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What Does An HR Audit Measure?

The greatest asset of any business is its employee. An effective HR department provides stability and structure and is an integral part of both small and large companies. The objective of the HR or Human Resource office is to ensure businesses and employees are in compliance with local, state and federal labor and employment laws. With this in mind, business owners should measure the effectiveness of their human resource department and make any necessary changes.

What is a Human Resource Audit and What Does it Measure?

A human resource audit is an official business checklist that identifies the weaknesses and strengths of operating procedures and processes. All critical areas are evaluated and measured, as the audit focuses on at least six critical areas the HR department carries out on a daily basis. Without an effective HR department, many businesses would lose contracts, employees, and subsidiaries.

Company Benefits

What first step the audit evaluates is the company benefits policy, such as dental, medical, paid time off (PTO) and offer coverages. It focuses on the cost of these benefits, employee usage, and company payout amounts. Gathered data help to determine the best programs and overall investment.

Policies and Procedure Practices

In order to prevent future lawsuits surrounding wrongful employment termination and discrimination, companies must have established policies and procedures. This includes setting up training and new employee orientation. New employees must sign their contracts and complete other documentation to ensure they understand their job function. Any concerns are brought to the attention of the human resource department.


Noncompliance results in severe penalty and fines. Civil rights, unfair labor practices, and unsafe working conditions can affect profitability and productivity. Therefore, every area of labor and employment law must be evaluated periodically.

Training and Development, Safety and Proper Employee Records 

The maintenance of employee records includes enforcing the HIPPA laws regarding employee hiring and termination, medical information, salaries, benefits, health issues and immigration forms. The HR audit measures all of the functions, while keeping the business and employees in compliance.

If you're looking for an HR consulting firm or HR compliance consultants, contact Sage Solutions Group today.

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