HR Audit Checklist

HR Audit Checklist

File folder container papers and checklist being examined by a magnifying glass

The holiday season is a perfect time to take a step back and examine your strategy with an HR audit. By conducting a holistic review of your HR strengths and weaknesses, you’ll know exactly where to focus your energy in 2023. But how does an HR audit work? 

HR audits provide a clear picture of where your human resources function needs improvement. Additionally, they ensure your company complies with relevant legal statutes and provide valuable information for any potential investors. Whether you’re auditing your entire HR function or only specific elements, these reviews should be a regular part of your HR calendar. 

Every company is in a different place when it comes to HR. Some have robust HR departments, while others might have one super-employee managing it all. Wherever you fall on that spectrum, an HR audit can help. Though they may cost you some time and money today, they’re cheaper than a lawsuit tomorrow. In this blog, we’ll walk you through some of the items that belong on your HR audit checklist. 


1. Hiring & Onboarding Process

First things first, make sure your ATS (applicant tracking system) is functioning as you intended, and the information in it is accurate. Are resumes routing where they need to? Are there any open requisitions that should have been closed already? This should be a quick cleanup if anything. 

Next, take a look at recruiting platforms. Where are you posting jobs? Are those job boards performing well for you? For example, if LinkedIn brings in better applicants than Glassdoor, consider why. Your job-seeking audience may spend more time on one site than another, but there may also be inconsistencies with your postings across platforms. 

When you’re not finding applicants anywhere, it’s time to reassess your approach entirely. For example, certain blue-collar roles can be easier to fill on alternative platforms where those job-seekers spend more time. Craigslist anyone?

Then, examine how DEI efforts appear in your recruiting strategy. Are you making a concerted effort to bring in a diverse group of candidates? This is especially important when recruiting for leadership roles. In tech, for example, women only make up 22% of C-Suite roles

Another vital piece of your HR audit is the actual process of hiring. How many interviews do you conduct? Is it enough or too many? How do candidates feel about their candidate experience? Are hiring managers and interviewers conducting respectful interviews? Then, look at the quality of hires concerning the length of employment and performance over time. 

Finally, examine your onboarding process. Do employees feel acclimated adequately by the end of it? What information are you conveying about your company, culture, and their role? Onboarding can feel like drinking water from a fire hose when there’s too much information and insufficient time. See how you can alleviate the stress while transferring crucial information. 


High angle shot of a group of businesspeople conducting an HR audit.


2. Employee Records

In this step of the HR audit, start with your HRIS. Ensure that the system works correctly and the data is organized and secure. Specifically, have your employees’ I-9 documentation and all other relevant personnel files in order. Likely, certain health information is stored there too. Those documents, in particular, are incredibly sensitive, and any mismanagement of that data is dire. Effective data management isn’t sexy, but it’s absolutely critical. 


3. Employee Handbook and Legal Compliance

Spend a good deal of time poring over your employee handbook during your HR audit. If you don’t have in-house legal or an employment law expert, seek counsel to ensure your policies are up to date with local, state, and federal mandates. The laws constantly change, especially at the local and state levels, so your handbook requires regular oversight. That’s one of the key tasks performed in HR administration.

Then, look into best practices across your industry. What kind of policies could make you more competitive in the talent marketplace? How can your policies shift to foster greater loyalty at your business? Finally, if you make any changes, notify employees and offer up some time for any questions they may have. 


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4. Compensation

When you check up on compensation during an HR audit, prepare to adjust your company’s strategy. What you’re looking for here are consistency and competitive total salaries. Are your wages consistent across departments and job levels? Often, issues of discriminatory pay scales pop up during an HR audit. Though these disparities in compensation might not have been intentional, you must correct them. 

Of course, if you have any minimum wage or overtime-eligible employees, consult the relevant laws and regulations to ensure their compensation is compliant. Moreover, ensure that every employee on your payroll is classified correctly based on job function, or you may find yourself on the other end of a much less pleasant kind of audit. 

If your business has employees in states with pay transparency laws, review those pieces of legislation. They’ll impact your compensation strategy and recruiting approach. Finally, look into the nuts and bolts of your payroll process. Do checks go out on time? Are taxes paid on time? Are the necessary withholdings being taken out? Payroll errors come at a hefty price, so don’t skimp on that step. 


5. Benefits

Benefits analyses are a whole task unto themselves, but they’re also a big part of your HR audit. 88 percent of job seekers would consider an offer from a company with an excellent benefits package over one that offers a higher salary. 

Are your benefits competitive? How do your employees feel about your benefits? Send a survey to find out. Though benefits like healthcare, 401k, childcare, and the like are expensive, they’re big difference makers. 

You can also foster goodwill with remote and hybrid work options, which many employees highly value as a benefit. Overall, look to the market and internally to learn how your benefits package stacks up. Then make adjustments, and explain these benefits to your team clearly. 


6. Performance Evaluations

Time for HR audit inception: evaluating your evaluations. Performance reviews must be thoughtful and structured. How often do they take place? If it’s only once per year, consider bumping that up to at least twice. Are your criteria and process for promotion clear to your employees? Do you know what warrants a demotion? 

Additionally, assess whether your performance review process falls into the traps of favoritism or discrimination. That’s a toxic situation for your employees, and it opens your business up to legal issues. Finally, evaluate the tools and methods used for reviews. If you use software, is it effective with your people? Do they need more training on it, or do you need a new option? 

You could take an old-school approach to reviews. In that case, however, how well are you documenting that? Is it as effective as software-based solutions, or is it just convenient? How can it improve? Performance evaluations help your people improve, so don’t oversimplify the process just for the sake of time saved. 



7. Training

Training strategies, like performance evaluations, can make or break the development of your staff. First, consider how effectively you train employees as new hires. Are you setting them up for success? Work with managers and employees to identify areas where employees need more guidance. Managers may benefit from receiving training on effective onboarding. 

As your employees stick around, they’ll want more opportunities to grow. What kind of learning and development resources do you offer? Are they effective? If employees aren’t utilizing them, how can you increase adoption? Investing in learning and development keeps employees at your company longer and improves their performance during their tenure. 


ADDA makes HR easier

We love a good HR audit. They clean up your company’s policies and processes and often present exciting opportunities for improvement. However, they can take a lot of time, especially without a human resources expert on hand. That’s where ADDA comes in. Schedule a call with ADDA today if you’re ready to assess and improve your HR. 


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