HR audits evaluate HR activities and practices to examine their effectiveness and efficiency. It is concerned with collecting and analyzing information to decide the actions to be taken to improve business performance. There are several types of HR audit that can be categorized into 3 types:
1. Time period
Time period refers to the frequency of HR audit. Since they are very time-consuming and require review of numerous documents, practices, policies, etc., organizations follow an irregular schedule for HR audit. Some organizations conduct HR audits once a year or once in three years.
2. Conduct
In this category, HR audits can be further classified based on how organizations conduct the audits:
a) Internal audit
As the name itself suggests, internal HR audit takes place within the organization and is conducted by the HR department. This department identifies issues in its performance and efficiency and implements solutions.
b) External audit
When organizations do not prefer to conduct an HR audit internally, they hire external companies or professionals to do the job. There could be several reasons for external audits – lack of resources, time, and unbiased review being a few examples.
3. Purpose
While HR audit covers most HR processes, policies, and practices, organizations conduct the audit for different, specific purposes. These purposes are classified into:
a) Compliance audit
HR compliance audit determines how well a business is complying with all employment laws and regulations. Compliance audit comes under the ‘risk mitigation’ audit. It helps the organization prevent violations of any laws or being open to liability lawsuits.
b) Best practices organization audit
Best practices organization audit refers to reviewing the best HR practices of other similar organizations and trying to adopt them.
c) Strategic audit
A strategic HR audit looks beyond the internal HR operations and tries to align the department’s contribution with an organization’s strategic goals.
d) Job specific audit
HR audit is focused on a specific role or job performed by the HR department. It could be related to recruitment, training, performance, etc.