Finding results (strengths and weakness)
Having conducted a research in the sphere or HR auditing, it became obvious that different companies understand this process in different ways. Still, there is sample of the HR auditing process which shows the general guidelines to how this process should be organized (Appendix 1). There are two main functions HR auditing performs according to the research, controlling and reviewing process and procedures. In fact, there are much more different functions HR auditing is aimed at performing. One of the main directions where HR auditing functions is human resources, so it is natural that HR auditing depends on the functions human resources subsystem is directed at. The table below shows how HR auditing depends on the human resources subsystem functions.
Table 1. The main parameters of human resources audit
Having considered the parameters of the HR auditing and having evaluated the responds of some companies to the questions about the nature and the main idea of audit, it becomes obvious that one of the main weaknesses of the HR auditing in Abu Dhabi companies is that each company considers only the problems connected to the their company without stressing all the aspects. Thus, if the company has the problem with team spirit, the HR audit assessment is conducted on the basis of socio-psychological climate, evaluation of the attitude to changes and analysis of the leadership practices analysis. Moreover, it is possible to refer the HR auditing to the companies’ failures in the meaning that while the financial activities of the company are usually assessed, the companies do not pay attention to “human resource policies, practices, procedures and strategies” (Beccarelli, 2005). Being aware that one of the main hazards the company is subjected to is financial one, the risks associated with human resources are not even considered. Moreover, if to consider the separate companies, it should be mentioned that TDIC, for example, uses HR auditing only as the controlling means forgetting about other functions.
Turning to the problem of HR audit strengths for the companies’ functioning, it is possible to consider the following information. HR auditing strengths may be easily enumerated, (1) the evaluation of the purpose and strategy of the HR department, (2) how good the HR department structure in the relation to company structure, and (3) “how well staffing and policies of the department are compatible with its purpose in the organization” (Rothwell & Kazanas, 2003, p. 138). The strengths of the HR audit may be also related to the administration of human resources in the company. For example, small companies cannot afford an HR professional on the constant basis and HR auditing may be really helpful in identifying the company strategies in the future and the “issues associated with legal compliance, administrative processes and recordkeeping, employee retention, etc” (Mathis & Jackson, 2007, p. 62).
Tapomoy Deb (2006) identifies the following strengths and benefits of HR auditing. Sometimes the company overpays and the correction of those mistakes is crucial for company income. The initiation of the safety program may reduce company costs on compensations. The filling positions may be more effective if the recruitment policies are examined. The retention and turnover cases are also crucial for the company success. Furthermore, it is important to create an objective work grading on the basis of the market-competitive equitability. HR auditing may help create employee-referral program for the company as well as improve employees’ communication. It is also important o find the areas for outsourcing human resources for bringing more value for the company. HR auditing may easily cope with this task (Deb, 2006, p. 364).
Some companies do not understand the nature of the HR auditing and its process. That is why they do not trust in the results. Thus, some employers think that it is impossible to tell an HR auditor what information he/she should collect, that it is impossible to calculate the return on investment, that auditing process can be directed only on financial sphere, or that auditing will increase their problems (Kandula, 2004). Still, all those facts are false and an auditor is a person who can improve the companies’ performance and reduce the problems which could have appeared due to incorrect HR management.
To be specific, it is important to consider ADCO and its attitude to HR auditing. This company uses the information for evaluating the company functioning, and to use the information for improving company development. Still, the company does not use the combined information from different departments which is considered to be its weakness. UPC sees the process as a complex activity and tries to use the auditing information from all departments for creating the plan for company development.
Thus, it is possible to conclude that the parameters the HR auditing is aimed at do no coincide with those the companies expect. Being directed at the whole process of auditing, controlling and evaluation of all the functions HR department performs, HR auditors usually face the problems that the companies refuse from some research stating that only specific functions should be considered without turning to the whole range of services. This is the greatest weakness. The wrong understanding of auditing and the wrong use of information may lead to fail in planning the company development. UPC is the company which uses the information auditors provide them with.
To understand to what extend the expectations of the companies do not consider with the facilities the HR auditors are ready to provide them with it may be useful to compare and contrast those. Thus, we are going to compare and contrast the international standard IIA with the expectations of the companies in Abu Dhabi companies in relation to HR auditing.
Discussion section writing according to international standards such as IIA
Before getting down to comparison of HR auditing in Abu Dhabi companies with the standards provided by the Institute of Internal Auditors, it is necessary to dwell upon those standards. There are a number of rules each internal auditor should follow. An auditor should be independent, without personal interest in the company, free from interference, and objective. The professionalism of the auditor should not be questioned. These are the initial requirements for the company HR auditing. Having received the answers to the question what the HR audit is, it is possible to compare and contrast those results to IIA international standard. The responses to the question are presented in the Appendix 2.
Comparison with international standard
The main purpose of the HR auditing from the point of view of the IIA Standard is to conduct an “independent objective assurance and consulting activity designed to add value and improve an organization’s operation” (Standards for the Professional Practice of Internal Auditing, 2001). Considering the answers the companies provided about the nature of the HR auditing, it becomes obvious that the main results the companies expect are recruitment and selection of employees, payroll processing, training and development, termination process, HR system review to identify gaps and provide recommendations / process improvement opportunities, controlling the working process etc. It is obvious that the companies’ expectations do not coincide with the standard and this is one of the main weaknesses. Expecting a concrete result, the companies do not get those due to the specifics of the HR audits’ work and this leads to numerous dissatisfaction and disappointment.
Still, there are numerous strengths which the companies expect and the HR audits can supply those with. The companies expect that one of the results of the HR auditing is going to be the improvement of the professional image of the human resource department in the company (Aswathappa, 2005). According to the standard, “The internal audit activity evaluates and contributes to the improvement of risk management, control and governance systems” (Standards for the Professional Practice of Internal Auditing, 2001, p. 81). Many companies expect from HR auditing the controlling measurements and reports to senior managers. These processes are really crucial for auditing and they are mentioned in the IIA standard:
The chief audit executive should report periodically to the board and senior management on the internal audit activity’s purpose, authority, responsibility, and performance relative to its plan. Reporting should also include significant risk exposures and control issues, corporate governance issues, and other matters needed or requested by the board and senior management (Standards for the Professional Practice of Internal Auditing, 200, p. 81).
This function in really important as in case of some problems, the senior manager may correct the mistakes up to the end of auditing and until the results are not documented.
It is also important to remember that many companies expect hat HR auditing will inform them about some specific problems and point to the measures on how to resolve those. These expectations are mentioned in the standard as the main purpose of HR auditing is to evaluate the company performance, assess its working process, evaluate risks and offer the ways which may improve the company HR department functioning.
It is obvious that some companies’ expectations and understanding of HR auditing coincide with the IIA standard, but some not. Thus, it is possible to state that an HR auditor should inform the company about the expected work he/she is going to provide and about the specific information he/she will perform at the end of the work. The wrong expectations may lead to disappointment in the HR auditing process which may lead to the elimination of this practice at all which is undesirable.
Reference List
Aswathappa, K. (2005). Human Resource and Personnel Management. Noida: Tata McGraw-Hill.
Beccarelli, M. T. (2005). Human resource audits improve business performance. Westchester County Business Journal, 44(42), 46.
Costel, M. (2008). The main parameters and levels of human resources audit. Annals of the University of Oradea, Economic Science Series, 17(4), 390-395.
Deb, T. (2006). Strategic Approach to Human Resource Management. New Delhi: Atlantic Publishers & Distributors.
Kandula, S. R. (2004). Human Resource Management in Practice: With 300 Models, Techniques and Tools. New Delhi: PHI Learning Pvt. Ltd.
Mathis, R. L., & Jackson, J. H. (2007). Human resource management. Stamford: Cengage Learning.
Rothwell, W. J., & Kazanas, H. C. (2003). Planning and managing human resources: strategic planning for human resources management. Amherst: Human Resource Development.
Standards for the Professional Practice of Internal Auditing. (2001). Internal Auditor, 58(1), 79.
Appendix 1
Table 2. A Model for HR Auditing Process
Appendix 2
These are some definitions of HR audit from different companies
- ADCO
“HR audit is Internal Audit of Hr Processes and Systems”.
- TDIC
“HR Audit can be described as review of process and procedures relating to various HR Activities such as recruitment and selection of employees, payroll processing, training and development, termination process, HR system review to identify gaps and provide recommendations / process improvement opportunities”.
- UPC
“HR audit is Audit of internal controls such as approvals authority, saving the records and reporting to senior management”.
- Compnay1
“An audit is a means by which an organization can measure where it currently stands and determine what it has to accomplish to improve its human resources function. It involves systematically reviewing all aspects of human resources, usually in a checklist fashion, ensuring that government regulations and company policies are being adhered to. The key to an audit is to remember it is a learning or discovery tool, not a test. There will always be room for improvement in every organization”
- Company2
HR Audit can be described as review of process and procedures relating to various HR Activities such as recruitment and selection of employees, payroll processing, training and development, termination process, HR system review to identify gaps and provide recommendations / process improvement opportunities.