People make appointments to see their doctor for many different reasons. Some only go to the doctor when they are experiencing a new problem or concern and are looking for a specific diagnosis or treatment. Others see their doctor as part of a yearly check-up and preventative step to ensure good health. Human Resource organizations in companies are like people and periodically need check-ups to look at their people, programs and processes. These reviews determine whether systems are working efficiently and effectively and are aligned with the company’s mission, strategies and short/long-term objectives.
As a business consultant, I work with small and medium size organizations who routinely audit their financial results. Important strategic decisions are based on results of these audits. However, often I observe that human resources programs are developed and implemented based on senior management’s perceptions of what the organization needs versus factual data. Some companies have discovered the value of auditing human resources and organizational results. For example, CoBiz Financial Inc, a financial services company in Denver, scrutinizes and audits it human resources and organizational development programs on a regular basis. “Obtaining the results of your HR and organizational audit gives you factual information about where you are and where you could be”, shared Patricia Maley who is first vice president and head of the HR function for CoBiz.” Using factual audit results and information from “periodic health check-ups” can assist human resources and executive management to create specific actions plans and design longer-term plans for ongoing improvement of employee programs. Companies can invest time, money and resources for programs, based on concrete data versus management’s perceptions of “what is needed” in the organization. What managers and staff may intuitively think are issues, the diagnostics confirms. By making decisions based on fact, not intuition, companies not only avoids potential problems, they experiences greater program success.
In addition, an HR and organizational audit can save a company money. Most organizations intend to be compliant with laws and regulations affecting their employees. However, frequent legislative changes occur and companies fall into the mindset that “this is the way we have always done it, or we are so busy we just don’t have time….we will do it later mentality.” An HR audit can point out areas where a company needs to take immediate steps to correct a problem. Audit results can prompt training to occur, which improve situations and allow the staff to understand what they need to do and why. For example, audit results for one of my clients, showed managers needed to improve their skill set in dealing with problem employees. Training managers in a half-day seminar prevented them from making mistakes when dealing with problem employees since wrongful terminations can carry a price tag of $85,000 in defense fees with an average settlement of $500,000. These preventative steps have a direct impact on a company’s bottom line.
Human resources and organizational auditing is something companies should do at regular intervals just as they audit their financial information. Obtaining factual data is important. Just as people go to their physicians for an annual health check-up, and companies uses external auditors to analyze financial information — external Human Resources experts can audit and assess an organization’s programs, practices and processes. They can use their expertise to tell a company if its managers are asking illegal interview questions; if a filing cabinet is also holding potential fines; if the way managers treat employees is opening up an organization to a discrimination lawsuit, and more! By doing things right in the first place, a company avoids trying to fix much larger problems in the future. Businesses do not think twice about a financial audit, which they conduct at least annually. Human Resources is just as important. A well-executed HR and organizational audit can reveal gaps in areas that can potentially lead to costly legal disputes and governmental fines. Additionally, conducting an audit after a significant change in the organization (such as reconstruction, expansion, or reduction in force), can help to identify the right practices and highlight functions in need of modification. Just as annual health check-ups and financial audits are part of smart prevention programs, an annual HR and organizational audit ensures the right investments of time, money and resources are being made in a company’s most important resource—their employees.
