HR compliance audits and HR risk audits help businesses review their policies, procedures and systems to improve efficiency and identify potential risks or areas that need improvement. However, if you are not aware of what should be included within a HR compliance audit or HR risk audit, then completing one can be significantly less accurate and less effective for your business. Centric HR are here to help you understand all things HR compliance and HR risk related — including what should be included in each type of audit.
So, what should be included in a HR compliance and HR risk audit? Within these audits, you should include the following detailed sections to ensure accuracy: hiring, new employees, wages and hours, benefits, discrimination, employee relations, recordkeeping, data protection, and a HR audit questionnaire.
Keep reading to find out more about HR compliance audits and HR risk audits, including what they are, the methods used, and how often they should be completed.
A HR compliance or HR risk audit can be a lengthy and detailed process, so it is important to know exactly what to include. Below we outline what should be covered in each section of your audit to make the process more effective.
The hiring section should include all information and documentation relating to the hiring process. Examples of this could be relevant job descriptions, application forms, job advertisement postings, background checks, employment contracts, and even data protection processes. Basically, anything related to your hiring process should be detailed in this section.
The new employees section should include everything that relates to the information you provide to employees during the onboarding process. This could include how you communicate your policies and procedures through documentation, evidence of a detailed employee handbook and what is included within it, and even their introduction training, as well as training on such policies as harassment and discrimination.
The wages and hours section of your HR compliance audit should detail information such as your company’s formal pay structure, working hours/ times, sick leave pay, and flexible working hours. You can also include details on pay reviews if you have completed these with your employees.
The benefits section of your HR compliance audit should include information about any employee perks, membership schemes such as pensions, or performance related pay that your employees receive. You should also include information about who administers these benefits to your employees and how they make these decisions.
The employee relations section should include your staff policy, complaints policy and disciplinary policy so that they can all be evaluated fully. This section of your HR compliance audit should also include your whistleblower policy and performance evaluation system to ensure that you are managing these issues in the most efficient way possible.
The discrimination section of your HR compliance audit should include a detailed explanation of your discrimination and harrassment training that you provide to all employees. This section can also include any additional training that you provide, such as equality and diversity training, mental health training, and management training, where applicable.
This section of your HR compliance audit should include information regarding your GDPR processes, employee information storage, commitment to privacy and also who has access to this type of information. It is important that you include this information so that you can evaluate how well you manage data protection and adhere to relevant laws and regulations.
A HR compliance audit and HR risk audit is a method of reviewing company implemented policies, procedures, documentation, and systems in order to identify areas for improvement within the company. The HR compliance audit can help to identify areas that involve out of date procedures so that they can be updated accordingly to adhere to relevant rules and regulations.
Typically, HR compliance and risk audits are completed annually, though some organisations choose to carry them out more frequently. While not legally required, these audits are highly beneficial — improving efficiency, mitigating HR risks, and saving both time and money.
A HR audit checklist is a guide that you can use to help make sure that you include everything you need for your HR compliance audit. A HR audit checklist is a good document to create for yourself before you even start working on your full HR compliance audit because it can help you to identify the key areas you want to focus on improving within your organisation.
For example, you can start by identifying some of your key objectives, such as why your employee retention rate is so low. From here you can begin to develop a HR audit checklist to help determine what is causing this issue for your organisation. An example of what a HR audit checklist would look like based on this objective are detailed below:
Surprisingly, there is not one set way to complete your HR compliance audit. Instead, there are a variety of methods that can be used depending on your preference and type of business. We have detailed the 6 main types of audit methods below for you to choose from.
The interview method involves a procedure whereby senior management are interviewed by the HR auditor. The interview questions are structured in such a way as to help determine future growth plans for the organisation, including topics such as culture, work style, vision, and leadership style.
The questionnaire method involves a structured questionnaire being created by the HR auditor to assess the areas where HR processes could be improved. This method should include questions that relate to the objectives of the HR compliance audit to help improve efficiency of the business.
The observation method involves a visit from a HR auditor to observe employees in their natural environment, such as in the office, in the canteen, and in training sessions. It is important that the employees carry on with their normal day to day lives to ensure that the HR compliance auditor can assess where there are opportunities for development of human resources processes within the company.
This method involves a HR audit specialist collating data and information from your company and employees to determine their findings with regards to HR efficiency. This can involve appraisal reports, training programmes, employee feedback, safety practices and compensation scheme procedures.
The workshop method involves a selection of random employees to participate in a workshop that is solely designed for the HR compliance audit. The workshop involves employees being split into teams where they evaluate and create reports on specific HR areas of the business. This may also include a detailed SWOT analysis.
The task force method involves selecting multiple different experts from within the business to help identify, evaluate and recommend areas for improvement within HR aspects of the business. The HR auditor can then use these recommendations to collate their findings and determine their recommendations for improvement based off of these internal experts.
It’s clear that HR compliance and HR risk audits can be time-consuming and complex. Working with a qualified HR professional ensures objectivity, thoroughness, and accuracy — helping you identify risks and opportunities for improvement you might otherwise overlook.
Centric HR provides a variety of HR services including HR outsourcing , HR consultancy and even business support. For more information about HR compliance audits including advice and the potential for Centric HR to manage or guide you through your audit, feel free to get in touch today.
