When was the last time you gave your HR department a good look under the hood? If you’re running a company with fewer than 500 employees, chances are, your HR team is juggling a lot of responsibilities. From recruitment and compliance to performance management and employee engagement, there’s a lot to keep track of. That’s where an HR audit comes in handy.
Think of an HR audit as a wellness check for your people operations. It’s a chance to make sure everything is running smoothly, that you’re compliant with employment laws, and, most importantly, that your HR function is set up to support your business goals.
Here’s how you can conduct a thorough, yet straightforward, HR audit:
Step 1: Know Why You’re Auditing in the First Place
First things first, ask yourself: what do I want to get out of this audit? Are you mainly concerned with making sure you’re legally compliant? Maybe you’re trying to streamline your processes or boost employee satisfaction? Defining your objectives will help you stay focused during the audit. And trust me, with so many moving parts in HR, focus is key.
Step 2: Review Your HR Documents – Yes, All of Them
Now it’s time to dive into the paperwork (I know, not the most exciting part, but it’s necessary). This includes employee handbooks, contracts, job descriptions, performance review templates—basically, anything HR-related. Check to see if they’re up-to-date and aligned with current laws and policies.
Are you compliant with laws like the Fair Labor Standards Act (FLSA) or the Family and Medical Leave Act (FMLA)? If not, you could be setting yourself up for legal trouble. It’s better to catch these things now before they become bigger headaches down the road.
Step 3: Take a Hard Look at Your Recruitment and Onboarding Processes
Are your job postings appealing to a diverse range of candidates? Do new hires feel like they’ve got the support they need from day one? Recruitment and onboarding are like the front door to your company, and you want to make sure that door is wide open to the best talent out there.
Check your hiring timelines. Are they too long? Are candidates dropping off midway? This could be a sign that your process is outdated or needs more efficiency. And don’t forget onboarding—it’s your first chance to make a lasting impression.
Step 4: Evaluate Compensation and Benefits (It’s About More Than Money)
When was the last time you reviewed your compensation structure? Do you know how your salaries stack up against the competition? Offering competitive pay isn’t just about staying on par with other companies—it’s about showing your employees you value them.
But don’t stop at salary. Benefits play a huge role in employee satisfaction. Are your health benefits, paid time off, and perks still attractive to your team? If you haven’t made any changes in a few years, it might be time for a refresh.
Step 5: Check How You Manage Employee Performance
This is a big one. Employees need clear expectations and regular feedback to succeed. Ask yourself: does your performance management system actually work, or is it just a box you tick once a year?
It’s important that employees feel like they’re being supported in their roles. This means offering continuous feedback, setting clear goals, and helping them with their development. An audit can reveal whether your system is helping employees grow or leaving them in the dark.
Step 6: Dig Into Employee Relations and Engagement
Here’s where you take the temperature of your workplace culture. Are employees generally happy? Or are there underlying tensions you might not be aware of? Review any grievances or turnover trends—these can be red flags for deeper issues.
It’s also a good idea to check whether you have processes in place for resolving disputes or addressing concerns. Employees need to feel heard, and having strong communication channels in place can make all the difference.
Step 7: Wrap It All Up with an Action Plan
Once you’ve gone through all the steps, it’s time to compile your findings and make a game plan. What did you discover? Maybe you’re missing key documents or need to streamline your recruitment process. Whatever it is, create an action plan with clear timelines and responsibilities for making improvements.
And remember, this isn’t about placing blame—it’s about building a stronger HR function that supports both your employees and the business. Regular HR audits help you stay on top of things, and they make sure your company is moving in the right direction.
Final Thoughts
Auditing your HR function might seem like a daunting task, but it’s one of the best ways to ensure your company is on solid ground. For companies with fewer than 500 employees, an audit can reveal inefficiencies, compliance issues, and opportunities to improve employee satisfaction.
Make your HR function a strategic asset, not just an administrative task. Partner with The HR SOURCE for a thorough HR audit and actionable insights to drive your business forward. To schedule an audit consultation, CLICK HERE. To download our HR Audit infographic CLICK HERE.
