SMALL BUSINESS HUMAN RESOURCE MANAGEMENT AUDIT

As a small business enterprise owner, it is All-4-HR & Business Solutions, LLC’s testament utilizing human resource management (HRM) tools are key to aligning HR strategies with other business strategies to achieve organizational growth. Once must first identify what areas of the organization are weak and need strengthening. Many small business enterprise owners do not believe they are large enough to have an HRM audit performed on their organization. As a small business enterprise owner, it is critical that HRM strategies are streamlined in order to achieve organizational growth.  In fact, it is all the more critical for small business enterprise owners to determine the weak areas of the organization. When thinking about it, if there are areas of the organization that are less efficient, these areas are wasting more company funds, contributing to unhappy employees and contributing to unhappy customers.

What is a Human resource (HR) audit? A Human Resources Audit is a comprehensive method (or means) to review current human resources policies, procedures, documentation and systems to identify needs for improvement and enhancement of the HR function. A Human Resource audit further ensures compliance with ever-changing rules and regulations. An Audit involves systematically reviewing all aspects of human resources. An efficient manner to accomplishing this is utilizing a checklist.

Organization sections of review include:

• Hiring and Orientation
• Benefits
• Compensation
• Performance evaluation process
• Termination process and exit interviews
• Job descriptions
• Form review
• Personnel file review

The purpose of an HR Audit is to recognize strengths and identify any needs for improvement in the human resources function. A properly executed Audit will reveal problem areas and provide recommendations and suggestions for the remedy of these problems. Some of the reasons to conduct such a review include:

• Ensuring the effective utilization of the organization’s human resources
• Reviewing compliance concerns with a myriad of administrative regulations
• Instilling a sense of confidence in management and the human resources function
• Maintaining or enhancing the organization’s and the department’s reputation in the community
• Performing “due diligence” review for shareholders or potential investors/owners
• Establishing a baseline for future improvement for the function

Because of the multitude of laws affecting each stage of the employment process, it is extremely important for an employer to regularly review their policies and practices to ensure regulatory compliance in order to avoid potentially costly fines and/or lawsuits. An employer overlooking regulatory compliance with their human resource practices could face:

• A fine of $1,100 for any violation of the appropriate payment of overtime for non-exempt
  employees in accordance with the Fair Labor Standards Act.
• Penalties as high as $10,000 each occurrence for failing to post required safety notices or
  keeping accurate records.
• Fines up to $1,000 per employee for non-compliance with the Federal Immigration Reform Act.

While penalties such as these help define the risk of non-compliance and signify the importance of conducting periodic HR Audits, an Audit can also ensure that policies and procedures are fair and consistent across the organization and strengthen employee satisfaction. By maintaining a satisfied and productive workforce, an employer lessens the expense associated with costly turnover of staff.

Losing one employee is estimated to cost a company 50 – 150% of the lost employee’s salary in time and money spent to replace that employee.

SMALL BUSINESS ENTERPRISE OWNER UTILIZING HR TOOLS

     In utilizing tools to assess and gauge the need for change, it is important that small enterprise owners think strategically.  Small- medium- sized enterprises (SMEs) are seen to have an important role in the U.S. economy, indeed it would seem that both and local economies are largely constituted of smaller enterprises, with the addition of a minority of larger enterprises. A number of problems emerge from assuming that small firms are the same as large firms. The very size of a small enterprise creates special conditions. Some practitioners argue Human resource management (HRM) functions have failed in the workplace, specifically in SMEs.  

Some reasons for failure of human resource management functions include: only a small amount of SMEs adopt HR functions. SMEs adopt HR functions and discontinue utilizing the HR functions after a few years. Consistency is significant to achieving organizational goals when once implementing and utilizing new or modified HR functions. Once HR functions have been implemented and modified, the HR manager must monitor and track the results of the implemented or modified HR function. Monitoring and/or tracking the results will ensure the implemented or modified HR function(s) is producing positive results. 

For example, if you have changed your method for tracking applicants by perhaps utilizing a new job board, or you receive a referral, track that information so that you are aware of the tracking methods that are producing the best results of qualified applicants or producing little or no qualified applicants. 

When reviewing resumes, be sure you are checking applicant qualifications against the job description for the vacant position. An applicant may be highly qualified and exhibit an excellent resume. However, is that highly qualified applicant a good match for your vacant position? Finally, when filling a vacant position, be sure to audit the job description as the job duties could quite possibly have changed since the position was last filled.  You want the best qualified candidate for the position. 

I hear some employers complain and some employers praise job fairs. Have you thought of holding your own job fair? An employer may also consider partnering with other employers in the same industry to host a job fair. This is a good way to target and attract the candidates you are looking to attract, as well as network with other industry employers in terms of attracting qualified candidates. 

Finally, how many small enterprise owners practice employment planning? This is a means of preparing yourself to attract qualified candidates. The process of employment planning encompasses some variables that once implemented; you should be consistent with the policies and functions so as to maintain organization during this the employment process period.  There are aspects that have to be updated such as job descriptions, etc.  If you have questions, I will happy to answer them. 

The employment planning process involves establishing an employment planning realistic budget based on projections for new employees and compensation. How has employment planning been in the past? Has it produced positive results and qualified candidates? If not, have you made changes to address any challenges? The process is not simply: “We need to hire someone for this position; start combing the job boards and see what we come up with.” Are the current job boards producing lucrative candidates? If not, you should consider other job boards, word of mouth, agencies, etc.  Be sure the job description matches the vacant position so that you are attracting applicants possessing the right skills.

          Is there one person responsible for employment planning? Is that person included in evaluating the individual or department? Does this person know the job description and duties for the vacant position? These are questions you must answer in order to save yourself time and the hardship of hiring unqualified candidates. This is an area that is instrumental in searching and attracting qualified candidates to fill vacant positions.  

          Stay tuned for a free 1-hour webinar that will be hosted in the coming weeks. If you are interested, you can email me at aprilh@all4hrbiz.biz and I will let you know as soon as it is scheduled. You may also go through the website: http://www.all4hrbiz.biz and I will send you an invite as soon as it scheduled. 

          Thanks April,