Why do human resources management audit?

Answer 1

It is a common fact that many companies are unable to employ a human resource professional to manage the function. HR is often managed by staff from the finance or administrative teams. More often than not, in smaller firms and nonprofits fortunate enough to have an HR professional, this person may also wear many non-HR hats. Either of the above are scary propositions, given the often cumbersome oversight of Federal, state and local government regulatory authorities.

An organization that is unaware of its HR responsibilities is an organization precipitously close to incurring a costly fine or lawsuit. Examples of penalties include:

* DOL fines of $1,100 for any violation of failing to pay overtime to non-exempt employees;

* OSHA penalties as high as $10,000 for failing to post required safety notices or keeping accurate records; and

* IRS penalties of $100 per day per violation and ERISA penalties of $110 per day per qualified beneficiary for COBRA non-compliance, in addition to damages and court/attorney fees.

These examples point to the significance and importance of compliance. HR compliance means knowing the laws that apply to your organization, developing policies to support the laws and ensuring policy knowledge and consistent application.

Above and beyond compliance, effective HR management practices can accelerate organizational development and make a positive impact on organizational financial performance. For example, an audit will review policies and procedures and ensure consistent application across the organization. Fair policies that are applied consistently can lead to improved employee productivity which can positively impact employee satisfaction and retention. With the cost of turnover calculated minimally at 100% of an employee's salary, the value proposition for an HR audit is extremely compelling; it likely will pay for itself many times over.