Complete Human Resources (HR) Audit Checklist

What is an HR audit? It is a comprehensive assessment of the HR function. An HR audit evaluates the effectiveness and efficiency of how an organization manages its people, including recruitment, selection, performance management, and development phases.

Employment laws keep on changing; therefore, organizations have to keep up with them to exhibit updated HR compliance. One of the many benefits of auditing is that it helps organizations identify areas for improvement and cost savings, such as improving leadership development programs or reducing turnover rates through improved performance reviews.

If you’re interested in learning more about the human resource audit process checklist via video then watch below. Otherwise, skip ahead.

We have come up with a human resource audit checklist that asks a series of questions on critical areas of the HR department. You can use it to make your audit successful. Let’s dive in.

6 HR Audit Checklists to Streamline Your Organization

Here is the regular HR audit checklist that you can use to make the human resource audit process successful:

Overall Company

Here are points for you to include in your checklist regarding the overall company:

• Do you have mission and vision statements?
• Is the HR department following the goals of the company?
• What’s the number of supervisors and managers in the company?
• How many employees in total does the company carry, including full-time and part-time?
• What hours in total do they have to work as full-time employees? part-time employees?
• Do they know their status as full-time or part-time employees?
• For how long does an employee have to stay temporary?
• Is your company EEO-1 compliant? How often do you file for Equal Employment Opportunity (EEO) compliance?
• What are company timings? If there are shifts, do they follow a set schedule?
• What are the means of communication for HR professionals with employees and higher management?

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Recruitment

Here are points for you to include in your checklist regarding the recruitment:

• Who is the recruiting manager?
• What’s your recruitment process for new employees?
• Who does the initial assessment of candidates?
• Who gives the go-ahead to call someone for an interview?
• Is there a training process for those who take the interviews?
• How does the procedure of recruitment gets logged?
• Are there procedures set for checking candidate backgrounds and references? If so, how are they cataloged?
• What mediums are used to hire staff (social media, job portals, or print media)?
• What about job descriptions? Do they exist and are ADA compliant?
• Are there I-9 forms created for each employee, and are they reviewed on per year basis?
• Is there a mechanism set for e-verify for new hires?
• Are protected health information and I-9 documentation kept separate from public records?
• Where does a job opening gets posted? Can the current employees utilize an opportunity?
• Do employment contracts’ applications discourage requesting information about an applicant’s criminal record?
• Does the application form ask whether or not the applicant needs accommodation?
• Who makes the final decision to hire someone?
• Once hired, are they notified through a conventional offer letter?
• Is there a way to distinguish Independent contractors from other employees?
• Is there a test to classify independent contractors?
• Is there a culture of raising issues about the classification of employees?
• How do exempt employees fit into the classification process?
• How does your organization deal with the complex issue of reporting new hires on time?
• Does there exist an employee handbook?
• Is the employee handbook updated and according to the workplace?
• Do the employees have to attend orientation?
• How long does it take to finish orientation?
• Are harassment, attendance, and wellness HR policies in place?
• Are the employees briefed on harassment and discrimination problems?

Compensation and Employee Benefits

Here are points for you to include in the checklist regarding employee compensation and benefits:

• Who negotiates compensation and benefits?
• Is there a compensation committee in place?
• What are the salary ranges for different positions in your organization?
• Is there a process to designate the exempt and non-exempt per provisions of FLSA?
• What are the company’s policies on recruitment and employee retention?
• Does your organization offer benefits to its employees such as health coverage, disability, life insurance, bereavement leave, and others?
• Is there a proper pay structure in place in compliance with the national pay scale?
• Are the work hours monitored?
• Are the vacations and holiday schedules structured right?
• Is the company’s vacation policy in compliance with any applicable local laws or regulations?
• Does your organization compensate non-exempt employees according to the law for extra work?
• Do the employees know about their compensation rights?
• Is the company’s wage and hour compliance plan current?
• What is the organization’s policy on overtime compensation?
• Does the company comply with the COBRA law to protect employees from losing their health coverage when they leave or are terminated?
• Is the employee leave time in line with the guidelines of FMLA?
• Are the supervisors and managers responsible for notifying the HR department if an employee misses work due to a medical condition?
• Are paychecks distributed on time?

Employee Relations

Here are points for you to include in your checklist regarding employee relations:

• Do supervisors work with staff to provide a positive work environment?
• Is the company’s attendance policy clear and communicated well?
• How are performance evaluations conducted? Do employees know about the several types of assessments?
• Is there a way to assess the quality and volume of work done?
• Is there a clear procedure for resolving performance issues?
• How flexible are disciplinary actions for violating workplace policies? Does documentation exist to support each incident of infractions in the future?
• Is there a way to file complaints against coworkers?
• To discourage retaliation against employees who exercise their rights, are there policies in place that prohibit such actions?
• Are the employment criteria following the anti-discrimination federal laws?
• Is the company’s EEO statement clear and available to all employees?
• Is there any performance appraisal tool?
• What about exit interviews? Do they happen to find reasons for their departure?

Safety, Wellbeing, and Worker’s Compensation

Here are points for you to include in your checklist regarding employee safety:

• Does the company have a policy in place to protect employees from workplace violence and threats?
• Do managers know how to react when an employee is exposed to physical, emotional, or sexual abuse at work?
• Is there any employee training on bullying prevention for supervisors and middle management?
• Are employees protected against verbal abuse?
• Do you know if workplace accidents are reported and investigated?
• Are employees encouraged to report injury without fear of retaliation?
• Is there a clear policy for drug testing, and what are the rules for it?
• Are there any policies in place for pregnant workers?
• Is the workplace lit for ergonomic purposes, and is the temperature within a reasonable range?
• Is there an emergency response system in place in the event of an emergency?
• Are the disabled employees briefed on official structures?
• Are new employees aware of OSHA regulations and how to report incidents?
• Are minors kept away from work involving hazardous material?
• Is there the availability of MSDS sheets for cleaning supplies and other chemicals in the workplace?
• Are the programs to help employees get back on track effective or sustainable for all after a leave of absence?
• Are employees provided with safety training and information?
• Is there a written policy for handling confidential material in the workplace?

Record Keeping and Documentation

Here are points for you to include in your checklist regarding the employee record and documentation:

• Are personnel records, performance reviews, and other HR documents logged promptly?
• Is there an audit trail of activities on the system to ensure that changes are authenticated by authorized users only?
• What kind of information is held in personnel records?
• Is there a system in place for the storage and retrieval of personnel records, documentation, and other HR information?
• Are sensitive documents stored in a secure location?
• Who has access to sensitive documents and records?
• Do the managers and supervisors undergo training on personnel files?
• Do the federal and state labor posters show in an easy-to-read location where employees will not miss them?
• What does your office do to maintain the integrity of its document retention policy? Do you have a written record-retention procedure in place that is followed by employees and enforced through periodic reviews?
• What’s the process to keep track of paid time off, FMLA, and Worker’s Compensation?

Final Words

This is the HR audit checklist that covers all the aspects of human resource management. Any organization that wants to maintain good practices when it comes to workforce management should follow it.

If there is anything else that is left, it is the implementation part. You have to make sure the information and procedures are implemented across the organization. After all, the gist of an audit is that the company is a better version of itself.

Here are a few more things to note for a successful implementation:

• Keep employees informed of the changes as a result of the human resources audit through memos and other communication methods.
• Hold training sessions on updated or new HR policies, so all employees know about them at one go with clear explanations as required. Employees need to take it all in and provide feedback to the HR team as well.
• Include a small section about company policies on employee handbooks so that employees are aware of what is expected of them

If you have anything to add to this HR audit checklist, please leave us a comment.

FAQs

Here are answers to some general queries regarding the human resource audit process:

Who Conduct HR Audits?

External auditors who specialize in human resources operations generally conduct HR audits. However, internal HR professionals might also conduct them to see how their department stacks up against industry standards or benchmarks set by other companies within the same sector.

How Do You Audit an HR Process?

The first step is to collect as much data as possible. It includes any available industry averages as well as benchmarks for your organization; data from recent performance reviews and employee surveys; financial records of company growth or decline; statistics on how many employees left before they were given notice to quit (or are still employed there); and, details about hiring practices.

Once that is done, compare it with the best practices to see if they align. Wherever you see the gaps, you will have to resolve them for organizational improvement.

If you are new to Human Resources and are looking to break into an HR role, we recommend taking our HR Certification Courses, where you will learn how to build your skillset in human resources, build your human resources network, craft a great HR resume, and create a successful job search strategy.

Josh Fechter is the founder of HR.University. He's a certified HR professional and has managed global teams across 5 different continents including their benefits and payroll. You can connect with him on LinkedIn here.