Do you know whether your human resource practices are helping,
hindering or having little impact on what your credit union is trying to
accomplish? Credit unions routinely conduct internal and external audits
of their accounting function to evaluate company practices against
industry standards and legal and regulatory requirements.
Similar review and analysis can be applied to the human
resource function. An HR audit can evaluate the effectiveness of human
resources, comparing your credit union’s current practices against credit union
industry best-practices, reviewing compliance with relevant employment
laws and regulations, and identifying “gaps” between what the credit
union needs vs. what HR is delivering.
Why Should You Conduct an HR Audit?
Have you ever wondered whether that turnover report you
supply to senior management is worth all of the time and effort? Or,
have you wondered if the way you’re handling FMLA leave is technically
correct, given all of the changes in the last couple of years? An HR
audit can provide solid answers to these types of questions and much
more.
Compliance review is another key reason to audit the HR
function. We all know that the pace of change in the HR arena has been
fast and furious. Are your credit union's policies, forms, and practices all compliant
with current regulations? The audit process can help you focus on making
sure that everything is up to date.
Has your credit union gone through a merger,
consolidation or added a new branch? If so, this is a good time to take a
moment to consider if the HR function has changed with these changes.
Do you continue to meet its needs and to ensure that all practices are
in compliance?
Determining the Scope of the Audit
Once your credit union has committed to undertaking an audit, you will
need to decide what areas the audit will cover. An all-encompassing
audit would look at things like policies, forms and tools, employment
records, the employment process and much more. The audit can also look
at key metrics, such as turnover, cost per hire, spans of control,
salary compa-ratios, etc. Just keep in mind that the scope of the audit
should be centered on the current status of your credit union and the
strategic plan.
Never Conducted an Audit?
Now that you think an HR audit sounds like a good idea for
your credit union, now what? Certainly one option is to do an in-house
audit. One of the primary benefits of a do-it-yourself audit is that you
know your organization better than any outsider. It can save your
credit union money, you can set your own schedule and you can maintain
maximum control over the process.
One the other hand, audits are very time-consuming. Outsourcing your audit provides several benefits:
- You get the credibility and validity of an expert’s opinion of your HR practices.
- They can give you a fresh perspective on your processes and policies.
- Using a third party to conduct staff interviews allows for a level of confidentiality and staff may be more candid.
- It will save time for you and your HR staff.
- This third party auditor could continue to be an
ongoing resource for your credit union with any questions or issues you
may have going forward.
Whether conducted in-house or by an outside party, an HR
audit can provide an opportunity to examine the HR function in your
credit union and offer useful feedback to improve the department’s
contribution to its success.
Related Services: Compliance Consulting, HR Compliance
