Human Resource Audit - 4 Credits

Assignment Set- 1 (60 Marks)

Q.1 Discuss the conceptualizing of HR Audit.

Conceptualization of HR Auditing

Auditing has evolved, becoming increasingly specific, until the term functional audit has
emerged. The objective of a functional audit is to diagnose, analyze, control, and advise within
the boundaries of each functional area of the company.

The HR audit is a type of functional audit. Thus, as a first approach, one could say that HR
auditing consists of diagnosing, analyzing, evaluating, and assessing future lines of action within
the framework of HRM.

HR auditing is a basic tool for the management of a company. Its objective is not only the
control and quantifying of results, but also the adoption of a wider perspective that will aid in
defining future lines of action in the HRM field. Thus, HR auditing must perform two basic
functions [Cantera, 1995]. First, it must be a management information system whose feedback
provides information about the situation in order to facilitate the development of managing
processes or the development of HR. On the other hand, it must be a way of controlling and
evaluating the policies that are being applied, as well as the established processes.

It can be understood that in order to secure the operative efficiency and user or client
satisfaction, an appraisal of the results of the HR function is necessary. According to this
approach, the results obtained can be valued from certain HR policies (an external type of
measurement), or from the results of the policies or the policies themselves. The results can be
valued through their cost (a measurement internal to the function) [Walker, 1998]. This would
lead the company to consider some basic questions. Are adequate HR policies being developed?
Are the desired results being obtained? To what extent do they add value to the company?

The purpose of this work is to offer a few guidelines for the appraisal of the HR function, which
is in itself the basis for the auditing process. The objective is to set conceptual limits for its
content and to present the different approaches with which the HR audit can be presented.
Q.2 What are the goals of HR Audit.

GOALS OF THE AUDIT

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. HR audit also
helps companies to figure out any gaps or lapses and the reason for the same. The goals of the
audit can be of two types i.e. short-term or long-term. Short-term goal can solve any recent
problems in the organization and long-term goals are the objectives that have greater impact on
the goodwill of the organization. Read box 4.1 for understanding the concept of long- and short-
term audit goals through example.

Example of short-term and long-term audit goal:

Suppose in a steel plant, many workers are leaving because of safety issues. So the senior HR manager
decides to verify the safety and health issues in the factory. So in this case short-term goal is to solve the
problem and try to retain the workers.
Long-term goal is to increase the job-satisfaction among workers and increase the goodwill of the
company as a better employer.

The main goal of the HR Audit is to ensure that proper controls, policies and procedures are in
place for each of HR functions, and that records, disclosures, and other information are
consistent with plan documents and in compliance with applicable laws and regulation. The
other important goals can be as follows: 1. To ensure effective utilization of human resources.
2. To review compliance with tons of laws and regulations.
3. To motivate human resource department that it is well-managed and prepared to meet
potential challenges and opportunities.
4. To maintain or enhance the organization's reputation in the society.
Q.3 What are the different types of interview?

Types of Interviews

All job interviews have the same objective, but employers reach that objective in a variety of ways. You
might enter the room expecting to tell stories about your professional successes and instead find yourself
selling the interviewer a bridge or editing code at a computer. One strategy for performing your best
during an interview is to know the rules of the particular game you are playing when you walk through the
door. 

The Screening Interview

Companies use screening tools to ensure that candidates meet minimum qualification requirements.
Computer programs are among the tools used to weed out unqualified candidates. (This is why you need
a digital resume that is screening-friendly. See our resume center for help.) Sometimes human
professionals are the gatekeepers. Screening interviewers often have honed skills to determine whether
there is anything that might disqualify you for the position. Remember-they do not need to know whether
you are the best fit for the position, only whether you are not a match. For this reason, screeners tend to
dig for dirt. Screeners will hone in on gaps in your employment history or pieces of information that look
inconsistent. They also will want to know from the outset whether you will be too expensive for the
company.

Some tips for maintaining confidence during screening interviews:

 Highlight your accomplishments and qualifications.

 Get into the straightforward groove. Personality is not as important to the screener as verifying
your qualifications. Answer questions directly and succinctly. Save your winning personality for
the person making hiring decisions!
 Be tactful about addressing income requirements. Give a range, and try to avoid giving specifics
by replying, "I would be willing to consider your best offer."
 If the interview is conducted by phone, it is helpful to have note cards with your vital information
sitting next to the phone. That way, whether the interviewer catches you sleeping or vacuuming
the floor, you will be able to switch gears quickly.

The Informational Interview

On the opposite end of the stress spectrum from screening interviews is the informational interview. A
meeting that you initiate, the informational interview is underutilized by job-seekers who might otherwise
consider themselves savvy to the merits of networking. Job seekers ostensibly secure informational
meetings in order to seek the advice of someone in their current or desired field as well as to gain further
references to people who can lend insight. Employers that like to stay apprised of available talent even
when they do not have current job openings, are often open to informational interviews, especially if they
like to share their knowledge, feel flattered by your interest, or esteem the mutual friend that connected
you to them. During an informational interview, the jobseeker and employer exchange information and get
to know one another better without reference to a specific job opening. 

This takes off some of the performance pressure, but be intentional nonetheless:

 Come prepared with thoughtful questions about the field and the company.
 Gain references to other people and make sure that the interviewer would be comfortable if you
contact other people and use his or her name.
 Give the interviewer your card, contact information and resume.
 Write a thank you note to the interviewer.
The Directive Style

In this style of interview, the interviewer has a clear agenda that he or she follows unflinchingly.
Sometimes companies use this rigid format to ensure parity between interviews; when interviewers ask
each candidate the same series of questions, they can more readily compare the results. Directive
interviewers rely upon their own questions and methods to tease from you what they wish to know. You
might feel like you are being steam-rolled, or you might find the conversation develops naturally. Their
style does not necessarily mean that they have dominance issues, although you should keep an eye open
for these if the interviewer would be your supervisor.

Either way, remember:

 Flex with the interviewer, following his or her lead.

 Do not relinquish complete control of the interview. If the interviewer does not ask you for
information that you think is important to proving your superiority as a candidate, politely interject
it.

The Meandering Style

This interview type, usually used by inexperienced interviewers, relies on you to lead the discussion. It
might begin with a statement like "tell me about yourself," which you can use to your advantage. The
interviewer might ask you another broad, open-ended question before falling into silence. This interview
style allows you tactfully to guide the discussion in a way that best serves you.

The following strategies, which are helpful for any interview, are particularly important when interviewers
use a non-directive approach:

 Come to the interview prepared with highlights and anecdotes of your skills, qualities and
experiences. Do not rely on the interviewer to spark your memory-jot down some notes that you
can reference throughout the interview.
 Remain alert to the interviewer. Even if you feel like you can take the driver's seat and go in any
direction you wish, remain respectful of the interviewer's role. If he or she becomes more directive
during the interview, adjust.
 Ask well-placed questions. Although the open format allows you significantly to shape the
interview, running with your own agenda and dominating the conversation means that you run the
risk of missing important information about the company and its needs.

The Stress Interview

Astounding as this is, the Greek hazing system has made its way into professional interviews. Either
employers view the stress interview as a legitimate way of determining candidates' aptness for a position
or someone has latent maniacal tendencies. You might be held in the waiting room for an hour before the
interviewer greets you. You might face long silences or cold stares. The interviewer might openly
challenge your believes or judgment. You might be called upon to perform an impossible task on the fly-
like convincing the interviewer to exchange shoes with you. Insults and miscommunication are common.
All this is designed to see whether you have the mettle to withstand the company culture, the clients or
other potential stress.

Besides wearing a strong anti-per spirant, you will do well to:

 Remember that this is a game. It is not personal. View it as the surreal interaction that it is.
 Prepare and memorize your main message before walking through the door. If you are flustered,
you will better maintain clarity of mind if you do not have to wing your responses.
  Even if the interviewer is rude, remain calm and tactful.
 Go into the interview relaxed and rested. If you go into it feeling stressed, you will have a more
difficult time keeping a cool perspective.

The Behavioral Interview

Many companies increasingly rely on behavior interviews since they use your previous behavior to
indicate your future performance. In these interviews, employers use standardized methods to mine
information relevant to your competency in a particular area or position. Depending upon the
responsibilities of the job and the working environment, you might be asked to describe a time that
required problem-solving skills, adaptability, leadership, conflict resolution, multi-tasking, initiative or
stress management. You will be asked how you dealt with the situations.

Your responses require not only reflection, but also organization. To maximize your responses in the
behavioral format:

 Anticipate the transferable skills and personal qualities that are required for the job.
 Review your resume. Any of the qualities and skills you have included in your resume are fair
game for an interviewer to press.
 Reflect on your own professional, volunteer, educational and personal experience to develop brief
stories that highlight these skills and qualities in you. You should have a story for each of the
competencies on your resume as well as those you anticipate the job requires.
 Prepare stories by identifying the context, logically highlighting your actions in the situation, and
identifying the results of your actions. Keep your responses concise and present them in less
than two minutes.

The Audition

For some positions, such as computer programmers or trainers, companies want to see you in action
before they make their decision. For this reason, they might take you through a simulation or brief
exercise in order to evaluate your skills. An audition can be enormously useful to you as well, since it
allows you to demonstrate your abilities in interactive ways that are likely familiar to you. The simulations
and exercises should also give you a simplified sense of what the job would be like. If you sense that
other candidates have an edge on you in terms of experience or other qualifications, requesting an
audition can help level the playing field.

To maximize on auditions, remember to:

 Clearly understand the instructions and expectations for the exercise. Communication is half the
battle in real life, and you should demonstrate to the prospective employer that you make the
effort to do things right the first time by minimizing confusion.
 Treat the situation as if you are a professional with responsibility for the task laid before you. Take
ownership of your work.
 Brush up on your skills before an interview if you think they might be tested.

The Group Interview

Interviewing simultaneously with other candidates can be disconcerting, but it provides the company with
a sense of your leadership potential and style. The group interview helps the company get a glimpse of
how you interact with peers-are you timid or bossy, are you attentive or do you seek attention, do others
turn to you instinctively, or do you compete for authority? The interviewer also wants to view what your
tools of persuasion are: do you use argumentation and careful reasoning to gain support or do you divide
and conquer? The interviewer might call on you to discuss an issue with the other candidates, solve a
problem collectively, or discuss your peculiar qualifications in front of the other candidates. 

This environment might seem overwhelming or hard to control, but there are a few tips that will help you
navigate the group interview successfully:

 Observe to determine the dynamics the interviewer establishes and try to discern the rules of the
game. If you are unsure of what is expected from you, ask for clarification from the interviewer.
 Treat others with respect while exerting influence over others.
 Avoid overt power conflicts, which will make you look uncooperative and immature.
 Keep an eye on the interviewer throughout the process so that you do not miss important cues.

The Tag-Team Interview

Expecting to meet with Ms. Glenn, you might find yourself in a room with four other people: Ms. Glenn,
two of her staff, and the Sales Director. Companies often want to gain the insights of various people when
interviewing candidates. This method of interviewing is often attractive for companies that rely heavily on
team cooperation. Not only does the company want to know whether your skills balance that of the
company, but also whether you can get along with the other workers. In some companies, multiple people
will interview you simultaneously. In other companies, you will proceed through a series of one-on-one
interviews.

The Mealtime Interview

For many, interviewing over a meal sounds like a professional and digestive catastrophe in the making. If
you have difficulty chewing gum while walking, this could be a challenge. With some preparation and
psychological readjustment, you can enjoy the process. Meals often have a cementing social effect-
breaking bread together tends to facilitate deals, marriages, friendships, and religious communion.
Mealtime interviews rely on this logic, and expand it.

Particularly when your job requires interpersonal acuity, companies want to know what you are like in a
social setting. Are you relaxed and charming or awkward and evasive? Companies want to observe not
only how you handle a fork, but also how you treat your host, any other guests, and the serving staff.

Some basic social tips help ease the complexity of mixing food with business:

 Take cues from your interviewer, remembering that you are the guest. Do not sit down until your
host does. Order something slightly less extravagant than your interviewer. If he badly wants you
to try a particular dish, oblige him. If he recommends an appetizer to you, he likely intends to
order one himself. Do not begin eating until he does. If he orders coffee and dessert, do not leave
him eating alone.
 If your interviewer wants to talk business, do so. If she and the other guests discuss their
upcoming travel plans or their families, do not launch into business.
 Try to set aside dietary restrictions and preferences. Remember, the interviewer is your host. It is
rude to be finicky unless you absolutely must. If you must, be as tactful as you can. Avoid
phrases like: "I do not eat mammals," or "Shrimp makes my eyes swell and water."
 Choose manageable food items, if possible. Avoid barbeque ribs and spaghetti.
 Find a discrete way to check your teeth after eating. Excuse yourself from the table for a moment.
 Practice eating and discussing something important simultaneously.
 Thank your interviewer for the meal.
The Follow-up Interview

Companies bring candidates back for second and sometimes third or fourth interviews for a number of
reasons. Sometimes they just want to confirm that you are the amazing worker they first thought you to
be. Sometimes they are having difficulty deciding between a short-list of candidates. Other times, the
interviewer's supervisor or other decision makers in the company want to gain a sense of you before
signing a hiring decision.

The second interview could go in a variety of directions, and you must prepare for each of them. When
meeting with the same person again, you do not need to be as assertive in your communication of your
skills. You can focus on cementing rapport, understanding where the company is going and how your
skills mesh with the company vision and culture. Still, the interviewer should view you as the answer to
their needs. You might find yourself negotiating a compensation package. Alternatively, you might find
that you are starting from the beginning with a new person. 
Q.4 Explain compensation system.

Compensation System

Employee compensation system along with the benefits programs, are one of the most complex
HR systems. A reward system should help support the organization's strategic mission, motivate
employees, and reward performance. Compensation systems should be both externally
competitive and internally equitable. Auditors may want to work with a compensation expert
when reviewing this area. A review of the organization's salary administration process is also
important to determine how employees are paid throughout their careers, including merit
increases, variable performance pay, promotions, bonuses, stock options, and deferred
compensation, to name a few.

Base salary

During the audit, auditors should ensure that: a compensation philosophy has been developed
that defines how the organization wants to pay people with respect to its position in the labor
market; there are current job descriptions for each position; an effective market analysis has
been conducted; a salary structure has been developed to help manage pay, and an
appropriate job evaluation system is being used to slot jobs into the salary structure.
Auditors should verify controls to ensure that the confidentiality of personnel data is maintained,
additions to base pay are appropriately calculated and authorized, full compliance with tax and
other deductions is made, terminating employees' payrolls are processed appropriately, and
payroll costs are in line with budgeting objectives.

Sales incentives

Sometimes past incentive programme may be a reason for disappointment to both you and your
salespeople. At the time of HR audit, sales incentive programme should be crosschecked
because a payment less than the worth may lead the sales team to underperform or fail as a
result. Corporations use incentive programs to drive behavior and it is a well known fact that
what gets rewarded gets done. To ensure that the incentive programme at your organization
work, you may use.

The 80-20 principle

Twenty percent of the salespeople make eighty percent of the sales and profits. Too often,
sales incentives are geared to the entire sales force. This may seem to be a fair strategy, but a
strategist should remember that these 20% people are already motivated. That means that the
sales incentives should be good enough to
1. keep these motivated sales personnel going and
2. light a fire under the next twenty percent – the next logical group

The results have shown that this doubles the business in a more cost efficient manner.

Keep it simple: Good salespeople look to simplicity to make things happen. Thus the
organization must keep the incentive program sweet, simple and attainable. There can be no
ambiguity. Anything less will result in a lack of interest, as well as a waste of time and money
that can sometimes spill over into other departments whose task it is to administer and account.
Productivity incentives
HR audit should employ meaningful methodologies of productivity measurement to evaluate and
monitor the performance of a business operation. Productivity measurements must show a
linkage with profitability and should clearly demonstrate how efficiently (or inefficiently) a
company is using its resources to produce quality goods and services.
The auditor should analyze if a realistic means of measuring progress has been employed or
not. More importantly, he should ensure that the organization has made realistic goals and
performance targets that can be reached through productivity improvements.

Executive bonus programs

In most of the companies, title and seniority mean more when it comes to bonus pay. By
granting bonuses according to title and seniority, companies turn them into entitlements, not
incentives. Due to this, executives, who does the field work and put in more labor do not get that
much of the bonus. HR auditor should ensure that the organization links incentives to
performance as the only fair and rationale way to reward employees. Bonus plans by design,
should be geared to reward employees for short-term performance.
In implementing a bonus program, employers must first establish how the program fits into their
overall compensation philosophy as well as set criteria that need to be met for the reward.
There are some that believe in paying low salaries and highly aggressive incentives, while
others believe the exact opposite. Regardless, the auditor should check if the executive bonus
plan fits the uniqueness of the company.

Team based incentives

Since in most of the big organizations, a project is assigned to a whole team together and the
performance on the project depends on the collective performance of the team, the HR auditor
should check if the due reward is being paid to the collective performance of the employees.
There are primarily two ways to offer team based incentives, viz.
1. Team based
2. Gain sharing
The auditor should also check if the employees are satisfied by the allocation method employed.
The methods of team based incentive allocation are:
 Equal incentive payments
 Differential payments based on contribution to goals
 Differential payment according to base pay

Most often than not, the teams like the second one of the above methods of the incentive
allocation. At the time of the audit, it should also be checked if the team is being told about the
team based incentives entitled to them, and the allocation method involved or not.

Exempt and non-exempt status determination

This concept is more prominent in USA where the HR auditor should analyze if the finance department
has correctly determined whether a salaried associate should be exempt or non-exempt? Exempt status
is regulated by the Fair Labor Standards Act (FLSA). When determining exemptions, employers must first
consider the way in which the employee is paid (hourly vs. salaried), then they must review the duties
and responsibilities of the job. Although, there are a number of unique position that provide for exempt
status. The majority of employers must use what is referred to as the “white-collar exemption tests” to
determine exempt status. There are four main exemptions, executive, administrative, professional, and
out-side sales, that positions can be placed in based upon the duties and responsibilities of the job. The
determination is never, made based upon the job‟s title or the manner the position is paid.
Overtime computation

According to the labour laws in India, when a worker works in an employment for more than
nine hours on any day or for more than forty-eight hours in any week, he shall, in respect of
such overtime work, be entitled to wages at double the ordinary rates of wages.
The labour laws also state that the workers should be given double the normal salary when they work
overtime (extra hours, either on working days or weekly offs). But many a company do not do so. They
might, for example, not pay the entire double amount and instead replace it with an amount that is
definitely higher than the basic, but still less than the double. This will definitely create employee unrest
over time and the productivity is bound to suffer. At the time of HR audit, the auditor must make sure
that no such practice is being undertaken and the employees are getting their dues properly.
Q.5 Write a note on Audit of HR Function.

Audit of HR Function

The purpose of a Human Resources audit is to assess the effectiveness of the Human Resources
function and to ensure regulatory compliance. The audit can be conducted by anyone with
sufficient Human Resources experience. Having experience working in more than one company
is a plus, as it provides the auditor with a broader perspective. There's an advantage to having the
audit conducted by an external consultant. Because the external consultant has fewer biases
about the organization and has less personal interest in the outcome than an employee of the
company, the external consultant may be more objective.

Collect Data

Assess the mission, vision, strategy, and culture of the organization, from whatever written
material there is in the company (check with the department or person who handles public,
customer, or shareholder relations). Collect existing data such as:
1. Hiring statistics (acceptance rate, hiring rate, hiring projections)
2. Turnover
3. Compensation and benefits philosophy and practice
4. Exit interview summaries
5. Employee complaints (discrimination, harassment, safety, other)
6. Promotion and advancement practices and trends
7. Human Resources budget and expenditures

Where possible, compare the data you collected with market data. This information will provide
you with a point of view for the next phase of the audit: the interviews. If, during the interview,
discrepancies arise between the data and the interviewee's answer, you can explore the reasons
for the discrepancy(s).

Conduct Interviews

The purpose of the interview is to collect input from the internal customer on their Human
Resources needs and how those needs are being met. Begin the interview with top management.
Next conduct interviews with a sample of subordinate managers including first line management.
The topics to discuss during the interview include:

1. Perceptions of the company and its goals

2. Strengths and weaknesses of top management
3. Employee perceptions of the company and top management
4. Relations with subordinates
5. Support of career goals for self and employees
6. Major Human Resources issues
7. Which Human Resources functions work well
8. Which Human Resources functions need improvement
Conduct the Regulatory Compliance Audit

The following areas should be audited as part of the regulatory compliance audit:

1. Personnel files and recordkeeping (contain only job related information)

2. Pay equity
3. Job descriptions (ADA compliance)
4. Legal postings
5. Equal Employment Opportunity and Affirmative Action
6. Forms (applications, internal forms, etc.)
7. Workers' Compensation
8. Fair Labor Standards Act
9. Family and Medical Leave Act
10. Legal reporting

Summarize the Results

Consolidate the information you collected. Compare the results with market surveys. Determine
which practices are good/popular/effective/competitive. Determine which practices need
improvement. Recommend specific improvements referring to the results of both the
Effectiveness audit and the Regulatory compliance audit. Justify the recommendations.
Determine how to measure whether the improvements are successful.

Obtain Approval from senior Management

Present the preliminary results and recommendations to senior management individually. Point
out how these recommendations will support their needs. Obtain their support, then present the
final results and recommendations to the senior management staff for final approval.

Implement the Program

Consider implementing the program in part of the organization as a pilot program. Monitor and
measure success and seek to continuously improve processes. Be prepared to modify the
program if an organizational change requires it.
Q. 6 Write a note on design and implementation of competencies model.

Design and Implementation of competencies model

During an HR audit, due attention must be paid to find out if the competencies model has been
adequately designed and developed or not. There are three ways in which competencies
models may be developed:

1. Behavioral Indicators: Behavioral indicators describe the behaviors, thought patterns,

abilities and traits that contribute to superior performance.

2. Evaluative Competency Levels: Exceptional competencies of high performers are set

as standards for evaluating competency levels of employees.

3. Competencies Describing Job Requirements: This approach is useful for

organizations having multiple competency models. Competencies required in a particular
job are described. Job specific competency models help in structuring focused appraisal
and compensation decisions.

To identify role-specific competencies required industry specific, functional and

behavioral competencies, which need to be developed for enhanced performance. The
approach for developing a competency framework for a particular role is as proposed
below:

 Understand strategic business context of the organizations in term of its structure and
environmental variables.

 Detail role description for positions. Defining and scaling (relative importance and mastery
level) of specific behaviors for each identified competency as a measure of performance.

 Develop competency framework taking into consideration the core values and the culture of
the organizations in addition to specific functional and level requirements. This should gel with
the vision and mission of the company.

 Validate the competency framework through a workshop, which should include functional
experts and top management personnel in order to define critical and desirable competencies.
And also to substantiate the extent to which the competencies differentiate between high and
average performers by validating the content and criteria.

The auditor should establish the link between people and roles through effective measuring
tools that evaluate the performance of the person in the HR Audit role.
On-the-job performance of the individual is evaluated on the basis of a performance
management system.
The assessment centre is a powerful tool in the hands of the management for selection and
development. As a selection tool it can be used for management promotions, fast tracks
schemes, high potential list and change of functional role. As a development tool, it is helpful in
succession planning, identifying training needs and career development.
Designing and conducting a potential assessment centre should follow basic principles in term
of accuracy, fairness, reliability, legality, efficiency, multiple assessors, multiple tests and
optimal stress to increase performance. It would involve two types of exercises, i.e., group
exercises and individual exercises.

Group Exercises
For potential assessment, the following group exercises are conducted:
 Assigned Role Exercises: Used to assess negotiating skills, decision making skills, and risk
taking skills;
 Unassigned Role Exercises: Used to assess ability to handle uncertainty, change
orientation, ethical behavior and global orientation; and
 Team Exercises: Used to assess ability to work in a team and solve problems efficiently.

Individual Exercises

For potential assessment, the following individual exercises are conducted:

 In-Basket Exercises: Used to assess ability to plan, organize, decide, manage and delegate;
 Learning skill Inventory/Psychometric Inventories: Used to assess ability to learn,
leverage knowledge and indicate behavioral patterns; and
 Interpersonal Effectiveness Module: Used to assess interpersonal effectiveness,
excommunication skills, patience and interpersonal skills.

Inputs for analysis of an individual’s potential and behavioral patterns are also collected through
multilateral feedback, behavioral event interviews, career aspiration interview, career history, etc. In
order to minimize assessors’ bias and ensure objectivity and uniformity multiple trained assessors for
each competencies assessment are used.
 MU0013 – Human Resource Audit
Assignment Set- 2
Q.1 Explain staffing in detail.

 Staffing

Staffing is a term that refers to the management of employee schedules. It can be described as the process
of acquiring, deploying, and retaining a workforce of sufficient quantity and quality to create positive
impacts on the organization's effectiveness.

The ideal staffing level for an organization depends on the amount of work to be done and the
skills required for doing it. If the number and quality of staff employed are greater than
necessary for the workload, an organization may be deemed to be overstaffed or if the number
of staff is insufficient for the workload, an organization is deemed to be understaffed.
Effective human resource planning will determine the appropriate staffing level for an
organization at any given point in time. Staffing includes various aspects to ensure the best
practices in an organization
.
Workforce planning: Workforce planning is one of the most important activities in a business.
It starts with analysis of the strategic position of the business. The results of this analysis then
feed into a forecast of the required demand for labor by the business and how this is likely to be
supplied. The final stage involves the creation and implementation of a human resources plan
which aims to deliver the right number of the right people for the business.

Specifying Jobs and Roles: Clearly defining employee roles in your company is vital to work
efficiency. When employees understand what their role is in your company they will be more
productive. Employees should also know what is expected of them and the work they produce.
Employees that do not know what is expected of them or their role in your company can lead to
unnecessary conflict and misunderstandings.

Here are some tips to help you to clearly define employee roles:
 Clearly tell people what is expected of them.
 Balance the work load.
 Update your employee's progress continuously.
 Weekly progress reports should be implemented.
 Encourage employees to openly communicate with you and other employees.
 Share information about the company with your employees.
 Along with knowing what an employee's role is in the company, they should also be trained
and educated for this role.

If your company continues to grow and develop you may realize that there is a need for a new job role.
When employees continue to report being short-handed and mention that some tasks are not being done
this could mean it is time to plan a new job role.

Management should draft a job description which states the general responsibilities of the
position, along with some specific job duties to be conducted by the role.
 Get feedback from other managers and supervisors about the new job role, the job
description and the responsibilities that the new employee will have.
 Make changes if necessary to maintain a balanced work load.
 Finalize the job description. It is important the job description is accurate because it is what
you have based the new employee's salary, required training and skills on.
 Remember to help your company grow and advance it is vital that all employees know what
their roles are in your company.

Recruiting: It involves the process of identifying and hiring best-qualified candidate (from within
or outside of an organization) for a job vacancy, in a most timely and cost effective manner.

Outsourcing: Employee Outsourcing can be a cost effective alternative to the expense and
administrative burden of a traditional employer-employee relationship. Outsourcing your human
resource functions allows you to focus on business development and provides administrative
relief from many employment responsibilities such as payroll preparation, income tax reporting,
employee benefits and workers compensation.

Outsourcing is accomplished by transferring many of your employer responsibilities to a

Professional Employment Organization (PEO). A PEO is not simply a temp firm, staffing
agency, payroll service or placement agency. The PEO acts as your off-site human resource
department. Your company enters into an agreement with the PEO to establish a three-way
relationship between you, your employees and the PEO. You and the PEO become co-
employers instead of the traditional employment relationship.

The other staffing processes involve

 Screening Applicants
 Selecting (Hiring) New Employees
 Succession Planning
 Job and Task Analysis
 Job Description

Specifying Competencies

 New Employee Orientation

 Training and Development
 Retaining Employees
 Out placing and Downsizing (laying off employees)
 Exit Interviews

HRD audit and staffing

HR auditors review the process of staffing and policies pertaining to staffing. It includes reviewing the
recruitment process, the interview process, the employee orientation process, the job analysis and job
description, promotion and growth opportunities.
Q.2 Discuss approaches to HR Audit.

Approaches to Human Resources Audit

The following are the approaches to Human Resources Audit, which 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 of the Model 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 industry’s actual performance with the set objectives.

The Legal Approach in HR Auditing

This first concept of HR auditing is based on a legal outlook. According to Antona [1993, p. 2],
the audit of performance or conformity consists of "making an inventory of the social situation of
the company, considering the labor law norms and regularly verifying the company's compliance
with the applicable regulations." Thus, this concept is centered on the verification that the current
labor laws are being fulfilled. The audit should verify if the firm's policies, practices, and
documents regarding employee hiring, retention, discipline, termination, and post-employment
are both fair and legal [Higgins, 1997]. These practices and policies must: prohibit
discrimination by offering equal employment opportunities; protect the employment seeker from
being discriminated against on the basis of age; carry out minimum wages; and contain
provisions regarding mental disabilities and reasonable accommodations for disabled workers.

According to Nevado [1998, p. 49], the basic functions of the audit of conformity or of
performance as an element of HR auditing are threefold. The first function is examining to see if
the firm is fulfilling all its administrative social obligations, as well as those relative to the
collective rights of its personnel. The second is to study the relationship between the employees
and the firm based on the legal statutes. The final function is verifying if the firm fulfills its
financial obligations (for example, social security payments), as well as its informative ones.

Concern about labor risks has created a function within HRM with the purpose of altering
working conditions by identifying the risks that could stem from them and implementing
necessary preventive measures. Such preventive activity could fit perfectly into the legal
approach of HR, although the effort that the company can make in this sense can go beyond the
application of the existing risk prevention laws. The requirement for labor security and hygiene
is a part of the search for quality of life in the workplace, which is becoming increasingly
demanded from companies.
Q.3 Describe How to approach a HR Scorecard.

This mode of scorecard is based on the assumption that competent and committed employees
are needed to provide quality products and services at competitive rates emphasizing on the
ways to enhance customer satisfaction. Look at Figure 9.1 for understanding the steps in HR
Scorecard approach.

The Seven Steps in the HR Scorecard approach to formulating HR policies activities and
strategies are as follows:

 The first step is to formulate business strategies i.e. define the business strategy of the
organization so as to be very clear about the way to exploit the human resource towards the
achievement of the organizational goal.
 The next step is to outline the company’s value chain activities and identify the strategically
required organizational outcomes.
 Now after the outcomes have been decided clearly, identify the workforce requirements and
behaviors expected so as to achieve the desired outcomes.
 The next step is to formulate HR policies and practices which are strategically relevant such
as new training and grievance systems.
 After ensuring that all above steps are correctly conducted then develop detailed scorecard.
 Then design the HR Scorecard measurement system.
 In order to ensure the productivity, periodically re-evaluate the measurement system.
Q.4 Explain the process of workplace behaviors that support legal compliance.

Workplace behaviors that support legal compliance

A safe, dignified, and respectful work environment is not only mandated by the law, but also increases
motivation and productivity of the employees. An example of review of business practices used to deal
with allegations of harassment safe working environments should be considered especially for the
females in the offices so as to make them feel confident and concentrate on work.

Many smaller companies do not like writing certain aspects of ways of conducting business. For such
companies, it is mere formality and they do not appreciate “people-oriented culture.” Though it should
be avoided because it is patently illegal because laws require that companies should mention very
clearly the policies about guaranteeing specific protections to employees

Safeguarding employee information

Employees‟ personal information should be safeguarded. Separate files should be maintained

for personal information as contrasted with employment related information.
Main objective behind it to ensure that while deciding the employee’s career with the company
his personal information should not be considered. For example while deciding whether to
promote employee or not, instead of his personal information like his religion, his work
experience and capabilities should be considered.
The employment decision needs to be made on work/performance-related information, not the
personal information. Relevant materials in the work file include information on the employee’s
education, related work experience, and performance evaluations in other positions within the
company. An audit can clarify what information must be segregated and the laws that govern
employees‟ access to and copying of their files. Other employee information that must be
safeguarded includes any materials that contain medical information.

Employee performance management

An audit can review company’s job descriptions for compliance (i.e., to determine whether the
descriptions list the essential functions of the job). Various legal issues can arise due to
performance related problems of employees. Audit will help in following improvements and
reviews:
 A 90-day written standard performance evaluation form,
 An annual written standard performance evaluation form,
 A performance management/performance improvement plan,
 A description of the company’s policy for both voluntary resignation and company-
initiated termination,
 Wage and salary administration program,
 Bonus/stock option criteria.

Safe work environment

Audit practices may also help the companies to know about factors that contribute to a safe
work environment. A company may choose to develop an audit sheet tailored to a particular
issue, such as the company’s zero-tolerance policy for harassment. For example, a company
may wish to review and evaluate its practices of dealing with inappropriate harassing behavior
in its workplace.
Q.5 What are the issues in Human Capital Measurement and reporting .Explain

Issues in Human Capital Measurement and Reporting

The human capital can be defined as "the knowledge that individuals acquire during their life
and use to produce goods services or ideas in market or non-market circumstances."
Organizations know that that measurement is a prerequisite for good management. As the
popular saying goes, “What gets measured gets managed”. But in most of the organizations
today, the most basic source of wealth creation – human capital – is not managed properly. This
is primarily because most organizations‟ systems of measurement, shaped in part by
accounting and reporting requirements, are still overly influenced by measurement concepts
that date back to the industrial era when physical capital was the primary source of wealth
creation.
Expenditures incurred on the development of the employees – education and training being
perhaps the most prominent – are treated as costs although, these expenditures possess the
traits of an investment (expenditure at one point in time that is made with the intention of
generating an increase in capacity at some future point in time). But this outright focus on costs
and cost cutting is not baseless. Often the known costs associated with people and their
development, because measurement and accounting practices associated with human capital
are remains of the industrial era, the measured costs are only a portion of the total costs.
Moreover, because benefits are both uncertain and unknown, a conservative strategy has its
merits. And finally, because human capital cannot be owned, spending on the development of
people does not meet the traditional accounting concept of an investment, since employers
cannot control the asset, i.e., the people in whom an investment is being made. There are
genuine arguments in favor of the status quo with regard to measurement, accounting and
reporting of human capital development and management. There are, however, also powerful
arguments to be made that change is necessary.
Human capital represents a huge operating cost that must be managed efficiently because of its
absolute scale. At the same time – because human capital is also the only asset that cannot be
owned – it must be managed wisely, but also with humanity. As a result, a strategy that focuses
exclusively on efficiency and cost containment can, at best, only be successful in the short-run.
This creates a fundamental paradox.
Exceptional management in the knowledge era is defined by the ability to resolve this paradox
through a “both/and,” rather than an “either/or” strategy. The both/and strategy requires a
relentless focus on finding ways to cut costs and improve productivity, while simultaneously
evoking the passion, creativity, loyalty and best efforts of the people on whom an organization
relies.
Q.6 Discuss the auditing for HR professionals.

Human Resource Audits

Scope—Human resource audits involve a company’s strategic actions to take an intensely

objective look at its HR policies, procedures and practices. This type of comprehensive review of
the company’s current state can help to identify whether specific practice areas or processes are
adequate, legal and/or effective. The results obtained from this review can help to identify gaps
in HR practices, and these gaps can then be prioritized for attention in an effort to minimize
lawsuits and/or regulatory violations, as well as to achieve and maintain world-class
competitiveness in key HR practice areas.

Overview
Human resource audits are a vital means of avoiding legal and/or regulatory liability that may arise from
a company’s HR policies and practices. In addition to identifying areas of legal risk, audits often are
designed to provide a company with information about the competitiveness of its HR strategies by
looking at the “best practices” of other companies in its industry. In essence, an HR audit involves
identifying issues and finding solutions to problems before they become unmanageable. It is an
opportunity to assess what an organization is doing right, as well as how things might be done
differently, more efficiently or at a reduced cost.

In today’s competitive climate, companies operate within the confines of a heavily-regulated

employee environment. This includes dealing with myriad complex laws and regulations. The
scope of the HR function includes establishing and administering a host of policies and practices
—many of which involve compliance implications—that significantly influence the productivity
and profitability of the enterprise. Just a handful of these are:

Benefit administration issues

 Disciplinary matters
 Employee development
 Employees’ eligibility to work
 Interim/contingent staffing
 Interviewing and hiring
 Job descriptions
 Organizational development
 Payroll management
 Performance management
 Problem or conflict resolution
 Stress management
  Substance abuse
 Team building
 Termination
 Workplace violence
Given that many HR departments are both understaffed and overworked, only in retrospect do many
companies become aware of the monetary costs of ignoring HR-related legal hot buttons.
Noncompliance with applicable laws and regulations involves significant financial risk. To minimize the
risk, many organizations purchase employment practices liability insurance. While this is a sound
strategy, companies can take other proactive measures. Chief among these is a voluntary HR compliance
audit.

Types of Audits

An HR audit can be structured to be either comprehensive or specifically focused, within the

constraints of time, budgets and staff. There are several types of audits, and each is designed to
accomplish different objectives. Some of the more common types are:

 Compliance: Focuses on how well the company is complying with current federal, state and
local laws and regulations.
 Best Practices: Helps the organization maintain or improve a competitive advantage by
comparing its practices with those of companies identified as having exceptional HR practices.
 Strategic: Focuses on strengths and weaknesses of systems and processes to determine
whether they align with the HR department’s and/or the company’s strategic plan.
 Function-Specific: Focuses on a specific area in the HR function (e.g., payroll, performance
management, records retention, etc.).

What to Audit

Deciding what to audit will depend largely on the perceived weaknesses in the company’s HR
environment, the type of audit decided on and the available resources. Keeping a log of issues
that have arisen but are not covered in the company’s procedures or policies will help identify
areas of potential exposure that can be addressed during the annual review process (if they do not
need to be addressed immediately.)

There are, however, certain areas in which companies are particularly vulnerable. Most lawsuits
can be traced to issues related to hiring, performance management, discipline or termination.
Some additional risk areas that should be carefully reviewed include:

 Misclassification of exempt and nonexempt jobs. Almost every company has job positions that
have been misclassified as exempt from overtime eligibility. The complexity of wage and hour
laws and regulations makes it easy to err in classifying a job as exempt, thereby exposing the
company to liability for past overtime.
 Inadequate personnel files. A review of sample personnel files often reveals inadequate
documentation of performance—for example, informal, vague and/or inconsistent disciplinary
warnings. Performance evaluations may be ambiguous, inaccurate or outdated. Personal health
information is often found in personnel files, despite medical privacy laws requiring such data to
be kept separate. Accurate and detailed records are essential for employers to defend any type
of employee claim, particularly unemployment compensation or wrongful termination claims.
 Prohibited attendance policies. Controlling excessive absenteeism is a big concern for most
employers. However, the complexity of family and medical leave laws, with sometimes
conflicting state and federal protections, has made many formerly acceptable absence control
 policies unacceptable. Absences affect workers’ compensation, family and medical leave,
disability accommodations and pregnancy laws. Companies often have attendance policies that
either do not comply with relevant laws and regulations or grant employees more protections
than required.
 Inaccurate time records. Employers typically require nonexempt employees to punch a time
clock or to fill out time sheets reflecting their time worked each week. The records generated by
these systems typically are the employer’s primary means of defense against wage and hour
claims, so it is essential that timekeeping policies and practices be clearly communicated and
consistently administered.
 Insufficient documentation. Reviews of employer hiring practices often uncover inadequate
documentation, such as missing or incomplete I-9 Forms. Employers can be fined between $100
and $1,000 for each failure to accurately complete an I-9 Form. Fines for these violations can
easily add up, with reported cases of repayment totaling over $100,000