Managing risks and rewards
March 15th, 2017
Written by: Dana Papke
Why it pays to put your Human Resources processes under the microscope.
If you always do what you’ve always done, you’ll always get what you’ve always got. Who knows who first said it – the point is, it’s true. Sometimes, in every walk of life, the time comes to take a good hard look at what you are doing and make sure you are doing the right things for the right reasons – and doing them right!
One of a company’s largest and most valuable investments is in its people, so, just as it makes sense to conduct an independent and objective financial audit, it pays, too, to do the same for your HR process and compliance.
An HR audit can be used both tactically (to ensure compliance) and strategically (to consider how a company is using its HR systems, processes and resources to achieve its objectives.) Or put another way, it can be used to a) identify the risks and b) optimize the rewards.
Smaller companies should at the very least use an audit to address compliance. Think of it as a health-check, to diagnose potential problems and identify the things you need to address. It’s a particularly useful measure for a company to adopt when it’s growing and changing, making sure, as you grow, you’re not entering a minefield of HR rules and regulations you haven’t had to consider before. It can also provide an essential double-check when a company’s HR function has been in place a long time, to ensure practice is up-to-date with changing state and federal laws. And, if your company isn’t large enough for you to have a dedicated HR function, it’s a good way to make sure that with all that juggling, you’re not at risk because you inadvertently dropped a ball.
As well as assessing compliance, a good HR audit will comprehensively review your HR policies and procedures, check you are keeping all the records you need to and make sure you have effective HR systems in place – for example for pay, benefits, performance review and performance management. It’s a check to ensure you are doing the right things right and not doing things that can “come back and bite you”. So, that’s how you can use an HR audit to manage risk – next time – how to use it strategically, to make sure you are maximizing your people investment.