HUMAN RESOURCE MANAGEMENT

ASSIGNMENT 2

Q.2). WRITE A DETAILED NOTE ON PERSONNEL AUDIT.

Personnel audit is a term used for a case study of human resources in the
organization. Personnel audit may have different objectives and benefits
according to the current needs of the organization’s management. This is a
kind of audit, its subject is an objective and independent review and
assessment of the condition and suggestion of solutions to increase the
effectiveness of individuals, organizational units and whole organization. It is
one of the tools to increase the effectiveness and efficiency of the organization
which uses both soft and hard techniques (e.g. Assessment Centre, mystery
methods, individual interviews) to find needed information. In other words, an
audit is, properly speaking, and examination and verification of accounts and
records. Personnel auditing refers to an examination and evaluation of policies,
procedure and practice to determine the effectiveness of personnel
management. In other words, personnel audit or periodical reviews of the
effectiveness of a management are concerned with:

▪ The measurement of the effectiveness of personnel programs and

activities.
▪ The determination of what should or what should not be done in the future
as a result of such measurement.

The objective of a comprehensive personnel audit is the answer to three basic

questions
▪ How many workers should the organization have to handle the current
volume of work?
▪ Which worker is the best for the given job?
▪ How is the system for managing people set?

The effectiveness of a personnel program, like that of personnel research, is

dependent upon available information, and its scope is as wide as the field of
personnel management. The performance of people is a complex product of
personnel interest, qualifications, commitment and expectations on one hand,
and of the employment environment (including working assignments, working
conditions, supervision, leadership, opportunity and challenge) on the other.
Because manager-employee relationships, from recruitment to retirement are
Inter related to compose the total system, no part of that system can be
ignored.

❖ Importance of Personnel Audit

In modern times, personnel and industrial relations audits have been widely
accepted as tools with which managers can control the programs and practices
of the personnel and industrial relations department. The importance of a
personnel audit has increased in recent years because of the following
reasons: -

➢ A change in managerial philosophy and theory, as a result of which a

management now feels that the employees' participation in the activities of
an organization, and their identification with it, has a tremendous influence
on the working of that organization.
➢ The changing role of government, which intervenes more often and more
extensively now, to control manpower management by an organization
with a view to protecting the interests of the employees, providing them
with better working conditions and ensuring their economic security.
➢ The increasing role played by trade unions and their strength, as a result of
which they often question managerial competence in industrial relations.
➢ The rising wages, changes in skills of technical and professional workers and
the increasing expenditure incurred on the industrial relations department
these are the factors which have influenced and encouraged the trends in
favour of a personnel audit.

❖ Use of the personnel audit in practice:

Personnel audit is typically used in situations where it is necessary to evaluate
the condition of the people and improve the functioning of the organization.
However, personnel audit is often used by management to reduce the number
of workers. The most common reasons for the implementation of personnel
audit are as follows:
 ➢ Improving the performance of the organization as a whole and the
optimization of human resources
➢ Cost optimization and reduction of the number of workers
➢ Improving the management system of human resources in an
organization, including incentive system
➢ Create a foundation for individual development and career plans of
employees
➢ Strengthening the system use of motivational tools in the organization

❖ Personnel audit is aimed in particular at:

➢ Personnel processes
➢ Evaluation of the current state of human resources in the organization
➢ The level of personnel quality (competencies, capabilities, skills)
➢ Correct settings of scope of the powers and responsibilities of workers
➢ Efficient use of human resources
➢ Adequacy of the number of human resources (deficiency or excess) -
determining the optimal staffing capacities

❖ Scope of Personnel Audit

The scope of a personnel audit is very wide. It represents a “whole man

“approach; that is, it assumes that the management of human resources
involves much more than the practice of recruiting, hiring, retaining and firing
employees. It examines the concept of “People management” by supervisors
at all levels. In the words of the National Industrial Conference Board of the
United States, “the top management is interested in auditing all the programs
relating to employees, regardless of where they originate, or the channels
through which they are administered”.

The field of personnel audit includes:

➢ Job analysis
➢ Recruitment
➢ Testing
➢ Selection
➢ Training
➢ Management development
➢ Promotions and transfers
➢ Rating
➢ Labour relations
➢ Morale development
➢ Employee benefits and services
➢ Employee communication
➢ Employee counselling
➢ Wage and salary administration
➢ Collective bargaining
➢ Personnel management, industrial relation and research.