Hr audit webinarv2

PRISCILLA NUNN

Priscilla Nunn, President of Cox Cox Consulting Group, is a results-oriented organizational development professional with over 25 years of progressive experience. She is recognized as a strategic business partner with a proven track record for delivering solutions and strategies aligned with business goals and objectives.

AGENDA

DEFINE HUMAN RESOURCES AUDITING

PURPOSE OF AN HR AUDIT

APPROACHES TO HR AUDITING

THE AUDITING PROCESS

DEFINITION

The Human Resources (HR) Audit is a process of examining policies, procedures, documentation,

systems, and practices with respect to an organization’s HR functions.

To identify HR management strengths and weaknesses.

To ensure legal and policy compliance in response to a discrimination charge or employment related lawsuit.

To purchase Employment Practices Liability Insurance.

To collect data and develop measurement standards to benchmark best practices.

As a part of regular internal audit procedures.

As a part of Merger &Acquisition activities.

Comparative approach: Audit results are compared to other organizations in the industry.

Outside authority approach: Organization use standards set by an outside consultant as benchmark for comparison of own results.

Compliance approach: Organization determines whether the audit results comply with legal requirements.

Management by objectives (MBO) approach: Organization uses audits to determine if goals and objectives are met.

DEVELOP IMPLEMENTATION PLAN

ANALYZE DATA

COLLECT DATA

DEVELOP CHECKLIST

PLAN AUDIT

AUDIT PROCESS

Develop An Audit Plan

• Scope• Key areas and Issues

• Organization’s Facilities

• Resources needed

• Timeline

• Governance

– Team

– Guidelines

– Process

Key Areas and Issues

Roles, head count, and HR information systems (HRIS)

Staffing (Recruitment & Selection) process.

Personnel records documentation

Training, development, and career management

Compensation, rewards and benefits.

Performance measurement and evaluation

Termination / demotions and transition / turnovers.

Legal actions / issues and personnel policies

Organization’s Facilities

• Corporate

• Individual plants, stores, and offices

• Departments, product lines, profit centers, and cost centers

• Subsidiaries and divisions

• Acquisitions

• Suppliers, vendors, and third parties

Cost related to conducting the audit, analyzing the audit findings, reporting the audit findings, and implementing corrective action:

• Staff salaries and expenses

• Legal and HR consulting expertise and expenses

• Equipment (computers, copiers, etc.)

• Space

• Time

Audit Governance

• Who conducts the audit?

– Internal team

• Managers, supervisors and employees from across the organization

– External Auditor

• An attorney or consultant, or an outsider may work as part of the audit team.

– Individual HR team member

• How often will the team meet?

• Will the the team issue interim reports?

• How will audit data and information be collected and stored?

• Who will have access to this data and information?

• Who will receive interim and final reports?

Develop a Checklist

Audit Checklist Example: Hiring Process

KEY LEGAL CONCERNS

• A claim of discrimination based on the way applicants are attracted or treated.

• Incomplete or inaccurate documentation which might be needed later; for example, to defend a discrimination claim or in a government audit focused on the hiring process.

• Incomplete or incorrect documentation collected after the hire, such as lack of I-9 documentation or child/spousal support documentation.

• Violation of drug testing statutes.

DOCUMENTS TO COLLECT AND REVIEW

Job advertisement - Job application -Job descriptions -Affirmative Action Plan (if any)

Drug testing policy - Internal job posting policy –Internal policies and procedures regarding interviewing and hiring –Reference/background check policy and forms -Rejection letter

• Does the recruiting process comply with the employer’s Affirmative Action Plan (“AAP”), (if any)?

• Does the recruiting process comply with federal and state discrimination laws, including making reasonable accommodation for applicants who request it as part of the hiring process

• Has the employer completed the I-9 correctly within the required time frame after the commencement of employment?

• Are all state drug-testing requirements met in the hiring process?

HIRING PROCESS QUESTIONS

OTHER AUDIT QUESTION EXAMPLES

Current Organization

• Total Headcount?

• Full-time / Part-time / Temporary?

• With benefits? Without benefits?

• Average years of service

• On Probation?

• On Family/Medical Leave?

• On Vacation/Sabbatical?

• By Division / Location / Department?

Positions

• Are there Job Descriptions for each position?

• Are there Job Classifications?

• Are Jobs consistently located within the job classification system?

• Do the Job Descriptions specify the minimum requirements, knowledge/skills/abilities, job duties?

• Is there an Organizational Chart?

• Is the Organizational Chart made public? Where is it distributed?

Recruitment

• How are candidates sourced?

• How are candidates selected?

• Are legal requirements met?

• Are the same processes used for all jobs, all locations?

• Are processes followed consistently?

Job Description

• Written in simple language that is clear to understand?

• Includes a Title, Description, and Requirements?

• Physical Requirements specified?

• Working conditions specified? Any hazards?

• Includes statements or work / duties?

Personnel Files

• Where are the personnel files currently located?

• What documents are in the personnel files?

• How long are the files kept after the employee leaves the company?

• What information is removed from the personnel files and at what time after the employee leaves the company?

• What controls are in place for access to the personnel files?

• Can employees request to review their files?

• What checks are in place to ensure accurate information?

• How much of this information is stored on-line?

Employee Handbook

• Is there an employee handbook?

• Is it distributed to new hires?

• Do the employees have to sign a form stating they read and understand the handbook?

• When was the handbook last updated?

http://mn.gov/deed/images/WhyandHowtoConductaHumanResourcesAuditinMinnesota.pdf

Collect Data

Methods

Interviews

Questionnaires

Observations

Reviewing Documents

Types of DocumentationAAP/EEO Related Affirmative Action PlanEEO-1 ReportsEqual Employment Opportunity FormVeteran/Disabled Self-Identification Form

Recruiting/Staffing Job Postings/Advertisements Employment Agency/Search Firm Contract Resume/Candidate Tracking System (sample report) Employment Application Interview questions Pre-Employment Tests –physicals, drug screens, FCRA Documents -Consent for Background Offer Letter FormRejection Letter/Rescission of Offer Letter Adverse Action Letters -FCRA, Criminal,or Drug Screen

Hire Orientation On-boarding/Orientation Checklist Invitation to Self-Identify I-9 Form W-4, 1099 Form

Employee Handbook & Acknowledgement Workplace Harassment Policy & Complaint Response Process ADA Policy & Accommodation Request Process Equipment Agreement Summary Plan Document Personal information Form Direct Deposit Form Non-compete Agreements

Federal and State Poster Requirementswww.dol.gov; State Department of Labor

Types of Documentation

Ongoing Employment Job Descriptions Compensation Analysis Time Sheets/hours Tracking Leave Documentation

Performance Management/Discipline Performance Review/Evaluation FormPerformance Improvement Plans/Disciplinary Action Forms

Termination of Employment WARN Act Notification Termination//Separation LetterSeverance AgreementsUnemployment InsuranceWorkers Compensation Information Non-compete Agreements, Confidentiality Agreements COBRA Notifications

Compensation Compensation Philosophy/Policy Salary Administration policyBonus PolicyExecutive Compensation Plan/PolicyIncentive Compensation Plan/PolicyGarnishment/Attachment Policy and ProcedureLoans and Payroll Advances Policies and Procedures Direct Deposit FormPayroll Action FormBonus Plan DocumentMerit Increase FormLoan Repayment AgreementsEmployment Agreements

“what should be” “what could be”

Analyze Data

Analyze Data: SWOT

Findings

Provide Feedback Prepare a a written report with finding and recommendations prioritized.

Meet with HR and Sr. ManagementSummarize the data and provide feedback to the company’s HR professionals and senior management team in the form of findings and recommendations.

Prioritization Recommendation • Compliance Violation• Policy Non-Compliance• Practice Inconsistency• Goal and Objective Misses• Outsourcing Opportunity

• Transactional• Benchmarking Opportunity

Develop an Implementation Plan

– Finding

– Recommendation-Action (Legal advice may be needed to understand issues and design action steps)

– Responsible Person

– Timeline

To Note

Findings of your HR audit

• Will be discoverable

• Will become common knowledge

• Will raise employees’ expectations that you will address the issues identified

It increases legal risk to conduct an audit and then fail to act on the results.

Closing Comments

• Implement the plan

• Continue to observe

• Continue to improve