Human Resource Audit

June 24, 2017 Teaching

Human Resource Audit – Case Study of “Ministry of Higher Education, Oman” By: Dr. Taraka Raghavendra Nanduru, Assistant Professor, Department of International Business, College of Applied Sciences, Ibri, Ministry of Higher Education, Sultanate of Oman GSM: 98823523 Email: raontr. [email protected] edu. om And Mr. Rashid Nasser Al Mataani Assistant Lecturer, Department of International Business, College of Applied Sciences, Ibri, Ministry of Higher Education, Sultanate of Oman GSM: 92672223 Email: rashid. [email protected] edu. om Abstract:

Every organization is said to be successful when the human resources of the organization is competent and resourceful, contributing to the individual and organizational growth. Success of every unit of management lies in the basic function of setting organizational tasks to be performed and achieve them with the help of the employees. Targets are decided in advance and their performance is measured at the end to know the success factor of the organization. Human Resource Audit (HRA) is one of those functions of management which studies the process of HR planning and its post assessment.

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In general terms, auditing is a routine exercise in field of accounting and finance, and in particular with the statutory obligations. In human resources management, there is no such legal obligation binding the employer to introduce the concept of audit. But the implementation of HR audit will build the successful career planning for the individuals and strong organizational development for business units. HRA is a formal audit process designed systematically to examine the strategies, policies, procedures, structure, system and HR practices in organization.

It is implemented with the basic objective of studying the strengths and weakness in developing the existing human resources in order to enhance the organizational performance. HRA must evaluate the personnel functions, policies, procedures, and their impact on the employees of the organization. The four areas as identified by the Robert L Mathis, and John H Jackson namely, audit of functions, managerial compliances, environment & culture in the organization and corporate/industry strategy will be used.

Thus the proposed study makes an attempt to study the HR gap analysis from the dimension of skill set required from the planning end to the employee performance at the operational end with the select organization Ministry of Higher Education. (Key words: Human Resource Audit, HR Gap analysis, Employee performance analysis) Human Resource Audit – Case Study of “Ministry of Higher Education, Oman” Introduction Auditing is the routine exercise in the area of finance, especially because with the statutory obligation. In case of Human Resource, there is no legal binding to adopt auditing. Some of the companies prefer to have HR audits.

The Human Resource Audit is also a systematic formal process that has been designed to examine the strategies, policies, procedures, documentation, structure, systems and practices within the organization. It is a systematically and scientifically process of assesses the strengths, weaknesses, and developmental needs of the existing human resources from the point of view of improving organizational performance. The human resource audit is based on the principle that human resource processes are vibrant and must repeatedly be redirected and re-energized to remain reactive to the increasingly changing needs.

Human Resource Audits are not scheduled practices meant at problem solving. It helps in providing insights into possible causes for current and future problems. HR audits give support to decision making in the organization and are usually internal documents that need not necessarily be shared with the public. Human Resource Audits are non-routine and may be intended to cater to the exclusive needs of the organization at a conscientious point in time. The manner in which the Audit is conducted could vary from autonomous surveys to interventions by outside consultants.

The HR audit covers three constraints, namely, the HR policies and practices, the HR professionals and the HR department. Audit process makes an attempt to find out the following four points with respect to the above mentioned constraints, and they are: • The tangible state; • The resemblance between the desired/professed state and the actual state; • The coalition with the organizational strategy and goals; and • The conformity by way of the laws and regulations. HR Auditing Process HR department provide six key services namely; staffing, training and development, appraisal, rewards, organization control and communication.

The Auditing process is a function of the organization and has the involvement from the top management. Nevertheless of the category of company or the size of HR department, the HR Audit is a simple, yet all-inclusive tool to analyze and perk up effectiveness as a function. This process may vary from organization to organization, but it essentially follows the stages described below. 1. Briefing and orientation: This is a introductory meeting of key staff members to: i) Discuss particular subject well thought-out to be significant ii) Chart out audit procedures, and ii) Develop plans and lineup of audit 2. Scanning material information: This is the stage commences with scrutiny of all the records and documents related to the personnel handbooks and manuals, guides, appraisal forms, material on recruitment, computer capabilities, and all such other information considered relevant[1]. Human Resource Audit is the critical analysis of the existing human resource practices within the organization. The audit will serve with the data that is quantitative, authentic as well as comprehensive.

In simple words, the success of this point of human resource planning solely depends upon the comportment in which personnel records and related information are maintained. 3. Surveying employees: Surveying employees involves interview with key managers, functional executives, top officials in the organizations, and representatives of employees. The major emphasis here is to identify and specify issues of concern, present strengths, predictable needs and managerial values on human resources. 4. Conducting interviews: The key issue at this point is to list the significant and inquisitive questions.

The decision on these questions depends on the scope and purpose of the Audit as well as on the culture of the organization. [2] The ability of the interviewer lies in receiving relevant and acceptable information without menacing the interviewees. 5. Synthesizing: The data thus gathered is used to present the: 1. Current situation 2. Priorities 3. Staff pattern, and 4. Issues identified. 5. Similarly, future needs are recognized and suitable criteria developed for highlighting the human resource precedence and specific recommendations made. 6. Reporting: The results of the audit are iscussed within numerous rounds with the managers and specialists. This helps in crystallizing the key factors of audit. The findings and the discussion during the meetings will be reported formally to the Management. This report includes the state of the organization, the assessment of effectiveness and competence of various areas covered by the Audit, a legal compliance of the concern, and critical recommendations for improvement. The following are four major steps of HR audit proposed for any business unit in general: 1. 1) Define preferred HR practices for the organization 2. 2) Assess current practices if any, . 3) Evaluate the results 4. 4) Ascertain improvement and take action This practice can be repeated as a part of the annual planning and objective setting process in the company. Development can be considered against objectives and an achievement cycle. The audit serves the following purposes: • Clarify desired practices of HR work and roles within the organization (HR Department, Line Managers). • Establish a baseline for future improvement. • Evaluate current effectiveness. • Standardize practices across multiple sites within a division or company[3]. • Assess current knowledge and skills required of HR practitioners. Improve performance levels to key customers within the organization. [4] The Audit Process The HR Audit process can be conducted in the four – stage process. They are defining audit statements, assessing the current existing practices, if any; analyzing the outcomes, and establishing the corrective measures. Defining Audit Statements Areas of responsibility and traditional HR practices covered by the function like; HR Planning, Staffing, Performance Management, Employee Relations, Compensation and Benefits, Training and Development, Safety and Wellness, and Communications.

A statement can be written about each major practice that has to define. Typically, they have to be stated in the present tense and in a constructive manner. For example; the staffing process is documented so that the accountability of each person in the process has to be clear and understood. Performance appraisals should be completed all the employees in the organization. Definitions can be complete or detailed, but it is better to make more general statements and keep them improve from year to year in order to raise the level of performance. Assessing Current Practices

One should be objective with the assessing the existing practices within the organization. The best approach is to gaze for verification that supports or contests each statement. Evidence may take in the form of policies and procedures, employee survey results, key customer interviews, HRIS data, reports to regulatory authorities and so on. Analyze the Results Any analysis should always be commenced with the recognizing strengths and opportunities for improvement. Some company may be very strong in administration and managing legal requirements but may need improvement in developing higher-level systems definition.

Another company may be very strong in areas Safety, Security, and Training, but need improvement in Communication practices that run across the company. [5] Reviewing the data in diversified perspectives will be helpful to devise an image of overall HR performance against the audit. It can reproduce the positive effect of actions taken in previous years as well as for the future actions. It may become noticeable that all definitions are not equal in importance. The effort is required to meet the definition is one more factor to consider. Establish Improvement Goals and Take Action

The best time to complete an audit is just prior to the annual planning process. With audit information in hand, it can be perched to take advantage of setting next year’s goals. Setting of annual goals consists of two important aspects, and they are maintenance of current best practices and development of improved practices. Knowing the ability and potential of the HR department and system it is critical in developing a practical plan. Good practices become a part of the HR system. As the process reaches the desired level then future development can occur more effectively.

The HR Audit could be a dominant lever of change in the organization. In one sense it is simple and practical, and can be completed fairly quickly and with ease. The degree of detail and definition of performance is within the control of the audit developer[6]. Over a period of time, the HR Audit enriches itself through better definition development and higher levels of performance expectations. It takes on a systems approach because it is comprehensive, inclusive of all traditional HR practices[7]. HR Audit Practice at MOHE

The beginning of the Oman modern Renaissance in 1970, was the Major concern of His Majesty Sultan Qaboos bin Said has been about science and education. His stand was expressed through the immortal saying: “We are determined to teach our children, even under a tree. ” In accomplishment of the higher education process in Oman, Sultan Qaboos University (SQU) was opened in 1986 as the first public university. The Ministry of Higher Education (MOHE) was established and, and its administrative structure and organizational structures were set up, in response in response to the Royal Directive issued by the Royal Decree. /1994, the fourth Article of which stipulates the MOHE. In parallel with MOHE establishment, the six intermediate teachers colleges, affiliated to the Ministry of Education, were transformed in to Colleges of Education awarding Bachelor degree. In The Academic year 2005/2006, and consistent with the future perspective of MOHE, these colleges have been transformed into College of Applied Sciences. The Ministry then expanded to include private universities and colleges; the number of scholarships increased.

The Higher Education Admission Centre (HEAC) was also established followed by the establishment of Scientific Research Council (SRC) was established by Decree Royal Decree (54/2005) Recently, the Oman Academic Accreditation Authority (OAAA) was established Royal Decree (54/2010), to replace the former Oman Accreditation Council (OAC). The number of private universities and colleges in the Sultanate has increased dramatically over the past decade, and now stands at twenty-six. There has also been a substantial increase in the number of scholarships awarded to students to study in-country, as well as abroad.

Accordingly, the Ministry has expanded and increased its capacity to manage growth in the system of Higher Education. Human Resource planning process at MOHE are done with the HR department. The department does two types of HR planning process, the first one for the teaching departments and the other being for non-teaching department (also called as the administration). Article: 69 of the Royal Decree 62/2007 deals with the employment process that is decided by Ministerial Decision. The HR department follows the procedure that is adopted as per the ministerial guidelines as follows: • Selection criteria Post selection verification • In case of defaulters, further course of action Selection criteria is the requirement of manpower request comes from the respective department. The concerned department, namely the educational institution with the specific education imparting unit (concerned faculty) engaged in the delivering the course(s) will send the details of the requirement. The MOHE will place the necessary advertisement in the newspapers within the country or will contact the respective placement agencies to provide the suitable candidates.

The first condition of recruitment process as a starting point of HR planning process is done as per the specified norms by the HR department of MOHE. Prospective candidates selected passing through the selection criteria need to submit the credentials supporting their qualification and work experience. The HR representatives of MOHE will conduct the necessary verification process for the given certificates. The verification of certificates is a lengthy process that is followed by the HR department of MOHE. The candidate’s credentials will be sent to the respect authentication centers to get the report of the certificate.

The various authorities in and around Sultanate of Oman are used in the aspects of verification process. As the process of verification the candidature is also required to provide the report of medical fit from the approved medical centers that are identified by the MOHE as the approved service provider for the medical fitness providing centers. Thus the verification process will go through the dual verification process where the selected candidate is verified for medical fitness and also the employment verification providing the scrutinizing the reports with the competent authorities.

Article: 71 specify that Employees are put under probation in the first 3 months. If the employee is not suitable, the direct supervisor should write a report to the HR committee. The HR committee should verify the suitability of the employee. If the employees found unsuitable, recommendations will be raised to the Minister who will terminate the employee contract. According to the Article(s) 137-14, the performance appraisal will be done for every employee when he/she completes more than 6 months in service. It is done annually that starts in the month of October and the respective report should be submitted in the month of December.

According to the Article 143 in can of the employee whose performance grade was ‘poor’ for two consecutive years, the HR committee should be informed to take further action. HR committee may transfer the employee to other departments where he/she might be suitable, or his/her contract might be terminated if found otherwise. The final recommendation should be reported to the Minster to take the final decision. Conclusion HR audit has become proficient reengineer process for the HR department executes, accomplishing job’s cost-effectively, and increasingly spin its attention as part of efficient strategic partner to the top executives.

A HR audit can and should be strategically integrated with a company’s business plan to help in achieving its objectives. Firms are increasingly moving beyond manual HR systems today, by installing HR Information Systems, and using the Internet and Intranet technology. Information technology can support HR audit not only in achieving the traditional HR functions but also in applying the concepts of strategic planning and reporting. It was evidential with the MOHE that the most of the HR audit practices desired are in place with it and functional.

Thus the HR audit process is successful contributor of strategic goals of any organization. References: Books 1. Byars, Lloyd. And Rue, Leslie. “ Human Resource Management”, 6th edition, Irwin McGraw-Hill, (2000). 2. Dessler, Gary. “Human Resource Management”, Prentice Hall, 8d edition, (2000). 3. Rao, Ashok. & et al, “ Total Quality Management: A Cross-Functional Perspective”, John Wiley & Sons, (1995). 4. Werther, William. & Davis, Keith. “Human Resource and Personnel Management”, Irwin McGraw-Hill, 5th edition, (1996). Web Sites and research articles: 1. www. mohe. gov. m 2. http://www. docstoc. com/docs/31001583/UNIT-17-HUMAN-RESOURCE-AUDIT 3. http://www. caseforest. com/case-study-Audit2. aspx. 4. http://www. indiastudychannel. com/experts/resources/117078-What-Purpose-an-Audit. aspx 5. http://www. scribd. com/doc/40311284/Modern-management-techniques. 6. http://www. oppapers. com/subjects/definitions-of-performance-management-page36. html. 7. http://www. oppapers. com/subjects/systems-approach-to-hrm-page18. html. 8. Dr Sherif A Mazen & Dina I El Kayaly, “Conceptual Design for a Strategic Human Resources Quality Management System”. . Marin costel, “The Main Parameters and Levels of Human Resource Audit”. 10. “Guidelines on Audit Quality”, Contact Committee of the Heads of SAI of the European Union, December, 2004. 11. “The Human Resource Audit as an Improvement Tool. ” 12. Dr A G Matani, “Human Resources Audit in Industries” May, 2006. 13. Martin Fossas Olalla, “Human Resource Audit”, University Compulense de Madrid, Spain. 14. “Building A Strategic Human Resource Function”, Workforce Brief # 7. 15. www. hrzone. com/topics/tqm. html, “Total Quality Management”, Judith Ann Schlender. ———————- [1] http://www. docstoc. com/docs/31001583/UNIT-17-HUMAN-RESOURCE-AUDIT. [2] http://www. docstoc. com/docs/31001583/UNIT-17-HUMAN-RESOURCE-AUDIT. [3] http://www. caseforest. com/case-study-Audit2. aspx. [4] http://www. indiastudychannel. com/experts/resources/117078-What-Purpose-an-Audit. aspx [5] http://www. scribd. com/doc/40311284/Modern-management-techniques. [6] http://www. oppapers. com/subjects/definitions-of-performance-management-page36. html. [7] http://www. oppapers. com/subjects/systems-approach-to-hrm-page18. html.


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