With the constantly shifting landscape of employment and labor laws, it can be difficult for organizations, specifically those without a Human Resources Department, to stay current. Remaining in compliance can seem nearly impossible at times, and without an HR expert in the organization, it is easy for things to get missed. As some might say – “You don’t know what you don’t know!”
While the term “audit” can tend to make people cringe, one of the most comprehensive and efficient ways to give an organization a check-up is to conduct an internal HR Audit. The opportunity to assess current practices and determine which areas require improvement can have a positive impact beyond the initial objective of achieving compliance. HR Audits can also serve to enhance the prioritization and focus of often limited resources within an organization.
Some of the most important and key components of an HR Audit include:
- Employee File Review – One of the most common areas of non-compliance lies within personnel files. Violations may include keeping Protected Health Information (PHI), I-9’s, or Background Check-related documents inside of an employee file (instead of separately), and not keeping employee files under separate lock and key or firewall protection. If employee files are maintained improperly, not only could the Department of Labor reprimand with costly fines, there is also an element of risk with legal exposure if files are ever subpoenaed or even reviewed by an employee at his or her request. One key additional benefit of a thorough employee file review is that it often tells a story of the life cycle of each employee. This provides a great opportunity for managers to revisit a specific employee’s progression through the organization (represented by pay increases and position changes), as well as any challenges or issues (performance reviews and/or discipline notes).
- Employee Handbook Update – While having a handbook is important, ensuring that it is updated annually is even more critical. Maintaining a handbook that is out of date can actually be more harmful in some cases than not having a handbook at all. Conducting a thorough handbook review to update company policies and then doing a yearly maintenance check thereafter is another way to ensure your company is in compliance.
- Compensation Benchmarking and Analysis – While compensation reviews may not always be an integral part of an HR Audit, EctoHR recommends reviewing where the company falls within the market and ensuring there is no pay disparity or potential for discrimination between males, females, and minorities. Companies often do not realize when their pay structure is out of line and a simple benchmarking analysis can often shed light on potential areas of concern. This review can also be a useful tool for recruitment and retention.
While a thorough HR Audit includes more than the three areas described above, these provide a great starting point when a company is beginning an internal check-up. EctoHR finds these areas of compliance are often pushed to the bottom of the list or sometimes even ignored because of a perceived lack of importance or because the thought of even beginning a compliance check-up can seem overwhelming to management staff that already have plenty of work within their standard responsibilities.
If your Company is interested in learning more about the HR Audit process and how you can leverage the knowledge and experience of the EctoHR Team, contact one of our HR Professionals at 810.534.0170 or firstname.lastname@example.org!