HR Audits & Due Diligence

HR Audits & Due Diligence

by Steven sieja
Periodically, a human resources audit & due diligence, or comprehensive method to analyze current HR documented policies and procedures is needed to distinguish what areas need to be improved, enhanced and aligned to stay in compliance with constantly changing government rules and regulations.

During a HR audit all company reports, employee files, records, departmental practices and processes are reviewed to meet a variety of objectives. Such objectives include identifying strengths and weaknesses in current best practices, ensuring efficient and consistent documentation, safeguarding technology guidelines, and even improving competitive advantages. Should there be any holes in these key practices, the gaps will be filled to minimize any violations.

Customized Due Diligence Process

When undergoing a Merger & Acquisition, a human resources due diligence review is necessary. Flex HR identifies obstacles that could compromise your organization’s human capital value and then develops a synchronized HR strategy to create value and reduce risk. This could include assigning a dedicated on-site individual or a multi-level team approach to ensure quality and consistency for successful growth.

We have seen company worth drop by over 50% due to the vulnerabilities associated with our findings upon completion of a due diligence. Employees then must be managed to support your tactical objectives and give you the best return possible. The human part of capital, however, makes it the least standardized function in most organization. Keep in mind that 30-70% of your company’s total value is human capital. We all know the danger in an acquisition – over 60% do not succeed without planning and implementing a strong transition plan. We have completed over 400+ due diligence audits where our ultimate goal is an acquisition or merger.

Employees Are Your Most Valuable Asset

Company audits help reassure that employment of best practices are making a positive impact on your workforce throughout an employee’s entire life cycle with your organization. Often times if a function is not working to its fullest potential, it may be evaluated for improved productivity, efficiency resulting in reduced costs.

Final Recommendations

We like to give a visual report at the completion of our audit. We will define the level of compliance by our coding system: red if there is a violation of law and you are not in compliance, yellow if the company is absolutely not at a best practice, and green for functions have good process in place and are being handled to at least a minimum standard. You will also receive advocated approaches to any one of the items that are not at a best practice level. These are solid recommendations that in most case can be immediately implemented to correct the situation.

Hand making notes on compliance and HR Audits and Due Diligence graphic chart.
Administrator business man financial inspector and secretary making report calculating balance. Internal Revenue Service checking document. HR Audit and Due diligence concept

Mergers & Acquisitions

  • Best practices
  • ERISA compliance
  • Federal compliance
  • Legal compliance
  • Pension compliance
  • Reduced risks
  • Redundancies
  • Required policy administration
  • State and local government compliance
  • Wage & hour