"The things that get measured gets managed"

“HR Audit is the systematic examination & evaluation of policies, procedures & practices to determine the effectiveness of human resource management.”

•    It’s not the core function but the supporting function of HRM.

•    It’s not legally mandatory.

•    HR Audit is conducted by the companies on their own because it provides various useful information which helps in developing better systems for managing human resource in an organization.


•    To evaluate the total HRM programs.

•    To seek explanation & information about “what” & “why”.

•    To evaluate the extent to which line managers have implemented various HR policies & programs that have been developed & initiated.

•    To evaluate the total performance of HR department.

Areas of HR Audit

•    Mission statement relating to HRM.

•    Objectives, Goals & Strategies of HRM.

•    Managerial compliance

•    Environment culture in the industry

•    Role of HRM in quality management.

Need for HR Audit

•    To manage large number of employees.

•    The presence of HR department in an organization

•    Communication & feedback

•    To evaluate the status of IR manager.

•    To keep check upon the administrative style of working.


•    Contributes to achieve the organizational objectives.

1. Organizational Objective

2. HRM Objectives

3. HRM Activities                          

4. HRM Outcomes

5. HRM Audit

6. Feedback

•    Helps to develop the professional image of the HR Department in an organization.

•    Reduces human resource cost through more effective procedures.

•    Promotes the professionalism among employees.

•    It gives insights into the company’s affairs.

•    Role clarity among HRD employees & line managers.

Process of HR Audit
  1. Appointment of Auditors (Internal or External as per organization’s requirements)
  2. Coverage of all the related factors
  3. Specification of Standards
  4. Collection & Evaluation of Information
  5. Preparation of Report

Approaches to Human Resources Audit

The following approaches are adopted for purpose of evaluation:

• Comparative approach
• Outside authority approach
• Statistical approach
• Compliance approach
• Management by objectives (MBO) approach

Comparative approach
In this, the auditors identify Competitor Company as the model. The results of their organization are compared with that Company/ industry.

Outside authority approach
In this, the auditors use standards set by an outside consultant as benchmark for comparison of own results.

Statistical approach
In this, Statistical measures are performance is developed considering the company’s existing information.

Compliance approach
In this, auditors review past actions to calculate whether those activities comply with legal requirements and industry policies and procedures.

Management by objectives (MBO) approach

This approach creates specific goals, against which performance can be measured, to arrive at final decision about organization’s actual performance with the set objectives.


The main functions of human resources audit are to take specific actions that will help minimize employee turnover orientation training, working conditions, remuneration and benefits and opportunities for advancement. Therefore, quality of turnover is more important than the quantity of people leaving and joining the industry. Human resources management should create a work environment to make employee realize that it makes a sense to work in the factory rather than staying at home and waste their time.


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