Concept of HRD Audit, Process of HRD Audit, Human Resource Development, MS-22

Discuss the concept of HRD Audit. Explain the process of HRD Audit being done in your organisation or an organisation you are familiar with. Describe how HRD Audit helps in improving organizational efficiency. Briefly describe the organisation you are referring to.

HRD audit is a comprehensive evaluation of the current HRD strategies, structure, systems, styles and skills in the context of the short and long-term business plans of a company. It attempts to find out the future HRD needs of the company after assessing the current HRD activities and inputs. I am familiar with Hoovers, Inc. It delivers comprehensive company, industry, and market intelligence that drives business growth. Their database of 12 million companies, with in-depth coverage of 40,000 of the world's top business enterprises, is at the core of our business tools and services that customers find vital to their business operations. Hoover's editorial staff of some 80 editors and researchers brings vital business information and knowledge to its coverage, updating the site daily to bring our visitors and subscribers the most up-to-date business information in the industry.

Process of HRD Audi at Hoovers
HRD audit starts with an understanding of the future business plans and corporate strategies. While HRD audit can be done even in organizations that lack well formulated future plans and strategies it is most effective as a tool when the organization already has such long-term plans.

The HRD audit starts with the following questions:

Where does the company want to be ten years from now, three years from now one year from now??
The top management needs to provide the answer to this question. If there are any long-term plan documents they are also reviewed. On the basis of answers, the consultants finalize the subsequent audit strategies and methodology. They identify the nature of the competencies the organization needs to develop in order to achieve its long term, five to 10 years plans.

What is the current skill base-of the employees in the company in relation to the various roles and role requirements?
This is assessed through an examination of the qualifications of employees, job descriptions training programmes attended, and so on. Besides this interviews are conducted to identify the skill gap in the organization. Training needs and performance appraisal forms provide insights into the competency and other skill requirements.

What are the HRD subsystems available today to help the organization competency base for the present, immediate future and long-term goals?
The auditors identify various HRD subsystems that are available to ensure the availability utilization and development of skills and other competencies in the company. The framework for evaluating these HRD subsystems have been presented earlier where all the component HRD systems have been presented. These systems and other HRD tools that an organization may be using are studied in details for arriving at the systems maturity score.

What is the current level of effectiveness of these systems in developing people and ensuring that human competencies are available in adequate levels in the company?
The consultants assess the effectiveness of each system. For example, the effectiveness of performance appraisal system is assessed by discussing with employees, individually and in groups, about the efficacy of the systems. The auditors look at the appraisal forms, at the. linkages between appraisal and framing, conduct questionnaire surveys to assess the extent to which coaching and other components on other appraisals are being utilized and also conduct systems.

Is the HRD structure existing in the company adequate enough to manage the HRD in the company?
At this stage, the auditors or consultants examine whether the current HRD structure can handle the pressing and future HRD needs of the company. They examine the existing skill base of the HRD staff, their professional preparation, attitudes, values, developmental needs, the line manager’s perception regarding them and so on. In addition to the full-time staff, the consultants also assess the HRD structure in terms of the use of task forces and other mechanisms.

Are the top management and senior manager styles of managing people in tune with the learning culture?
Here the consultants examine the leadership styles, human relations skills and so on, of senior managers. The extent to which their styles facilitate the creation of a learning environment are examined.

HRD Audit examines Linkages with other Systems:
Attempts Total Quality Management (TQM), personnel policies, strategic planning etc., evaluates HRD strategy, structure, system, staff, skill, style and consultants, make suggestions the basis of evaluation about the future HRD strategies required by the company. The structure the company needs to develop new competencies, the systems that need to be strengthened, and the styles and culture that have compatibility with the HRD process.

HRD Audit is Business-driven: 
HRD audit keeps business goals in focus. At the same time, it attempts to bring in professionalism in HRD. In keeping the business focus at the centre, HRD audit attempts to evaluate HRD strategy, structure, system, staff, skill and style and their appropriateness.

How HRD Audit helps in improving organizational efficiency?

It can get the top management to think in term of strategic and long-term business plans Ironically, it may seem that HRD audit should begin with such strategic plans, but in some cases it has propelled the top management to formulate such plans. Another aspect in this regard is that people cannot participate in HRD audit without some sharing of these plans. The audit, therefore, has forced the top management to share their plans across the organization resulting in increased involvement and commitment of employees. In a few system of annual planning and sharing of the business plans with management staff, to enable them to plan their own activities and competency development programmes, have been initiated.

Changes in the styles of the top management
Any successful HRD company has an excellent learning environment. Thus one of HRD is to create a learning organization. A learning culture can be created managers of the company exhibit an HRD orientation, ability to convert and conflicts and  problems as learning opportunities and so on. Some top level India have been found to block the motivation and learning of employees through coercive, autocratic and even paternalistic styles of management. HRD audit highlights styles of management thereby pointing out the difficulties in developing and employees for the future. This has helped in providing subtle feedback to the top management and initiating a change process.

Role clarity of HRD department and the role of line managers in HRD
In almost all cases, the HRD audit has been found to draw the attention of employees at various levels to the important role of the HRD department: current as well as the future, better role clarity of the HRD department and the HRD function, resulting in increased understanding of line managers about their HRD role and the uniform results of HRD audit. While the degree may vary from organization to organization depending on various factors, this exercise has favorable impact on employee productivity.

Improvements in HRD systems
HRD audit has helped most organizations in measuring the effectiveness of their HRD systems, and in designing or redesigning HRD systems, the most frequently changed or renewed system include performance appraisal, induction training, job rotation care planing and promotion policies, monitoring communication and training. A number of organizations have changed or strengthened one or more of their HRD subsystem as a result of HRD audit.

Increased focus on human resources and human competencies
(One of the results of HRD audit is to focus on new knowledge attitudes and skills required by the employees. Comments are made about the technical, managerial, human and conceptual competencies of staff at various levels. This differentiation has been found to help organizations in identifying and focusing sharply on the competency requirements and gaps. The audit establishes a system of role clarity and fixing of accountability. This may take place through separate role-clarity exercises or through the development of and appropriate performance appraisal systems. In any case, the attention of the organization gets focused on developing the competency base of the organization. More sensitivities are developed towards missing aspects of competencies. For example, one organization was found to neglect the human relations competencies of their staff which led to quite a few problems and wastage of time. With HRD audit many of these were streamlined. The various HRD policies also got strengthened.

Better recruitment policies and more professional staff 
HRD audit proposes the competence base required by tile organization. It gives direction for competency requirements of employees at various levels, thus providing a base for recruitment policies and procedures. As a result, in some companies, new recruitment and retention strategies have been worked out. In other companies, the audit as led to strengthening recruitment policies and procedures.?

More planning and more cost-effective training
HRD audit has been found to assist in assessing the returns on training. One of the aspects emphasized in the HRQ audit is to calculate the investments made in training and ask questions about the returns. The process of identifying training needs, and utilization of training and learning for organization growth development are assessed.
As direct investments are made in training, any cost benefit analysis draws the attention of the management and HRD managers to review the training function with relative ease. For example, one organization has strengthened its training function by introducing a new system of post training follow up and dissemination of knowledge to others through seminars and action plans. Many organizations have developed training policies and systematized their training function. Training needs assessment also has become more scientific in these organizations.

Strengthening accountability through appraisal system and other mechanism 
HRD audit can give significant inputs about existing state of accountability of can be assessed through performance appraisal as well as through the work culture and cultural dimensions. A number of organizations have introduced systems of planning, sharing of experience and documenting the accountability of staff. HRD audit to the chaining of appraisal systems.

Streamlining of other management practices
Most often HRD audit points out the strengths and weakness in some of the management systems existing in the organization. It also indicates the absence of system, which enhance productivity and utilization of the existing competency base, e.g., MIS, rules and procedure, etc., which may have an effect on the functioning of employees. In a few cases helped the management to look at some subsystems and work procedures. Preparation of a manual for delegation of powers, clarification of roles and responsibilities, developing or strengthening the manuals of financial and accounting procedures and systems and the information systems ad sharing of information are some of the resultant activities.

TQM interventions
Quality improvements and establishing TQM systems require a high degree of employees. In a number of cases HRD audit has pointed out to the linkages between TQM and other quality programmes, and helped in strengthening the same. Due to improvements in the training systems, enhancement of the quality of strengthening of the appraisals system, TQM programmes also get improved. In a few organizations performance appraisal have been changed to integrate quality internal customer satisfaction into the appraisal systems. Thus HRD audit leads to the strengthening of quality systems.

It can enhance the ROI (Return on Investment) of the HR function
In addition to all the above points, HRD audit aligns the HR function and activities with business goals. In the process it eliminates non-value adding HR systems, activities and processes and enhances the value-adding activities and processes. It reduces non-productive assets the HR department (For example, under utilized training centers, ill-implemented appraisal systems, etc.) and sharpens the focus of the HR function to get better results. The main contribution of HRD audit is to focus on value-adding HRD.