Eight HR mistakes that auditors will look for

How you can best prepare for an HR audit, by John Crowley.

group of employeesNobody's perfect, and I doubt your HR department is, either. But there are certain HR mistakes that are so common that auditors actually expect to find them.

I spoke to several experts, and compiled a list of the eight most common HR mistakes that auditors tend to find. This will help you to proactively plan to avoid them in your business.

What does an HR audit look like?

Before I talk about the common HR mistakes auditors find, let’s clarify what an HR consultant might be looking at when they audit your processes:

  • documentation
  • recruitment
  • on-boarding
  • training
  • performance management
  • compensation and benefits
  • employee relations
  • process efficiency

These eight areas form the foundation of a good HR department. That’s why HR consultants will look at these areas first, and it’s also why the most common HR mistakes tend to fall into one or more of these categories.

Missing documentation

If your documents or contracts are missing or incomplete, then you’re setting yourself up for expensive consequences. According to Nickie Elenor, managing director of Your HR Lawyer, their audits frequently uncover a lack of important documents, such as proof of the right to work in the UK, disciplinary warnings, and even contracts of employment.

“And if they do have the documents,” she adds, “they are rarely as good as they could be.”

Nickie thinks that missing or incomplete documentation is a symptom of companies where HR exists mostly because it’s a department that they are meant to have, not because it’s considered an important element of business success. But she insists that working this way will put you at a disadvantage if a situation occurs for which you need to provide evidence.

Biased recruitment practices

Recruitment professional, Taylor Dumouchel, says that whether you intend it or not, you are probably drawn towards certain genders, ages, or ethnicities, when you hire for a new role. Sub-conscious bias is very common in the recruitment process, and a lot of companies don’t even realise they’re doing it.

“The truth is that none of these factors translate into an exceptional employee,” he says. “Comparing blind career profiles allows our clients to conduct a more apple-to-apples comparison, and eliminates bias.”

A blind CV exercise involves removing any information from the CV that could influence your decision, without actually telling you anything about the candidate’s ability to do the job. Factors such as age, gender and ethnicity could be completely censored until you have decided who to invite for an interview.

Contracts issued too slowly

You should be issuing new starters with a written contract of employment within eight weeks of their start date, according to senior HR consultant, Linda Marsh. Ideally though, you should be doing this even sooner – because while a verbal contract of employment is still legally binding, it’s much harder to monitor or enforce.

Linda’s colleague, Kevin Smith, says that they often find employers who are not on-boarding new employees properly in this respect.

“The consequences of this are that where there is a later dispute, the employer cannot show the terms on which the employee was employed,” he explains, referring to employers who fail to provide a written contract in good time.

No serious training

HR consultant, Chere Taylor, says that too many companies view training and development opportunities as ‘nice-to-haves’. But a well-oiled HR department has training and development at the very heart of its operations.

“Lack of training is by far the most negligent and short-sighted way that companies fail not only their employees, but themselves as well,” Chere says.

It isn’t even just job-related training that companies overlook. Sometimes, employers fail to provide workplace training that could help them to avoid trouble further down the line – such as basic health and safety, harassment, and information security training.

Performance being ignored

Caroline Griffiths, Chartered Fellow of the Chartered Institute of Personnel and Development (CIPD), says that the biggest mistake that's often the hardest to fix is letting long-term performance issues pass beneath the radar.

“Many employers have let performance problems fester,” she explains, adding that the impact this has on the company’s performance is huge, and “permeates further through the organisation as high-performing staff see under-performing colleagues ‘getting away with it’.”

If you regularly review performance, and nip small issues in the bud as and when you detect them, you can gradually erase this problem. But it’s a tough mistake to identify, as it doesn’t always cause problems until much further down the line.

Not paying the minimum wage

Martine Robins, also a chartered fellow of the CIPD, says that complying with the most basic of basics – paying the national minimum wage – is something far too many companies struggle with.

She says it is a mistake made “often due to a lack of knowledge or awareness” by employers who assume it does not apply, or that it can be avoided.

All companies have a legal responsibility to pay the national minimum wage, which is reviewed and maintained by the government. Many companies go one step further, and pay the real living wage, though this is not mandatory.

Managers failing to follow protocol

One of the biggest mistakes that auditors pick up on is managers failing to follow HR processes correctly. For example, they may not keep a record of important conversations, which is not only an issue for employee relations, but can also cause litigation issues for the business in the future.

“There are clearly-stated frameworks that companies are legally obliged to adopt,” says Martine Robins. “When these processes are not properly followed, companies put themselves at risk of legal action.”

You should do more than just get your HR department in order. You should be making sure that policies and processes are understood and followed by everybody in your workforce, in particular, people who are responsible for a team.

Refusal to adopt new processes

A common shortcoming of many HR departments is their tendency to stick to what they know. This is understandable – after all, there is so much law and legislation caught up with an HR department, that making a radical change can cause a snowball effect, sometimes for very little gain.

Bigger companies in particular have difficulty adopting new processes. Not only do they need to consider a complex web of business operations, but they also have stakeholders to convince.

But sometimes, change is needed. Martine Robins says that “the investment made in good change initiatives – such as HR automation technology – is often recouped very quickly, because it stabilises and de-risks your processes."

About the author

John Crowley writes about HR, people management, and cloud technology. He edits the People HR blog, tackling topics ranging from building a stronger culture, to navigating the treacherous waters of HR technology.