HR Audit in EIC

Background….cont’d
 Without prejudice to the applicability
of laws governing insurance business,
the Corporation also be governed by
the Public Enterprises Proclamation
No. 25 of 1992.
 Starting from 30 January 2004, the
Corporation accountable to the
Financial Public Enterprises Agency
which is established as autonomous
government office having its own
legal personality by Council of
Ministers Regulations No. 98/2004 to
supervise financial public enterprises.

Human Resources
Management & Property administration
Division
Compensation
& Benefit
Department
Human
Development
Department
Personnel
Management
Department
Property
Administration
Department
Career
Management
Department

 The study arises from the need to manage the HR of the company
more effectively.
 The rapid growth of service sector, increase in environmental
variability and degree of competition, acute shortage of labor and
the corresponding increase in labor turnover and costs of
employee replacement have forced organizations to identify needs
for improvement and enhancement of the HR function to
aggressively compete for employees.
Statement of the Problem

Research Questions
 What are the role of HR Auditing in the transformation of the
functions of human resource department of the firms and
facilitating decision making?
 Does the HRM system of the organization aligned towards
business goals of the corporation?
 Does the HRM staff reflect adequate understanding and
commitment to the business goals of the corporation?

 Which practices, or lack of practices, might place the
organization at risk for compliance or regulatory
violations related to HRM; and
 What Process improvements will support HR in providing
the highest quality service to employees.
Research ….Cont’d

 To investigate the role of HR Auditing and area of HR functions
that should be audited to meet the business goals
 To examine the impact of HR alignment with business goal on
the HRM department and over all organizational performance.
 To develop techniques that help in collecting and extracting
critical HR information to improve the quality and effectiveness
of HR auditing.
Specific Objectives

 To locate gaps, lapses, failings in applying Policies, Procedures,
Practices & HR-directives. Also to see areas of wrong/ non-
implementation that hindered the planned programs and
activities.
 To determine whether company’s policies are being applied
consistently, whether they are the norm for corporation and
branch location, and whether they are consistently
communicated to all employees.
Specific…cont’d

It examine the level of practice and indicate the main success
and failure factor associated with human resource
Management in EIC.
It enables concerned bodies to expand their knowledge or
understanding of the HR audit importance which leads them to
design further strategies to use it efficiently.
Significance of the Study

It provides additional input for management of EIC in designing ways
to improve the HR dept efficiency & overall organization performance.
The result of the investigation will have some relevant contribution to
improve performance of corporation.
The finding of the study will be expected to be used by corporation.
Significance …cont’d

 In order to generate the primary data, the questionnaire
survey was the basic research design.
 A questionnaire was designed and distributed to 17 HR staff
and 8 to non HR staff (employees) of EIC.
 Data was collected through qualitative and
quantitative methods.
 The method is reliable enough to realize the
objectives of the study and answers the
research questions and help in gathering
information about the HR Audit in EIC and
the basic information about HRM function
Data Source and Methodology

 Human Resource Management is the process of managing people in
organizations in a structured and thorough manner.
 It covers the fields of staffing (hiring people), retention of people, pay
and benefit setting and management, performance management,
change management and taking care of exits from the company to
round off the activities.
Human Resource Management
EIC

 To determine whether company’s policies are being applied
consistently, whether they are the norm for companies and
branch location, and
 whether they are consistently communicated to all
employees.
 HR audit provide insight as to which individuals are
responsible for the implementation and enforcement of HR
policies.

 Identification of the
contributions of the HR
department to the
organization,
 Improvement of
the professional
image of the HR
department,
 Encouragement of
greater responsibility
and professionalism
among members of the
HR department  Clarification of the HR
department’s duties and
responsibilities,
 Finding critical HR
problems,
 Reduction of HR costs
through more effective
personnel procedures,
 Creation of increased
acceptance of the
necessary changes in
the HR department
 A thorough review of
the department’s
information system

Comparative approach:
Another division or company that has better practices or results is chosen
as the model. The audit team audits and compares the audited firm’s
results with the best practices of the model organization.
External audit:
Standards set by a consultant or taken from published research findings
serve as the benchmark for the audit team. The consultant or research
findings may help diagnose the cause of problems.
Approaches to Human Resource Audits

Approach…cont’d
Statistical Approach
This approach relies on performance measures drawn from the
company’s existing information system. From existing records, the
audit team generates statistical standards against which activities
and programs are evaluated.
Compliance Approach
This approach reviews past practices, to determine if actions taken
followed legal requirements and company policies and procedures.
The audit team here often examines a sample of employment,
compensation, discipline and employee appraisal forms
Management by Objectives (MBO)
Managers and specialists set objectives in their area of
responsibility. Then they create specific goals against which this
performance can be measured. The audit team researches actual
performance and compares it with the previously set objectives.

HR AUDIT Research question on HRP
Strongly
agree
Agree Neutral Disagree Strongly
Disagree
NO % NO % NO % NO % NO %
Organization has plans for ensuring its HR
needs and development.
2 11 10 55 6 33 - - - -
HRM is a strategic tool for the corporation 9 50 9 50 - - - - - -
Forecasting future employees by planning the
type of work and number of workers needed.
- - 7 39 9 50 2 11 - -
Restrict hiring, giving compensation,
reducing working, early retirement are the
strategy that the corporation are going to be
act in case of surpluses of employees exist.
- - - - 4 22 13 72 1 5
Job analysis provides information about jobs
currently being done in organization.
- - 11 61 7 39 - - - -
The approach that the demand forecast for
future HR is only based on the judgment of
top managers.
- - 9 50 6 33 3 17 - -
Labor turnover, retirement, resignation,
termination and death are the factors that
decrease internal supply of the corporation.
- - - - 6 33 11 61 - -
1.Human Resource Planning
Data Analysis and Interpretations

Interpretation
 Majority of respondents agreed with statement that top managers
judge for future HR demand forecast. This implied that the
corporation has followed a policy of top-down approach, which is
not participatory to all.
 Even if most respondents think that HRM is a strategic tool for a
corporation, 11% of respondents replied they have no idea their
company has plans for ensuring its HR needs and development and
 Most respondents (61%) are said that, turnover, resignation,
termination are not the factors that decrease internal supply of
their corporation.

0
2
4
6
8
10
12
14
HRA Q 1 HRA Q 2 HRA Q 3 HRA Q 4 HRA Q 5 HRA Q 6
S.agree
agree
neutral
disagree
S.disagree
1. Organization has a policy of stating recruitment and selection
2. There is a formal process in identifying job vacancies
3. Recruitment was done proactively from a planning mode
4. Recruitment of the company linked to human resource planning
5. HR division set recruitment strategies before active recruitment begins
6. HR department does perform all initial screening of candidates
Recruitment and Selection

Interpretation
 Most respondents agreed that their organization has a policy of
stating recruitment and selection and almost all respondents they do
believe that the recruitment was done proactively from a planning
mode and 61% of them knows recruitment of the company linked to
HRP.
 Almost more than half of respondents agreed exams and personal
profiles are used in the selection process of the company. These
indicate that the organization has followed the criteria of HR policy
and create trust and confidence for the existing employees as well as
for new applicants.

0
2
4
6
8
10
12
HRA Q 1 HRA Q 2 HRA Q 3 HRA Q 4 HRA Q 5
S.agree
agree
neutral
disagree
S.disagree
1. The compensation policy of the company contain procedures to guide managers
2. Distribution of compensation among departments are reviewed by management
3. The organization has a policy clearly stating its position on employees salary
4. The organization compensation philosophy clearly communicated to all employees
5. The organization has a clear policy regarding employee benefits
Compensation and Benefit

Interpretation
 Forty five percent of respondents replied that the distributions
of salary among departments are reviewed by management.
But on contrary 11% of respondents didn’t agreed.
 In regard with this majority of respondents believes that the
company’s compensation and benefit policies are clearly
communicated to employees.
 The results show that the salary structure and benefit policy
of the company have satisfied most employees and resolve
grievance with management.

0
55%
39%
6%
S.Agree
Agree
Neutral
Disagree
0
45%
55%
0
S.Agree
Agree
Neutral
Disagree
0
39%
50%
11%
S.Agree
Agree
Neutral
Disagree
0
50%
45%
5%
S.Agree
Agree
Neutral
Disagree
1. 55 % of respondent agree Performance
appraisal do reflect an employee’s positive
behavior as well as results and 6% of
them Disagree.
50 % of the respondent Agree the company’s
performance appraisal include a written
plan to improve employees knowledge and
skills and 5% Disagree
3. The evaluation establish clear
objectives, expectations and the criteria
are linked to the specific job
4. Employee who are better performers
receive higher pay increase than poor
performers
Performance Management and Evaluation

0
2
4
6
8
10
HRA Q 1 HRA Q 2 HRA Q 3 HRA Q 4
S.agree
agree
neutral
disagree
S.disagree
1. There is a process for assessing the corporation immediate training needs and
individual development needs
2. Job skills, knowledge and ability are considered in assessing training needs
3. All training programs and opportunities well communicated to employees
4. The corporation has to give a sponsorship for employee to study in higher
education
Training and Development

 HRM is a strategic tool that helps an organization for
sustainable competitive advantage.
 Majority of respondent stated the future HR demand
forecast was done by top managers, recruitment was done
proactively from a planning mode,
 The company’s compensation policies are clearly
communicated to employees, the company has the
practice of a pay-for-performance system, the company
has the practice of allowing budget for welcoming
program for new selected employees,
Conclusion

 Regarding training programs and opportunities, it was
not well communicated to all employees as expected.
 The mass of respondents commented difficult to get
personal files, and convincing terminated employees are
the challenges that occurred in EIC. And
 Lack of case study material on HR management auditing
in the corporation and other company context presents
problems for both researchers and practitioners.
Conclusion….cont’d

 By auditing itself, the department finds problems before
they become serious.
 Effectively conducted auditing process can build strong
rapport b/n the department and operating managers,
and it can reveal outdated assumptions that can be
changed to meet the department’s objectives and future
challenges.
•

 Finding out what is insufficient and inadequate is the
first step toward improvement. If deficiencies are
identified, it is important to take steps to correct those
deficiencies.
 Corporation should take that first step only when they
are ready to act on the findings, and to make necessary
improvements in their HR skills, processes, and systems.

Even though the company has plans for ensuring its
developmental and human resource needs, there should be
further carefully revision of the human resource planning
in order to minimize the problem of overstaffed and
understaffed.
The recruitment and selection process of the company
should continue following the HR policy and procedures
Since the corporation’s is a backbone for economic and
insurance development in the country.

 The company should be advisable to revise, administer and
improve the current employees’ compensation and benefit
scheme, unless the labor turnover will be high in the
future.
 Retaining excellent staff depends on outstanding pay and
benefits which are critical factors that will ultimately
determine how well employees feel about the corporation
and the likelihood that they will remain with company in
the future.

 The performance evaluation system should be clear,
objectives and related to the specific task .
 Redesigning performance review proficiently are needed
to manage the performances of employees as an integral
part process, maintaining it and effectively monitoring its
implementation should be an important function of HR
department for better performance of the corporation.

 Human resource development is one of the factors that the
company’s has productive and their competitive advantage will be
consistent.
 The ability to create training programs that solve human
performance problems will yield important benefits for corporation.
so in order to gain the competitive advantage, the company’s
training and development strategy should be strong and clearly
communicated to all staffs effectively.
 In relation to T&D, the company was doing well and advisable to
continue allowing a sponsorship for employees to attend in higher
education learning either in the country or abroad.
Recommendation….cont’d

HR Audit in EIC

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