of audit such as
results, programmes, policies, philosophy, etc., before actually initiating the audit.
personnel Experi
ence suggests that evaluation by results sometimes becomes just superficial. For example, high
absentee rates may result from a variety of causes. In order to make deeper probe, the process o
personnel audit includes the following steps:
() Identifying indices, indicators, statistical ratios and gross numbers in some cases.
(ii) Examining the variations in a time frame in
comparison with a similar previous
corresponding period.
(ii) Comparing the variations of different departments
during different time periods.
(iv) Examining the variations of different periods and then comparing them with the similar
units working in the region.
() Drawing trends, ascertaining frequency distribution and correlations between them.
(vi) Preparing a report and send it to the top management for information and action.
According to VSP Rao", the following questions can be asked to evaluate
procedures and practices:
personnel policies,
()What are they? (i.e.. policies/procedures/practices).
(ii) How are they established?
(iii) How are they communicated to various managers and employers concerned?
(iv) How are they understood by individual employers, supervisors and managers at differ-
ent levels?
()Are they consistent with the management's organisational philosophy and human
resource management philosophy?
(vi) Are they consistent with the existing trends towards human resource management and
research?
(vii) What are the controls that exist for ensuring their effective and uniform application?
(vii) What measures exist to modify them to meet the organisational requirements?
29.3 SUMMARY
This summary is organised by the learning objectives given on page..369:
1. The main purpose of personnel research is to analyse the problem and seek solutions to it
through the application of scientific methodology.
2. The
major approaches employed to conduct personnel research include
research, exploratory studies, experimental studies and historical studies.
case studies, survery
3. The process of personnel research includes statement of purpose, statement of problem,

methodology, results, analysis and interpretation.
4. Personnel audit refers toan examination and evaluation of policies, procedures and prac-
tices to determine the effectiveness of personnel/human resource management. The scope
of personnel research is encompassing that covers all personnel aspects like planning.
staffing and development, organising, motivation and commitment, administration, research
and innovation.

HR Audit

Uploaded by

Copyright:

Available Formats

HR Audit

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

HR Audit

Uploaded by

Copyright:

Available Formats

Personnel Research and Audit 373

29.2 PERSONNEL AUDIT

29.2.1 Meaning and Objectives

Table 29.1: Personnel Audit-Areas and Levels

Levels & Examples of Audit Data

Planning Personnel shortages, | Time bound or net- Explicitstatement to

Staffing & Development:

Motivation & Commit-

Research & Innovation:

3. The process of personnel research includes statement of purpose, statement of problem,

You might also like