In today’s competitive economy, organizations must operate within the confines of a heavily regulated employee environment. Many business lawyers recommend performing human resources audits to keep companies out of hot water. Beyond legal issues, HR audits can identify deficiencies in your company’s policies, practices and operations and develop strategies for improving HR functions. Professional human resources organizations advise conducting HR reviews on an annual basis. Smaller emerging businesses may conduct audits for M&A due diligence, to implement best practices, and/or during periods of significant growth.
Hiring an expert HR outsourcing firm to conduct an audit allows a non-biased, independent viewpoint, and offers best practices industry advice. Externally conducted audits also ensure many stakeholders (finance, HR, CFO, etc.) are involved and included in the review.
Here are three key benefits for conducting a third-party HR audit in your organization:
1) Reveals opportunities or gaps in the HR process – In many companies, HR functions are not getting the attention they deserve. An audit scrutinizes current HR practices, reviews compliance capabilities, identifies process improvement opportunities and provides recommendations. It clarifies HR tasks necessary to avoid legal issues, develop talent and strengthen corporate culture. Working with an external firm can strategically position your company based on experiences of similar organizations in your industry while setting and maintaining effective, sustainable HR processes.
2) Ensures compliance with legal requirements – Noncompliance with applicable employment laws and federal/state regulations is a significant financial and legal risk. The results obtained from HR reviews can identify and prioritize noncompliance issues in an effort to minimize lawsuits or regulatory violations. A third-party HR review may also help institute and manage legal compliance when your internal resources are tapped.
3) Saves time and money – In addition to helping avoid costly legal situations, HR audits can improve efficiency by cutting time and expenses spent on outdated processes and systems. For example, implementing a new HRIS (Human Resources Information System) may replace several related systems and identify redundant processing and storage of employee data. When it comes to corporate culture, focusing on talent development to maintain a satisfied and productive workforce lessens the expense related to costly turnover of staff. Losing an employee is estimated to cost a company 50-150% of the employee’s salary in time and money spent to replace that employee.
An HR audit should be part of your strategic business plan. Let us help you maintain world-class competitiveness in key HR areas. Contact The Verity Group today at 703.763.5480 for more information.