Performance management is core business function

A HR audit is like a health check for business. It can benefit an organisation by throwing light on areas such as effective use of human resources as well as ensuring compliance with regulations and laws among others.  

According to Paul Walsh, Director at PJW Training, HR must hone in on performance management, which is the core business practice. Walsh was the course facilitator at the marcus evans HR Audit Training Course that took place on 27-28 June in Kuala Lumpur.

In order for the HR function to contribute to the achievement of your business objectives, HR programmes must be aligned with the strategy, mission and values of the company and make sure they are financially sound, he explains.

“Many HR departments don’t know how much they are spending and whether it’s effective or not. For a HR audit to allow the company to move forward strategically they need to know where they are now and many companies don’t know this. They track things like successful planning, competency frameworks and career development but haven’t got a clue whether or not they need them or if it’s more effective than what they have in place at the moment.

“A HR audit will show if you are working well, if you are financially in a strong place, if you have a strategy. When you add up those things in place it's easier to make sure all the programmes fit in with the mission and the values of the company.”

HR ROI is surprisingly easy to calculate, Walsh explains.

“To get the ROI its two numbers – cost and the return. Many HR departments don’t even measure cost. It can be done as part of the audit process. It’s about putting in place a series of measures - for example we know what the cost of training is but how do we measure what the effect of the training is? It’s not difficult to do and it can be measured in the following ways - whether or not the employee gained any knowledge; is there any change in behaviour; has the person’s work following the training course increased revenue or made us more productive.”

In the Middle East, an area not hit too severely by the recession apart from sectors like construction and real estate, HR seems to lag behind everywhere else, he adds.

“HR is completely disjoined sometimes in relation to what’s going on within an organisation. When the recession hit HR just carried on as normal until they realised that costs must be cut. They’re only now, two years later, looking at costs and starting to cut back. They should now be looking ahead and starting to rehire as things are starting to pick up.

“But they are now smarter with how they train people so that is helping motivation. Rather than sending people on expensive training courses, they are looking at doing these courses in-house. Another way to motivate employees is to differentiate how they reward people by adjusting the allowances paid in addition to basic salary and that has taken the sting out of the effects of the recession.”

The marcus evans HR Audit Training Course took place on 28-29 June in Kuala Lumpur.