Human Resource Auditing Research ppt

IN

EIC

Background of the Organization

The Ethiopian Insurance Corporation was established as an autonomous public enterprise on 1 January 1976 by Proclamation No. 68 of 1975. Its principal place of business is in Addis Ababa and having branches all over the Country. It has limited liability. It is governed by Proclamation No. 86 of 1994, Proclamation for licensing and supervision of insurance business.

Corporation aims the following objectives

– Engage in all classes of insurance business in Ethiopia; – Ensure the insurance services reach the broad mass of the people;

Back

ground…

.cont’d

Without prejudice to the applicability of laws governing insurance business, the Corporation shall 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 an autonomous government office having its own legal personality by Council of Ministers Regulations No. 98/2004 to supervise financial public enterprises.

Organizational Structure and Staffing of EIC

Human Resources Management and Property administration

Division

Compensation & Benefit

Department

Human Development Department

Personnel ManagementDepartment

Staffing ManagementDepartment

Career ManagementDepartment

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Statement of the Problem

An audit of human resource management is a suitable method for evaluating whether human resource activities are contributing to an organization’s performance?

What areas of the Human Resource Function should be audited?

Do the HRM systems aligned towards business goals of the corporation?

Do the HRM staffs reflect adequate understanding and commitment to the business goals of the corporation?

Research Questions

Which “best practices” should be implemented to better position the organization to achieve its goals;

Which practices, or lack of practices, might place the organization at risk for compliance or regulatory violations related to HRM; and

What Process improvements that will support HR in providing the highest quality service to employees.

Problem….cont’d

Main objective:- The main objection of this study was to audit the

function of human resource management department

and its overall contribution to organizational

performance in Ethiopian Insurance Corporation (EIC)

and suggests possible recommendation.

Objective of the study

To conduct an HR audit and ensure that policies and procedures meet the business needs and minimize potential exposure To investigate the impact of HR auditing 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 audit reporting.

Specific Objectives

Measure the effectiv

eness of

organization’s procedures fro

m HR

perspective and how th

ey impact o

n

bottom lin

e.

To review perfo

rmance of H

uman

resource Department a

nd its activ

ities

to determine effectiv

eness.

Specific …cont’d

Specific objectives…cont’d

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 & 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.

By applying the results of the study it is hoped that human resource practitioners will be able to better understand the potential of HRM auditing to offer a contribution to an organization’s future performance.

Thus the study assumed to be conducted for the following reasons.

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 investigating will have some relevant contribution to improve performance of corporation.

The finding of this study will be expected to be used by corporation.

Significance …cont’d

Data Source and Methodology

In order to generate the primary data, the questionnaire survey is the basic research design.

A questionnaire has been designed and distributed to 17 HR staff and 8 to non HR staff (employees) of EIC.

Data will be collected through qualitative and quantitative methods. This method is reliable enough to realize the objectives of the study and answers the research questions and will help in gathering information about the Human Resource Audit in EIC and the basic information about HRM function

1. Design audit questionnaire / check listListing down the desired HR practices corporation executes and maintain. On this basis questions should be developed.

2. Evaluate the current practicesLooking for evidence / documents that support the response of questionnaires will be done. data collected from various HR documented policies, systems, process, employment records

3. Analyze the outcomeAfter collecting the information / data, analysis was done to indicate towards strengths and opportunities for improvement. Analysis will show areas that are strong and weak.

4. Preparing action plan for further improvements

Audit system can easily set goals which could be about maintenance of current good practices and further development and improvement practices.

Methodology used to audit HR system

Human Resource Management

Human Resource Management is the process of managing people in organizations in a structured and thorough manner.

This 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.

Functions of HRM

Human resource planning, recruitment / selection , induction ,orientation ,training ,management development, compensation development, performance appraisals ,performance management ,succession planning, safety management ,staff communication

• HRP is the process including forecasting, developing and controlling-by which a firm ensures that it has the right number of people and the right kind of people, at the right places at the right time, doing work for which they are economically most useful

• Recruitment is the attraction of capable candidates to a vacancy, whilst selection concerns the assessment and identification of the suitability of such applicants from this pool.

• Employee compensation refers to all forms of pay or rewards going to employees and arising from their employment,

HR Auditing HR Auditing

The Human Resources Audit is a process of examining policies, documentation, systems, and practices with respect to an organization’s HR function.

It reveal the strength and weaknesses in the human resources system, and all issues, which need resolution.

It focused on analyzing and improving HR function in the organization.

It will help the managers to identify what is missing or need to improve in the organization.

The main functions are to take specific actions that will help minimize employee turnover orientation training, working conditions, remuneration and benefits and opportunities for advancement.

provide a framework for improving the way in which the firm manages people.

The Human Resources Audit is a process of examining policies, documentation, systems, and practices with respect to an organization’s HR function.

It reveal the strength and weaknesses in the human resources system, and all issues, which need resolution.

It focused on analyzing and improving HR function in the organization.

It will help the managers to identify what is missing or need to improve in the organization.

The main functions are to take specific actions that will help minimize employee turnover orientation training, working conditions, remuneration and benefits and opportunities for advancement.

provide a framework for improving the way in which the firm manages people.

The audit’s goals are 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.

provide insight as to which individuals are responsible for the implementation and enforcement of policies.

Goals of the HR Audit

Benefits of Human

Resource Audit

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

Approaches to Human Resource Audits

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.

Approach…cont’d’Statistical: 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 an 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 PlanningData Analysis and Interpretations

Interpretation

• Majority of respondents agreed upon 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 they think that ,HRM is a strategic tool for a corporation, 11% of respondents replied that, 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.

HRA Q 1 HRA Q 2 HRA Q 3 HRA Q 4 HRA Q 5 HRA Q 60

2

4

6

8

10

12

14

S.agreeagreeneutraldisagreeS.disagree

1. Organization has a policy of stating recruitment and selection2. There is a formal process in identifying job vacancies3. Recruitment was done proactively from a planning mode4. Recruitment of the company linked to human resource planning5. HR division set recruitment strategies before active recruitment begins6. HR department does perform all initial screening of candidates

Recruitment and Selection

Interpretation

• Most respondents they 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 they agreed that, exams and personal profiles are used in the selection process of the company. These results indicate that the organization has followed the criteria that HR policy needed. And

• This would create trust and confidence for the existing employees as well as for new applicants.

HRA Q 1 HRA Q 2 HRA Q 3 HRA Q 4 HRA Q 50

2

4

6

8

10

12


1. The compensation policy of the company contain procedures to guide managers2. Distribution of compensation among departments are reviewed by management3. The organization has a policy clearly stating its position on employees salary4. The organization compensation philosophy clearly communicated to all employees5. The organization has a clear policy regarding employee benefits

Compensation and Benefit

Interpretation

Forty five percent of respondents replied that, distributions of salary among departments are reviewed by management. But on contrary 11% of respondents they 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 had satisfied most employees and resolve grievance with management.

55%39%

6%S.AgreeAgreeNeutralDisagree

45%55%

S.AgreeAgreeNeutralDisagree

39%

50%


50%45%


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

HRA Q 1 HRA Q 2 HRA Q 3 HRA Q 40123456789

10


1. There is a process for assessing the corporation immediate training needs and individual development needs2. Job skills, knowledge and ability are considered in assessing training needs3. All training programs and opportunities well communicated to employees4.The corporation has to give a sponsorship for employee to study in higher education

Training and Development

• Over the years as Corporate, EIC has grown so has the responsibility of the HR team to create an atmosphere for a better Employee relation. As many companies go in for various options like pay enhancements, loyalty programs, events, awards etc.

Employee/Labor-Management relation

HRM is a strategic tool that helps an

organization for sustainable competitive advantage.

The human resource department should be structured, organized and equipped to provide overall strategy, direction and effective management of the organization’s human resource function to accomplish organizational objectives.

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.

Conclusion

Conclusion….cont’d Improving the HR system take some time. A work plan with a timeline, accountability, and

deliverables should be created after performing the HR auditing and identifies areas where improvement is needed.

Follow-up and review should be a regular management function, performed on an ongoing basis.

This study has examined the HR auditing practices in EIC. To reach a conclusion, issues that have been addressed are the company’s practices regarding HRM function auditing.

Conclusion …cont’d Majority of respondents stated that 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,

Regarding training programs and opportunities, it was not well

communicated to all employees as expected. And

The mass of respondents commented that, difficult to get personal

files, convincing terminated employees, are the challenges that

occurred in EIC. And

Lack of case study material on human resource management

auditing in the corporation and other company context presents

problems for both researchers and practitioners.

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

After analyzing the questionnaires and having seen the available document related to HR in Ethiopian insurance corporation (EIC), the following recommendations are forwarded. Even though the company has plans for ensuring

its developmental and human resource needs, there should be farther carefully study the human resource planning in order to minimize the problem of overstaffed and understaffed.

The recruitment and selection process of the company should be continued following the HR policy and procedures. Since the corporation’s is a backbone for economic and insurance development in the country.

Recommendation

The company will 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 and Redesigning performance review effectively 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.

Recommendation….cont’d

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 this 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

Human Resource Auditing Research ppt

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