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What is an HR Audit?

April 5, 2021by Barbara Flynn0

The HR Audit is a comprehensive tool to analyze and improve the effectiveness of the HR Function.

The audit is made up of four main steps:

1) Define desired HR practices for your organization

2) Assess current practices against the criterion that you have established

3) Analyze the results

4) Establish improvement goals and take action

This four-step approach can be repeated as the annual planning and goal setting process occurs within your company. Progress can be measured against goals and a continuous improvement cycle naturally unfolds.

Purpose of the Audit

The audit can serve any of the following purposes:

  • To clarify desired practices of HR work and roles within the organization (HR Department, Line Managers).
  • To ensure compliance with all federal, state and local laws.
  • To establish a baseline for future improvement.
  • To evaluate current effectiveness.
  • To standardize practices across multiple sites within a division or company.
  • To assess current knowledge and skills required of HR practitioners.
  • To improve performance levels to key customers within the organization.

The Audit Process

Step One–Defining Audit Statements

People First will meet with designated company representatives (staff, executives, board members) to define the actual and desired HR.  An HR Audit Checklist is provided at this meeting for review of the legal requirements and programs that the department must administer.

First, we look at the areas of responsibility for the traditional HR practices.  Then other areas are evaluated to determine if there are any company initiatives that the HR function may be required to support.

Step Two–Assessing Current Practices

With the list created in step one, we take each item and identify them into three categories:

  • In Compliance
  • Not Incompliance
  • Do not know if we are in compliance

Step Three–Analyze the Results

In this step we prioritize the list of non-compliant and unknown factors in order of potential liability.

Step Four–Establish Improvement Goals and Take Action

Finally, we will take the list that is now prioritized and develop a set of action items and goals.


The HR Audit can be a powerful lever of change in your department and organization. In one sense it is simple, in that each step can be completed quickly and with ease. Also, the degree of detail and definition of performance is within the control of the audit team.

Barbara Flynn

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