Table of Contents

Personnel Research ............................................................................................................................ 2 Nature and Scope of personnel research. ............................................................................................ 2 Types of Personnel Research .............................................................................................................. 3 Functions of Personnel Research ........................................................................................................ 6 Approaches of Personnel Research ..................................................................................................... 7 The process of Personnel Research ..................................................................................................... 8 Importance and need of Personnel Research ...................................................................................... 9 Basic considerations for personnel evaluation .................................................................................. 10 The subjects and methods of personnel performance evaluation ...................................................... 11 Human Resource Audit ..................................................................................................................... 14 Conceptualization of HR Auditing ..................................................................................................... 14 Nature of HRM Audits ...................................................................................................................... 15 Approaches to HR Auditing ............................................................................................................... 16 The Legal Approach in HR Auditing ................................................................................................... 16 Focus of the Function Audit .............................................................................................................. 17 The Strategic Audit Approach ........................................................................................................... 20 Scope of HR audit ............................................................................................................................. 22 Special Areas Of HR Audit: ................................................................................................................ 23 Need for HR Audit ............................................................................................................................ 23 HR Audit Significance: ....................................................................................................................... 24 Use Of HR Audit................................................................................................................................ 24 Conclusion........................................................................................................................................ 25 References ....................................................................................................................................... 26

Personnel Research Introduction

Personnel research seems to be one of the most important topics under discussion about Human Resource Management. There are some different definitions of the personnel research. According to Michael J. Jucius, Personnel research is the task of searching for and analyzing facts to the end and that personnel problem may be solved or that guideline governing their solutions. Its scope is all-inclusive. There are no subjects in personnel about which so much is known that no further research is justified. On the contrary, our tested knowledge of basic relationship is so meager that it is a wonder that we get along as well as we do work with people. Even in fields in which business has been working for many years, a precise and indisputable basis of action is not available. So personnel research is an effective mean by which we can able to know all about the personnel. Through the personnel research, we know some very much important information which is essentially needed in providing data for making organizational decision so that the organization can achieve its goals.

Nature and Scope of personnel research.

Personnel research, defined simply, is the task of searching for and analyzing facts to the end those personnel problems may be solved or that guide lines governing their solutions may be deduced. Its scope is all-inclusive. There are no subjects in personnel about which so much is known that no further research is justified. On the contrary, our tested knowledge of basic relationships is so merger that it is a wonder that we get along as well as we do in working with people. Even in fields in which business has been working for many years, a precise and indisputable basis of action is not available. Witness the following remarks on training: There is, then, little dependable research data published on industrial training. By dependable research data, I mean conclusion concerning a problem which are based on investigations which control, statistically or otherwise, all variables. This, of course, is not conclusive evidence that 2

training men are not using a research approach. My contacts with industrial training, other than in my own organization, are not as broad as I would like. Yes these contacts have given me little evidence that an extensive use of research techniques made in industrial training. The absence of adequate research in every other field of personnel could similarly be observed. Hence the problem of research is to determine which of the many pressing problems should be studied first. It is a matter of determining how available resources and time can best be allocated. Obviously, it is impossible here to survey the fields of needed research or what has been done. All that can be done here is 1. 2. To comment briefly on some basic considerations on research To illustrate with an example or two the task and value of careful data gathering.

Types of Personnel Research

Personnel research is very much important for providing information which is used in manufacturing and making decision by an executive. There are two basic types of personnel research, such as1. Descriptive research and, 2. Behavioral research. Now we can try to describe the two types of personnel research. Descriptive research: Descriptive research is conducted to satisfy need of management for information about the personnel situation in its company and in competing companies. This is involves compiling data about employees who have comparable jobs in the same industry. Descriptive research is an important source of information. Turn-over data and wage surveys are the example of this type of research. Behavioral research: Social science is the basis of this type of personnel research. It provides the detailed information about employees to a company. This kind of research usually addresses the deeper questions 3

about employees behavior, such as whom to employee, how to reduce turn-over, and how to increase job satisfaction etc. The traditional techniques of test validation, opinion surveys, training evaluation and motivational research are used under this method. These are the two main types of personnel research. But the most contemporary personnel research is applied rather than basic. It usually used to answer specific question and solve specific problem. There are two basic kinds of personnel research: basic and applied. In general, Basic research is universalistic: it tries to uncover truths about personnel issues that apply across different people and organizations. Applied research is particularistic: it tries to understand what is happening to a specific set a people in a particular situation or setting. Basic research is more likely to be performed by academics and published in scholarly journals. Applied research is more likely to be performed by human resource managers and personnel consultants. The difference between basic research and applied research is similar to the difference between science and technology. While science is fundamental to technology, the purpose of scientific work is simply to understand how all things work, while the purpose of technological work is to apply that understanding to making stuff happen.

Basic Personnel Research

The purpose of basic personnel research is to understand the relationships between personnel variables. For example, we might ask:

1) Which increases employee performance the most: punishment for poor performance, or
rewards for good performance?

2) What are the traits that distinguish good managers from bad managers? 3) What psychological/personality characteristics are most compatible with a sales job? 4) How can we predict whether a prospective employee will steal from the company?
The ultimate goal of basic personnel research is to provide a complete understanding of human behavior in the context of organizations. If this were achieved, it would mean that we could design organizations optimally so that people would be happier and more productive, and the organization more successful. For example, consider Maslow's work on human motivation. According to Maslow, human beings are motivated by a hierarchically ordered set of needs such that we most strongly 4

motivated by the lowest-ranked needs that have not yet been satisfied. As shown in the diagram, a person whose physiological needs like food, water and shelter are not yet being met, is hardly interested in self-help books about how to express their inner child!

We can use this information in a practical way to create organizational motivation and compensation systems that really work. For example, for temporary workers, you want to provide a way that they can get job security if they perform well. For entry-level people who are being paid a permanent salary and who are not in danger of being downsized, you want to create work atmosphere which satisfies their social needs, that gives them a sense of belonging to a group.

Applied Personnel Research

The purpose of applied personnel research is usually to solve an immediate problem within a particular organization. For example, we might ask:

1) Why is there so much turnover in the telephone associates division? 2) Why is morale so low right now? 3) How can we change things so that employees get their travel expense reimbursement
requests in earlier and more accurately?

Sometimes the research is more descriptive in orientation. For example, we might be interested in: Implementing a morale-tracking system so we can be alert to downturns Collecting basic information about our employees, such as what their outside interests are Analyzing data already available in the organization, such as salaries, in order to identify and correct inequities (e.g., male employees making more money than female employees in similar positions; or salespeople in one division making more than salespeople in another division with comparable performance).

Functions of Personnel Research

A personnel manager not only conducts researchers for his own division but is often asked to undertake studies for other division. Personnel research serves the following functions Building existing knowledge: Personnel research is a newer idea. So a huge number of topics are still unexplored. Unrecognized labor and its problem, female employment, group work performance and changing nature of supervisor are some areas which can be explored by the personnel research. Appraisal of proposed programs: Before a change is introduced it should be ensured that it will be effective. An organization may be interested in replacing obsolete machine, staggering holydays and lunch break or changing its appraisal method. Personnel research can help in predicting the employees responses to these changes. Evaluation of current and new policies: Once a change is introduced the changed agent must continuously evaluate its outcomes. Opinion and attitude, survey and analysis of output and performances can provide signals to management about the efficiency of its policies and practices. Personnel research also can help in this field. Anticipation of personnel problems: The successful opening of an organization does not refer that it will remain so in future. A personnel manager is one who not only manages problem but can foresee problem and corrective measure. So this is an important function of personnel research. 6

Approaches of Personnel Research

Personnel research can be of various types and different approaches can be used to get information. The approaches depend on the nature of problem, availability of data and the timecost. The different types of approaches are given below-

1) Case studies:
Case study is may be the most effective approach to the personnel research. The case presents the related facts and the context of the problem. The purpose is to understand how a problem is handled by an organization. Case study identifies and establishes problems, objectives and alternative course of action. To evaluate the alternatives they choose the most effective action plan to solve the problem.

2) Historical studies:
The past history is the great source of information. For this reason, it may be an approach to personnel research. It offers a perspective of current events in view of past experience. The essence of historical studies is there systematic investigation on a time span. But the problem of historical study is the time gap, which treated as a lacking of this approach.

3) Survey research:
Survey research is used for problems requiring a systematic collection of data from a population through personal contact. A personnel manager may contact some workers and elicit their opinion. Again he can question some employees and get an indication of the program.

4) Exploratory studies:
It emphasizes the discovery of idea and insight in order to formulate the precise problem or develop hypothesis. Thus the personnel manager concerned with high absenteeism among female employees. Once he has insight into the problem he can frame specific hypothesis.

5) Experimental studies:
This is another important approach to the personnel research. Experimental studies consist of investigating the effect of one condition on behavior, attitudes, opinion etc. It helps in isolating a single variable that influences a phenomenon thus making its occurrence more predictable 7

The process of Personnel Research

A specific process which is mostly scientific is very much important for the effective personnel research. So every personnel manager should have the clear idea about the process of personnel research. The process of personnel research consist of some correlated stages which are given below one by one1) Statement of purpose: The researchers must point out what the purpose to do, why and how the result could be useful. The statement of purpose should also point out that given the problem, the present research is the easiest way of seeking answer 2) Statement of problem: To find out the problem is another important stage in personnel research. Personnel research is the mean to answer to the problem faced by an organization. Here the most important step is to state the problem concretely. 3) Statement of method and procedure: The arrangement of conditions for collecting data that ensures the relevance mostly depends on the method and procedure. An important part in this section is the identification and selection of a sample group. The selection of the sample may be random. 4) Statement of results: Statements of result based on the information collected refer to the relationship of the both dependent and independent variables. They may support or reject the hypothesis. To be sure that result reflects the influence of only the independent variable. Application of statistics quantifies the data and summarizes the data to permit generalization. 5) Statement of analysis and implications: The personnel researchers main concern is to visualize the implications of the result. The result should not be narrowly viewed to find only the answer to the problem faced. It should also be seen in a larger perspective which may support a theory or a conceptual framework.

Importance and need of Personnel Research

To conduct the business effectively, personnel research is very much important for any type of business organization. Because, if a personnel executive fails to maintain a necessary degree of creativity, actions to meet changing conditions, it may results in the failure of the whole organization. The importance, for why the personnel research is needed are given below1. Providing information:

Personnel research is the mean to provide necessary information to the company. The total performance of a company depends on the reliable information. So in this case, personnel research plays a vital role to the development of a company. 2. Providing security:

It provides assurance of job continuation and remains the stability of the company. Besides, it emphasizes on the fringe benefit program. It demonstrates the history of growth and stability of the organization. It also provides sound training and development program, prepare people carefully for changes that will affect their job, and it applies rules and regulations. 3. Belonging needs:

It emphasizes the friendly and cooperative environment in the organization. It has an impact on providing good communication through two-way discussion, newsletters, bulletin etc. It stimulates strong interpersonal relation in group; establish good orientation for new members of group, calls regular and well planned group meeting. Personally it gives attention to employees family, hobbies and athletic interest. 4. Esteem and recognition needs:

Assign tasks so as to permit individuals to show their special skill is one of the most important activities of personnel research. It provides merit salary increases. It also provides goals that are achievable and recognized by personnel and give public recognition for outstanding performance through news bulletins and papers. It invites people to attend special staff meeting on particular occasion when the individuals job may be concerned. 5. Self-actualization needs:

It encourages creativity and imagination through personal involvement in work design. It provides autonomy and risk taking without the constant tear of negative feedback. Besides, it 9

encourages self-development of the employees, stress personal freedom and growth opportunity at the present position. It gives complete information on personal progress. That is why, personnel research is very much important or a crying need for any kind of organization. Every organization should emphasize on it and thus it can hope to obtain its optimum goal.

Basic considerations for personnel evaluation

Basic Considerations Evaluation of personnel and policies may be backwardor forward looking. Since evaluation is concerned with a comparison of what happened with what was expected, there is a tendency to turn the process into faultfinding. The intent is that of finding scapegoats. Every-one expects to be called on the carpet. And as offsets, each begins to have alibis ready, to shirk responsibilities, to pass the buck. and to mistrust others. Under such conditions, the evaluation has become worse than useless. Forward-looking evaluation still has the determination of faults mistakes, and errors in mind. But the purpose is not to assess penalties although that may be done- on occasions. The purpose is to find out what went wrong so that the-mistake ill no be repeated. In such an atmosphere the wrongdoer is as much interested in tine-arching causes of failure as anyone else. With improvement being emphasized, pride in making progress is enlisted. The philosophy is positive, not negative. Another consideration in evaluations is that of how often they should be made. A number of alternatives are available Perhaps the most common plan is the annual evaluation or audit. At the end of the calendar or fiscal year areport covering such information as activities performed, results achieved, costs and expenditures, statistical displays and comparison of objectives and accomplishments is presented. Most companies conduct their own audits. The examinations are most frequently assigned to the functional heads of the personnel division, although occasionally an audit and research unit is formed. The latter practice is limited to the larger companies. Under the former practice the employment manager reports on the achievement of hiring goals, the training manager on training accomplishments, and the labor relations manager on progress in collective bargaining. This seems to make the executive his own judge, but there are offsetting juries. The conclusions of 10

the various reports will be inconsistent and require reconciliation and explanation. Superior executives will find that reports do not agree with their own interpretations of past events. And employees through attitude surveys or expressed conflict may enter counterevidence to the story told by reports. But the personnel division need not be the sole appraiser of personnel practices. It is well to adopt the policy followed by some companies having each executive incorporates as a part of his annual or monthly report a section on personnel accomplishments and shortcomings. This has the advantage of underlining the sound premise that ever executive is a personnel manager. It has the further advantage of interpreting personnel policies and practices at their most viral point, and not solely from the viewpoint of a staff bystander. In short, evaluation can embrace the services of several groups and levels. The warning that must be out here is: If many are made responsible, no one may tie all the loose ends together. Hence, whatever plan is followed, some one individual or organizational unit-senior vice-president or personnel manager or personnel evaluation division should have the tasks of (1) Bringing together all audit reports (2)Arranging meetings for their discussion, and (3) Following action taken on recommendations of such meetings.

The subjects and methods of personnel performance evaluation

As in the case of research, there is no subject that is being performed so well that evaluation is unnecessary. Rather, all phases of personnel practice should e audited. In this way, it can be determine more accurately whether or not a company is getting the most out of the practices it is pursuing. But on the other hand audits are desirable to ascertain weather all practices that might of advantage to a company is being pursued. Each of these is now reviewed. 1. Appraising Current Practices:The filed of evaluation is s broad the all the can be done here is to outline the areas and methods of evaluation. Merely by way of illustration, it is well to outline the field of coverage to be certain that noting is overlooked as follows: a) Personnel function to be evaluated: 1. 2. 3. Programming Recruitment Selection 11

4. 5. 6. 7. 8. 9.

Training Rating Transfer and promotion Morale development Health and safety employment stabilization

b) Records and statistic to be used: 1. 2. 3. 4. 5. 6. 7. 8. 9. Time standards Cost record Test scores Training scores Interview records Work stoppages Number of maniacal express Accident report Grievance report

10. Unite & labor cost c) Methods of analysis: 1. 2. 3. 4. 5. 2. Comparisons between varies time periods Comparisons between departments and with other companies Trend lines, frequency distributions and statistical correlations Ratio analysis-e.g. labor costs per unit of output Classification of data by kinds of employees, products, departments etc Adequacy of program: In the matter of determining whether or not a company is pursuing

all practices which are of advantage to it, two major alternatives are available. First outside consultant may be called in to review a companys program. This is highly desirable, because it is difficult for any company to examine itself. An outside, however who know the practices of others, and particularly the breadth programs fund elsewhere can d a good job of sizing up inadequacies, weak points and gaps. If a company desires to d this job itself, check lists such as the selected illustration. In this system of check lists, emphasis is placed upon the use of question that may be answered either Yes f no n 12

the surface, this may appear to be an oversimplification. Ho, it must be remembered that problems cannot be soled or plans laid for their solution until they are uncovered. Hence the use of such audit forms is desirable, in that they sere to reveal areas of personnel Practices in which improvements may be desirable. Once ascertained in this manner the next step and a very significant one of course is that of determining what is to be done abut the practices in question. Another interesting aspect of such check lists is that they focus attention upon the wide range of personnel policies and practices that various companions have fund it desirable t include in their programs, The mere fact that these plans are cited in the check lists is sufficient to cause some employees to wonder whether or not they, to should take a broader view in their personnel practices. On the other hand, it is well t guard against unnecessary dissatisfaction with ones personnel program because of the use of such check list. As one reviews his against a list which is a campsite of numerous plans, it is easy to conclude that ones present program is inadequate. While it is well to have plans for future expansion, it is perhaps more undesirable to undertake an overly ambitious program which is likely to fail because of hurried installation that it is to proceed with a limited personnel program that is gradually expended. In any events, check lists do perform a function indicating a type f practice that is useful in auditing personnel practices. It is simple, yet comprehensive. As a consequence, such a plan of auditing is more likely to cash the attention of busy top extended descriptive reports.

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Human Resource Audit

A human resource audit evaluates the personnel activities used in an organization. The audit may include one division or entire company. It gives feedback about: 1. The function of operating managers. 2. The human resource specialists. 3. How well managers are meeting their human resource duties. In short, the audit is an overall quality control check on human resource activities in a division or company and how those activities support the organizations strategy. Regardless of the type of company or the size of your HR department, the HR Audit is a simple, yet comprehensive tool to analyze and improve your effectiveness as a function. The audit is made up of four main steps: 1) Define desired HR practices for your organization 2) Assess current practices against the criterion that you have established 3) Analyze the results 4) Establish improvement goals and take action This simple four-step approach can be repeated as the annual planning and goal setting process occurs within your company. Progress can be measured against goals and a continuous improvement cycle naturally unfolds.

Conceptualization of HR Auditing
Auditing has evolved, becoming increasingly specic, until the term functional audit has emerged. The objective of a functional audit is to diagnose, analyze, control, and advise within the boundaries of each functional area of the company. The HR audit is a type of functional audit. Thus, as a rst approach, one could say that HR auditing consists of diagnosing, analyzing, evaluating, and assessing future lines of action within the framework of HRM. HR auditing is a basic tool for the management of a company. Its objective is not only the control and quantifying of results, but also the adoption of a wider perspective that will aid in dining future lines of action in the HRM Held. Thus, HR auditing must perform two basic functions [Canter, 1995]. First, it must be a management information system whose feedback provides 14

information about the situation in order to facilitate the development of managing processes or the development of HR. On the other hand, it must be a way of controlling and evaluating the policies that are being applied, as well as the established processes. It can be understood that in order to secure the operative efficiency and user or client satisfaction, an appraisal of the results of the HR function is necessary. According to this approach, the results obtained can be valued from certain HR policies (an external type of measurement), or from the results of the policies or the policies themselves. The results can be valued through their cost (a measurement internal to the function) [Walker, 1998]. This would lead the company to consider some basic questions. Are adequate HR policies being Developed? Are the desired results being obtained? To what extent do they add value to the company?

Nature of HRM Audits

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Approaches to HR Auditing
HR auditing has evolved in recent years to the point that it has ceased to be a mere instrument of control and has become a necessary decision making tool in personnel related matters according to the global objectives of the company. As a result, all of the functions and competencies of HR auditing are being progressively expanded. This is creating a distinction between its component elements and the different types of HR audits. In this way, Walker [1998] differentiates between two approaches relative to HR auditing: those centred in the functions internal aspect, and those centred on the external aspect. From an internal perspective, as in any staff function, there is a trend of valuing its actions as a result of the activities undertaken and its costs. In this way, the departments capability would be judged on its ability to supply certain services to the organization at the lowest possible cost. Under this approach, the operational measurements traditionally used are those which refer to quantity, quality and reliability, or cost and speed, therefore placing the focus on activities, costs, or productivity ratios. From an external perspective, if it is understood that the ultimate appraisal of the effectiveness of HR is based on their impact on the companys results, then the measurements should include results obtained outside the function. Another well-known classification of HR audit approaches, which is used to structure the present work, is the difference between three focuses, which are the legal audit of performance or conformity, the operative or efficacy-based audit, and the strategically audit.

The Legal Approach in HR Auditing

This first concept of HR auditing is based on a legal outlook. According to Antona [1993, p. 2], the audit of performance or conformity consists of .making an inventory of the social situation of the company, considering the labor law norms and regularly verifying the companys compliance with the applicable regulations.. Thus, this concept is centred on the verification that the current labor laws are being fulfilled. The audit should verify if the Arms policies, practices, and documents regarding employee hiring, retention, discipline, termination, and post-employment are both fair and legal [Higgins, 1997]. These practices and policies must: prohibit discrimination by offering equal employment opportunities; protect the 16

employment seeker from being discriminated against on the basis of age; carry out minimum wages; and contain provisions regarding mental disabilities and reasonable accommodations for disabled workers. According to Nevado [1998, p. 49], the basic functions of the audit of conformity or of performance as an element of HR auditing are threefold. The first function is examining to see if the Arm is fulfilling all its administrative social obligations, as well as those relative to the collective rights of its personnel. The second is to study the relationship between the employees and the Arm based on the legal statutes. The final function is verifying if the Arm fullfillits financial obligations (for example, social security payments), as well as its informative ones. Concern about labor risks has created a function within HRM with the purpose of altering working conditions by identifying the risks that could stem from them and implementing necessary preventive measures. Such preventive activity could t perfectly into the legal approach of HR, although the effort that the company can make in this sense can go beyond the application of the existing risk prevention laws. The requirement for labor security and hygiene is a part of the search for quality of life in the workplace, which is becoming increasingly demanded from companies.

Focus of the Function Audit

The function audit centers on observing if the procedures applied are the adequate ones and if they function correctly. That is, checking to see if the relationship between objectives and procedures is a satisfactory one and if this has been achieved in the most cost effective manner. The function of this level of the HR audit is to study and analyze each one of the specific areas of HRM. The analysis should center on the planned measures, the method of implementation, and the results obtained. In order to carry this out, the areas that are to be studied must first be identified. Afterwards, a list of the indicators that will serve to analyze each of them must be made. These indicators can be either quantitatively (absolute numbers or ratios) or qualitatively derived from the responses given by the people involved (management, employees, or external experts). A list of the indicators corresponding to the different areas of the HR function could contain some of the following. 1) Description of the Companys Staff 17

The complete staff can be described by: hierarchic levels, years of service, qualification, sex, and nationality; the number of permanent and temporary employees, interns, and physically or mentally challenged employees; and indexes of personnel rotation and absenteeism. 2) Job Analysis Job analysis can include: the number of described posts and occupants per post; the degree to which the job description cards have been updated; the degree of detail in the job description cards; and the methods used to analyze and describe the jobs. 3) HR Planning Planning includes the methods employed to plan personnel needs, the measures adopted to cover future personnel needs, and the temporary planning horizon. 4) Recruiting and Personnel Selection This includes: the number of days needed to fill a vacant post; the number of applications received by work place categories; the average amount of days between the reception of the application and the final answer; the average cost of recruitment and selection per job post; the degree to which internal and external sources of recruitment are used; the average number of candidates that do not pass the selective tests; a study of the reliability and validity of the selection tests; and the degree to which the recruiting efforts fit the companys business plan. 5) Training The training indicators are: the procedures followed and the frequency with which personnel training needs are analyzed; the criteria followed to dene the content of the training programs; the evaluation criteria of the efficacy of the training programs; the percentage of the HR budget dedicated to training; the average number of hours of training per employee; and the percentage of employees that participate in training programs by work place categories. 6) Development of Professional Careers These indicators include: the percentage of people promoted per number of employees; the percentage of vacancies covered internally and externally; and the average time per employee it takes to receive a promotion. 7) Retribution Retribution can be measured by: the average wage per employee and wage difference among employees; the fixed and variable components of retribution; the percentage of remuneration 18

linked to the employees yield; and the internal equity and external competitiveness of the retribution system. 8) Performance Evaluation Evaluation indicators include: the level of usage for promotion or career; the level of feedback of results to the companys personnel; and the degree to which poorly performing employees are assisted in improving their performance.

9) Work Conditions
Work conditions can be assessed by the frequency and index of the graveness of work related accidents and by the labor accident and sickness prevention policies that are in place. In searching for adequate measurements, the use of financial references to evaluate the costs and benefits of HR programs has become commonplace. Financial analysis models applied to HR development programs are increasingly being seen in the literature [Head, 1995; Swanson and Gradous, 1998; Mosier, 1990] and in cases that document their use. Grossman [2000] proposes a three-pronged approach for the measurement of the HR function. First, according to this model, there should be efficiency measurements that help to determine the way in which the resources are being used. Within this group are the measurements of turnover, quits, and discharges as a percentage of total employees, average tenure of employees in various jobs, absenteeism, employee productivity, and intellectual capital. After calculating the measurements of efficiency, they must be compared to the results obtained in previous periods. Nevertheless, this is not sufficient, and it is critical to benchmark against others in the same industry or profession. When inefficiencies are revealed, careful analysis of the problem should follow before expenditures are slashed. These cover the efficiency side, but one must also look at the value-creation side. Thus, it is necessary to develop a new set of strategic measurements that connect directly with the mission and strategies of the company. The creation and selection of these ratios is more difficult, given that they depend greatly on the specific company of which one is talking about. Fitz-enz [1999] proposes a measurement that includes quality, efficiency, and service. He suggests using a ratio constructed around five factors that can be applied to anything that one chooses to measure. These five factors are cost, completion time, quantity, quality, and the human reaction. This system concludes with the calculation of measurements of the HR activities, which try to demonstrate their

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financial viability. These measurements are based on the idea of the ROI ratio, which is calculated by dividing the monetary value of a HR program by its costs. For this, the cost of the program that is being measured must first be determined, then it must be translated into monetary terms.

The Strategic Audit Approach

Nevado [1998] considers that the audit should also analyze if the personnel policies are in alignment with the general objectives and the global strategy of the company. It must also translate the HR strategy into plans and programs. Thus appears a new element of the audit of HR, the strategically audit. Dolan, Schuler, and Valle define it as the evaluation of the adaptation of the HR policies and practices in their support of the companys general strategy. The strategical audit of HR helps assure that the HR programs are aligned with the companys long-term objectives. In this way, the HR function is becoming a source of com- positive advantage and is ceasing to be considered as a specialized and unrelated function that incurs high costs to the company. When performing this evaluation, the auditor must identify the companys global strategy before designing the HR policies that will contribute to its achievement. These policies are then compared to the HR practices that are currently being applied, which leads to the modification of some policies to better conform to the firms strategy. The employee-client-benefit model that was developed and applied at Sears and other companies illustrates this complete alignment of the business and HR measures. This alignment approach presents greater challenges, since the impact of certain actions on the results is frequently not clear. Many HR professionals find it easier to look inside than to connect their results to organizational measures. Yet, with relatively little effort, HR leaders can identify the keys to their business and the actions to apply on the people related to them as well as their results. The main change involved for those responsible for HR is to leave behind their comfort zone and dedicate more time to finding ways of integrating HR into the business. With this approach, the measurements applied must be useful in identifying if the HR activities are being developed adequately, if the correct results are being obtained, and if such actions add value to the business. As Welbourne and Andrews [1996] highlight, the importance that management gives to its human capital is one of the most important factors that investors look for when assessing the attractiveness of a company. 20

Recognizing the strategical importance of HR for any organization, the measurements of results can lead to measuring the impact on business through the extraordinary benefits generated as a result of a better trained and motivated work force. Brown [2000] considers that the measurements used to evaluate the companys personnel refiect neither its value nor its performance. This is why he proposes an alternate procedure that consists of creating a human capital index based on four elements that must be carefully studied considering their relative importance to the company: the number of years in the business or field, the level in the company (by job grade or organizational chart level), the number and variety of positions or assignments held, and the performance rating, which is subjective. It is the result of an evaluation of an employees performance, which should include an evaluation by a superior and another of objective aspects such as sales, benefits, or other factors. Through the use of this index, the value that each employee has for the company would be obtained over a total of 100 points. This index is easy to calculate and interpret, and it is fair since it is based on a larger number of objective factors. Yet, it is very simple and does not supply information about the knowledge, abilities, values, managing experience, or other factors of each employee. To overcome this inconvenience, Brown has created a second index that attempts to measure the employees level of experience and aptitudes. Some companies, on the other hand, have developed and applied a balanced scorecard approach to the HR function and treat it as a business unit in and of itself. HR leaders must use four different techniques to measure client attitudes, financial impacts, operative efficiency, and strategic capability.

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Scope of HR audit

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Special Areas Of HR Audit:

Need for HR Audit

Though, to audit HR- Policies & Practices no legal obligation exists, some Modern Organizations chase to: 1) Increase size of Organization & Personnel 2) Change Philosophy of Management towards HR 3) Increase Strength & Influence of Unions

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HR Audit Significance:

1) Essential for Organization success. 2) It Provides Required Feedback. 3) Managing Rising Labor Costs. 4) Increasing Opportunities for Competitive Advantage of HRM. 5) HR Audit can avoid Government intervention 6) HRP protect Employees interests by identifying their problems.

Use Of HR Audit
Basic purpose of HR-Audit is to find:

1) How various units are functioning? 2) How they met policies & guidelines Pre-agreed upon? 3) To assist Rest of Organization locating gaps between Objectives & Results. 4) Formulate Plan for corrections.
PERIOD OF AUDIT Naturally any audit will be done annually. Though it is preferred to conduct Human Resource Audit annually, but it is advisable to conduct audit once in three years or five years, keeping in view the fact that the realization of the Organizational goals may not be identified within a year. Audit Report
Audit comes to end with preparation of Report. Report may be Clean or Qualified. It is Qualified if HR Performance contains Gaps for which remedies suggested. Report is Clean where Performance is fairly Satisfactory.

The audit report Findings of research are used to develop a picture of the organizations resource activities. For this information to be useful, it is compiled into audit report. The audit report is a comprehensive description of human resource activities that includes both commendations for effective practices and recommendations for improving practices that are less effective. Audit report often contains several sections. One part is for line managers, another is for manager of specific human resource function, and the final part is for the human resource manager. 24

Conclusion
Given that the human factor is a prime strategical element, which explains a companys differentiation capacity, it is logical that a measurement effort of the way this function is undertaken in the company is made. That is the content of the HR audit, which goes beyond the simple investigative function, and is an extension of the traditional concept of the accounts audit. The existing literature describes different approaches to HR auditing, including the legal approach, the function-based approach, and the strategic approach. All of them have been analyzed in this work. The legal approach centers on finding out if the company is complying with the current labor laws. Presently, it focuses mainly on the evaluation of the companys efforts in the prevention of work-related risks. The function approach analyzes the application of different HR policies. Several measurement systems have been presented with the same basic ideas, which include the study of planned measures, the method of implementation, and the results obtained. Yet, these two approaches are limited to the operational and tactical fields, and do not evaluate if HRM supports or aids in the achievement of the companys strategy. This is why the strategical approach has been developed as a means of determining if the HR function is a source of competitive advantage for the company. This third approach, through the use of several systems such as the client-employee-benefit model or Brown.s human capital index, can make the companys management aware of the true importance of its employees by identifying them as a key resource worth optimizing. This idea can lead to mistakes when the employees come to be considered as property of the company. The correct interpretation would be to think of personnel not as human capital, but as the owners and investors of human capital.

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References
Resourc managemnt 1) Human Resource Management by V.S.P. Rao. 2) Personnel Management by C.B. Mamoria. 3) http://assignmentpapers.blogspot.in/2011/08/personnel-research.html 4) http://www.analytictech.com/mb313/whydowe.htm

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