Organizations are constantly evolving to comply with current business trends. But when it comes to policies, practices and procedures, they often remain unchanged. To prevent legal issues and ensure the company’s compliance, it is imperative to perform regular HR audits.
Audits can sound daunting, but it is a valuable process that helps organizations stay up to date. An HR audit is a thorough review of policies, procedures, documentation and HR systems. The process provides recommendations that will help you improve operations and performance.
Here are four red flags that signal your company is due for an HR audit.
Transition in HR leadership
When leadership within the HR function transitions, it is a good time to review employment policies, practices and procedures for several reasons:
- Incumbents may get tunnel vision, using practices that may have served the organization at one time but have become outdated.
- Employment laws and enforcement of those laws change over time, so if you haven’t taken a complete look at your policies, practices and procedures, you may be out of compliance without knowing it.
- The organization may have different needs that prompted the HR transition. An HR audit can help identify key organizational needs.
Turnover, even in one department or position, can indicate something is wrong in the organization. When turnover increases, employers aren’t meeting the expectations and needs of employees. An HR audit can determine the specific reasons, but there are three common reasons for increased turnover:
- Lack of career development opportunities and recognition for jobs well done;
- Not having a consistent work-life balance; and
- Lack of fairness on the part of managers with their staff.
Significant organizational growth
When an organization grows significantly, compliance needs change. Certain employment laws come into effect when an employer reaches key milestones in their employee counts (50 and 100 are the biggest changes, but others are present). For example, the Family and Medical Leave Act (FMLA) is required once employers reach 50 employees.
Also, the organization’s culture shifts as it grows. Management and communication by proximity aren’t always possible, and organizations need to update their practices to reflect different employee needs.
HR audits can help assess what change the organization needs to make to its policies, as well as what practices are no longer working or new ones that are needed.
Other organizational changes may signal a need for an HR audit. Changes to the business model, reductions in force, and mergers and acquisitions can impact an organization’s employees and employee needs, thus indicating a need to make changes to policies, practices and procedures.