A

PROJECT REPORT
ON
HUMAN RESOURCE AUDIT
AT
THERMAX BABCOOK & WILCOX
ENERGY SOLUTIONS PRIVATE LTD.
SUBMITTED TO
SAVITRIBAI PHULE PUNE UNIVERSITY
THROUGH
IIBM COLLEGE OF BBA & BCA
IN PARTIAL FULFILMENT OF
BACHELOR OF BUSINESS ADMINISTRATION
SUBMITTED BY
MS. HOLE PRANALI LAXMAN
PRN:1012005041
GUIDED BY
PROF: BHAVNA SHRIVASTAV
IIBM COLLEGE OF BBA & BCA
CHINCHWAD, PUNE- 411019
2022-23
 CERTIFICATE
This is to certify that project titled HUMAN RESOURCE AUDIT is a
bonafide work carried out by Ms. Hole Pranali Laxman a student of BBA
Semester VI specialisation Human Resource Management under Savitribai
Phule Pune University in year 2022-2023.

Head of Department Examiner Examiner

Internal External

Date:

Place:
 To Whom It May Concern

This is to certify that PRANALI LAXMAN HOLE, a student of Bachelor of

Business Administrator, Savitribai Phule Pune University worked under my

supervision during her internship period and she worked at the Thermax

Babcock & Wilcox Energy Solutions Pvt Ltd. I am pleased to state that she

worked hard in preparing this report and she has been able to present a good

picture of the concerned works. The information and findings presented in the

report seems to be authentic.

Pranali Hole possesses a good moral character and pleasing personality. I wish
her every success in life.
 CERTIFICATE OF INTERNAL GUIDE

This is to certify that, Ms. HOLE PRANALI LAXMAN of IIBM

COLLEGE has successfully completed the project work titled
“HUMAN RESOURCE AUDIT” impartial fulfilment of
requirement for the award of Bachleor of Business Administration
prescribed by the University of Pune.

This project is record of authentic work carried out during the

academic year 2022-2023.

Date:

Place: Chinchwad, Pune

PRANALI LAXMAN HOLE

T.Y.B.B.A
 DECLARATION:

I hereby declare that the project titled HUMAN RESOURCE AUDIT is an

outcome of my own efforts under the guidance of Prof. Bhavna Shrivastav. The
project is submitted to the University of Pune for the partial fulfilment of
Bachelor of Business Administration 2022-2023.

I also declare that this project report has not been previously submitted to
any other university.

PRANALI HOLE
T.Y.B.B.A
 ACKNOWLEDGEMENT

“Acknowledgement is an art, one can write glib stanzas without meaning a

word, and on the other hand one can make simple expression of gratitude.”

I take the opportunity to express my gratitude to my faculty guide MRS.

BHAVNA SHRIVASTAV, IIBM COLLEGE OF MANAGEMENT STUDIES
for their valuable guidance and support on completion of this project in its
presently.

I also acknowledge with a deep sense of reverence, my gratitude towards my

parents, who has always supported me morally as well as economically.

At last but not least gratitude goes to all my friends who directly or indirectly
helped me to complete this project report.
HUMAN RESOURCE AUDIT
 TABLE OF CONTENTS

Sr.no TITLE Page.No

1. Introduction 01
2. Company Profile 08
3. Human Resource Audit 16
4. Interpretation Of Result 36
5. Questionnaire 46
6. Observation 52
7. Suggestion 54
8. Research Methodology 56
9. Bibliography 58
 CHAPTER 1

INTRODUCTION

1
 HUMAN RESOURCE AUDIT

Every organisation needs a technique by which it can check the different

activities and outcomes of various individuals working in that organisation. This
operation is performed by process of audit.

An Audit is a method by which financial records of any department are assessed

and verified systematically, which is done on a regular basis by the finance
department. But in the context of HR department, it cane be defined as an
activity which is aimed at assessing the effectiveness of all the human resource
policies, procedures and activities performed by the individuals working in the
organisation at regular intervals.

HR audit is not only the method of measuring monetary records but it is also the
planning device. There are many functions that take place in the organisation
such as recruitment, deployment, training, development, promotions, retaining
capable employees, etc. HR audit helps to improve these functions by
identifying the available prospects so that an organisation can exploit it and
become more successful.

According to Storey and Sisson, “HR Audit is concerned with the

gathering, analysing information, and then deciding what actions need to be
taken to improve performance”

2
 OBJECTIVES OF HUMAN RESOURCE AUDIT
i. HR audit looks after the effective functioning of the HR department of
the organisation. It evaluates the systematic implementation of policies
and procedures in human resource department and also evaluates its
working environment.
ii. HR audit rectifies the mistakes done by human resource while performing
their tasks and provides suitable corrective measures as soon as possible.
iii. It checks whether the HR functions are carried out as per the set policies
and procedures of the organisation or not.
iv. HR audit also helps in maintaining discipline among the employees by
evaluating their behaviour and actions frequently and making them
realise their responsibility towards the benefit of the organisation.
v. It also identifies those areas of HR department which need revival or
improvement. Thus, the steps are taken to improve the performance of the
HR employees. As a result, if improvement in performance is observed,
they are rewarded accordingly.
vi. It is the responsibility of HR audit to assess all the functions of the
corporation and search out for those functional areas and activities which
require cost-cutting. These functions include staffing of new employees,
selection, training, holding-on of potential employees, separation of
human resource, etc.
vii. It measures the errors as well as positive aspects of the HR department. It
ensures whether HR department is following the policies regarding the
recruitment, training, placement, promotion, workplace environment,
employee grievances, etc., according to the organisational rules and
regulations or not.
viii. Certain problematic employees may take legal actions against the
organisation; HR audit also prepares for such lawsuits in advance to face
such people effectively.
3
 IMPORTANCE OF HR AUDIT
Human Recourses audit is very important for any organization. Some of its
noteworthy roles are as follows:

i. Promoting Critical Business Plans: Every organization follows certain

strategic plans in order to achieve organizational goals. HR auditor’s
responsibility is to convince management to disclose these plans to
employees of the organization so that they can participate comfortably
in the decision-making process of the company. The aim is for
employees to contribute their point of view about these plans and
involve themselves completely.
ii. Role Clarity of HR Functions: People working in HR department must
be very clear about their roles and responsibilities. They should have a
clear understanding that their priority should be in the interest of the
organization says HR audit. The role transparency function is performed
by HR audit to ensure they understand their role.
iii. Improving Organizational Competency: An HR audit helps in
identifying the strength and weaknesses of the present administrative
system. If there is any drawback in the functioning of the system, the
HR audit tries to develop techniques by which productivity can be
increased. These positive impacts are also visible in HRIS, working
procedures, delegation and clarification of roles and responsibilities.
iv. Analysis of HR Functions: An HR audit plays a very crucial role in
analyzing the functioning of the HR department. It helps in evaluating
the performance of the employees and developing their leadership
qualities. If necessary, the HR audit also helps in re-designing the
development system of the HR department.

4
 NEED OF HR AUDIT
To make the show interesting and increase the effectiveness of the
company, management found the solution incompetent workforce. HR
development functions should be performed as per the planning and
expected results. To ensure and not to take the chance, the company
undertake human resource department audit due to the following reasons:

1. Employee Participation and Identification: A change has taken place in

managerial philosophy. The management now feels the employee’s
participation in the activities of the company and their identification with its
essential for the successful making of the company.

2. Feedback: As a company grows, constant feedback is required to enhance

the conduct of its personnel. It becomes much easier with the help of a human
resource audit as it provides required feedback. Especially, diversified and
decentralized companies need feedback more essentially.

5
3. Meet the Challenges of Trade Union: Trade unions have become more
powerful and are playing a more active role in human resource management.
They often question management’s competent in industrial relations.
Management can meet this challenge through the HR audit.

4. Rising Labour Costs and Increasing Opportunities: Human resource audit

is becoming necessary due to rising labour cost and increasing opportunities for
competitive advantage in human resource management.

5. Protect Employee Interest: HR audit helps in refraining from the

interventions caused by the government for protecting the employees’ interest.

6. To Tackle the Problems Related to Women Employees: The growing

proportion of technical, professional and women employees create more
complicated problems in human resource management. An HR audit is required
to tackle these problems.

6
 OBJECTIVE OF THE STUDY

 The main objective of this study was to audit the function of human
resource management department and its overall contribution to
organizational performance and suggests possible recommendations.

 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

overall organizational performance.

 To develop techniques that help in collecting and extracting critical HR

information to improve the quality and effectiveness of HR audit
reporting.

 To review performance of Human Resource Department and its activities

to determine effectiveness.

7
 CHAPTER 2

COMPANY PROFILE

8
Thermax Group is an INR 4,899 Cr. (661 Million US$) company
headquartered in Pune, India. Its business portfolio includes products
for heating, cooling, water and waste management, and specialty
chemicals. The company also designs, builds and commissions large
boilers for steam and power generation, turnkey power plants,
industrial and municipal wastewater treatment plants, waste heat
recovery systems and air po llution control projects.

The systems, products and services developed by Thermax help

industry achieve better resource productivity and improve bottom
lines, while maintaining a cleaner environment. Even as we convert
costs to profits, we help to protect the environment in our own limited
ways. A win-win for industry and the society at large.

We operate globally through 29 international offices and 14

manufacturing facilities – 10 of which are in India and 4 overseas.

Our presence spans 88 countries and supports customers through an

extensive sales & service network spread over Asia, South East Asia,
Middle East, Africa, Europe and the Americas.

The group consists of 7 owned domestic subsidiaries and 21 wholly

owned overseas subsidiaries.

9
 VISION AND MISSION OF THERMAX

VISION:

To be a globally respected high performance organisation offering

sustainable solutions in energy and the environment .

MISSION:

 We aspire to become a leading technology company with a global

outlook delivering world-class products and services to customers.

 We exist to fulfil the needs of our customers – best understood

through an enlightened partnership with him.

 Our challenge is to continually expand and define new markets by

expanding the frontiers of research and engineering and customer
applications in our chosen field of business.

 Our commitment is to create an organisation, which nurtures the talent

and enterprise of our people, helping them to grow and find fulfilment,
in an open culture.

 We seek dependable partnership with o ur suppliers – to generate a

strong mutual interest in each other’s welfare.

 We live by a high value of integrity and excellence in management.

 We strive to contribute substantially to the global priority areas of

energy conservation, environment protection and enrichment of
society .

10
 VALUES OF THERMAX

 RESPECT:

 Respect for human lives and human dignity

 Respect for what is right, and not who is right

 Respect for diversity – religion, caste, gender

 Respect for systems and processes

 Respect for performance, behaviour and discipline

 COMMITMENT:

 Deliver what is promised to all our stakeholders

 A commitment to excellence in all that we do

 HONESTY & INTEGRITY:

 Being true to ourselves in our personal and professional dealings and

doing what is right at all times

 Nobody will exploit the company for personal gain or gratification

 CONCERN FOR SOCIETY & ENVIRONMENT:

 Encourage reuse, reduce and recycle, energy conservation

 A strong sense of giving back to society

 We must remember business cannot sur vive in a society that fails

11
 HISTORY OF THERMAX:

 Thermax manufactures boilers to harness the power of steam. The

company started with producing small, once-through, "baby" boilers to

cater to the steam requirements at hospitals. It was established in 1966,

when A. S. Bhathena collaborated with a Belgian company, Wanson, to

commence business operations in Dadar, Mumbai, India as Wanson India

Ltd., manufacturing small boilers.[3]

 On 15 February 1995 it became a public company on the Bombay Stock

Exchange. It has, since long, been known simply as Thermax Limited.

 In 2009, it signed a 51–49 joint venture with US firm SPX Corporation to

provide equipment and services for the Indian power sector. [4][5]

 In 2010, it signed a joint venture agreement with US-based Babcock &

Wilcox to manufacture super-critical boilers for the power sector. [6]

12
 ASHISH BHANDARI

MANAGING DIRECTOR & CEO

Ashish Bhandari is the Managing
Director & CEO of Thermax Group
since 1 st September, 2020.
Before joining Thermax, Mr. Bhandari
was the Vice President – India and
South Asia region at Baker Hughes (formerly a GE company). He
joined GE in 2005 in Houston, USA and relocated to Gurgaon in 2011.
He is credited with building GE Oil and Gas into one of GE’s biggest
businesses in India and for the successful integration of Baker Hughes
and GE Oil and Gas during a time of significant transition. Over his
15-year GE career, Mr. Bhandari has worke d in a variety of industrial
businesses including GE Enterprise Solutions, GE Energy, and GE Oil
and Gas. He has been instrumental in consolidating legacy businesses
and at the same time looking at new technologies and opportunities for
growth.

His prior work experience includes Schlumberger, consulting with

McKinsey & Co. and two start -ups overseas.

Mr. Bhandari completed his Bachelor of Technology in Electrical

Engineering (B Tech) from the Indian Institute of Technology,
Mumbai. He received his master’s degree in Business Administration
from Duke University .

13
 MEHER PUDUMJEE
Ms. Meher Pudumjee is the
CHAIRPERSON of Thermax Ltd, a
company focused on providing energy
and environment solutions.
A postgraduate in Chemical
Engineering from the Imperial College
of Science & Technology, London, Meher joined Thermax as a trainee
engineer in August 1990. A year later, along with her husband Pheroz
Pudumjee, they took over the responsibility of turning around a
Thermax subsidiary company in the UK.

After her return to India in September 1996, she was appointed on the
Board of Directors. With her newly acquired interest in Finance, she
worked closely with the treasury and working capital management
functions of Thermax. She was involved with overseeing a Joint
Venture Company in the area of drinking water as well as the Air
Pollution Control businesses of the company. In January 2001 she
became a non-executive director and was appointed Vice Chairperson
in 2002. During this period she played an active role in th e turnaround
of Thermax.

She took over as Chairperson on October 5, 2004, after the retirement

of Mrs. Anu Aga. Ms.Pudumjee represented India at the Asian
Business Women’s Conference in Osaka in 2006 . She was selected as
CEO of the Year, 2009 by Business Standard.

Ms. Pudumjee served as the Chairperson of Pune Zonal Council of the

Confederation of Indian Industry (CII). She lives in Pune with her
husband and has two children.
14
 THERMAX BABCOOK & WILCOX

ENERGY SOLUTIONS PRIVATE LIMITED

TB

WES SERVICES
TBWES SERVICES:

This strategic business is the exclusive services arm of Thermax's large boiler
and heater division. It has been successful in addressing plant renovation &
modernisation since the early 1990s. The Renovation and Modernisation
(R&M) approach provides tailored technology and experience-based solutions
for boiler users including boiler safety and inspection which have benefited
more than 200 customers around the world.

Today, these solutions are boosting process efficiencies across a

diverse spectrum of industries that include power utilities,
petrochemicals, refineries, fertilisers, steel, cement, sugar and paper,
among others. The services we provide include integrity assessment,
plant equipment assessment and reliability based maintenance ( RBM).

In addition to determine boiler fitness for continual operation TBWES

provide comprehensive boiler safety and inspection health checks
through Condition Assessment and Remaining Life Analysis.

15
 CHAPTER- 3

HUMAN RESOURCE AUDIT

16
 SCOPE OF HR AUDIT

 HR audit comprises of a detailed study of various aspects and components of

HR. These components are:

HR Systems HR Strategies HR Compentencies

HR Culture and HR Impact and

Values Alignment

HR Systems:

 Systems are an organized way of making things happen. Every system has its
own objectives, elements, and process. HR systems include manpower
planning, performance management, feedback, and training and development,
etc.
 These systems assist in planning, prediction and bringing professionalism,
discipline, and security.

17
 HR Strategies:

 Strategies are an organized way of doing things. the HR strategies imply the
choice of the organization to use various systems related to the HR functions
like recruitment, training, motivation performance appraisal, etc.
 Some of the important HR strategies include culture building strategy,
communication strategy, quality, and customer orientation strategy etc.

HR Competencies:

 HR competencies are skill and knowledge required by the main stakeholders of

the organization that hold the key for making human resources of the
organization work. These include competencies of people working in the HR
department.

HR Culture and Values:

 HR audit attempts to evaluate the extent to which the organization has values
and culture. It indicates culture which encourages and promotes Openness,
Collaboration, Trust, Authenticity, Pro -action, Autonomy, Confrontation and
Experimentation.

HR Impact and Alignment:

 HR impact includes the impact made by various HR interventions in terms of its

contribution to organizational performance involving cost reduction, revenue
generation, profit, talent management, and intellectual capital formation, etc.

18
 TYPES OF HR AUDIT

There are various types of audits which can be classified on the basis of
following factors :
1) Time Period :
Most of the organisations follow an irregular audit, i.e., the time period is not
fixed for auditing; it can take place once in a year or may be once in three years.
But as per the changing time audits should take place on fixed time-period and
regularly so that constant check can be kept on the functioning of the
employees.

2) Conduct :
In this type of auditing, assessment can be carried out by any of the following :

i) Internal Audit :
This type of audit takes place within the organisation and is performed by
internal management in order to assess and control the working of the HR
department.
ii) External Audit :
The external audit may take place within the organisation premises or even
outside it. It is carried-out by external professionals who are specially hired for
this purpose. Unlike internal audit, the outcome of evaluation from the external
audit is always unbiased.

3) Purpose :
As per the purpose required, audits can be divided into the following :
i) Compliance Audit :
A compliance audit checks whether all the departments are following the rules
and regulations of the organisation or not.

19
ii) Best Practices Organisation Audit:
In this audit, he tasks executed by HR department are compared with the 'best
practices' of the other organisation Efforts should be made to make their
practices to be the "best practices among all other similar organisations.
iii) Strategic Audit:
Strategic audit evaluates the contribution of HR practices in achieving strategic
goals of the organisation. It also checks the improvements made in the
performance of the employees by providing them proper working condition.
iv) Job Specific Audit:
This audit focuses on specific function performed by the HR department. These
functions include recruitment, raining, salary, promotion, etc.

HR AUDIT

Conduct Time Period Purpose

Best Practices
Compliance
Internal Audit External Audit Organisation Strategic Audit
Audit
Audit

Job Specific
Audit

20
 AREAS OF THE AUDIT

Planning:
Planning is one of the major areas where human resource audit can be
conducted. Planning of HR requirement and effectiveness of forecasting and
scheduling can be ascertained through HR audit. It is to be seen whether the
needs of HR were identified in time or not.Through audit management knows
whether there is surplus or shortage of manpower.

A review of recruitment and selection practices can be made to meet the future
HR requirements.. HR auditors should evaluate the communication in the
organisation which is one of the major criteria of failure or success. HR auditors
should find out the causes of absenteeism, rate of accidents, labour turnover and
can make suggestion to improve them.

Staffing and Development:

Staffing and development is yet another are a need to be evaluated with
reference to results obtained, programmes and procedures adopted and policies
framed. Staffing is done through recruitment and selection. Here the HR
auditors need to evaluate the sources of recruitment and the number of persons
hired by the organisation.

The auditors should thoroughly check the records and statistics and should
stress on their accurate maintenance. HR auditors have to examine the
procedure and programmes adopted in respect of career and succession
planning.

Organizing:
Organisational structures are meant for facilitating coordination, communication
and collaboration. HR auditors have to evaluate effectiveness of organisation

21
structure in attaining the results. They can obtain feedback from the employees
and from reports and records. They can check the jobs assigned to the individual
employees, authority delegated to the subordinates, special task forces etc. H.R.
auditors can also evaluate the policy formulated for encouraging employees to
accept change. They can also verify effectiveness of three way communication.

Commitment:
Enterprise wants committed employees. Efforts are taken by the management in
this respect for motivating individual and groups of employees. HR auditors
have to examine the results of motivation through increase in productivity,
improvement in performance and costs. They also have to examine the
programmes and procedures followed for job enrichment, wage and salary
administration, fringe benefits, morale of employees. They have to verify the
satisfaction level of employees through the HR policies adopted by the
organisation. A satisfied employee is committed to the work.

Administration:
HR auditors have to examine the style of leadership adopted by the management
in dealing with the subordinates. Leadership may be authoritative or
participative should be evaluated. Auditors can assess the results of style of
leadership adopted in getting the things done through others by inviting
suggestion, going through grievances of the staff, disciplinary actions taken
against the subordinates etc.

Research and Innovation:

Research and innovation is yet another area of HR audit. Here several
experiments are conducted and theories are put to test by the experts relating to
quality design, marketing etc. Auditors can evaluate the results. The
management’s policy in respect of R & D efforts can be examined by the
auditors and necessary suggestions can be made by them in this regard.

22
 APPROACHES TO HR AUDIT

Given below are various approaches that can be used by the auditors to evaluate
HR functions:

1) Comparative Approach:

In this approach, the progress of one organisation is compared with the progress
of other organisation. Results of both the organisations are matched. In this
case, other organisation is treated as a model organisation and the target is to
achieve the same result as that of the model organisation.

2) Outside Authority Approach:

Under this approach, standards for comparison are set by external experts and
these yardsticks are used by the internal auditors of the organisation to evaluate
their work.

3) Statistical Approach:

In certain cases, statistical approach has to be followed in order to create

statistical performance measures with the help of organisation's current
information. For example, to measure the rate of absenteeism, the amount of
revenue received, etc., certain arithmetical methods are required to evaluate the
performance. Thus, this statistical technique helps the auditors to get the
information accordingly.

23
4) Compliance Approach:

In this approach, past performance and activities of the employees are

reconsidered to check their conformity with the organisational rules and
regulations and whether there was any violation of legal provisions or not.

5) Management by Objectives (MBO) Approach:

In this approach, the auditor asks the departmental heads and operational
managers to set certain objectives for their departments. The degree with which
these objectives are achieved can easily determine the performance of the
departmental manpower. This assessment is then utilized by the HR audit to
verify the genuine performance of the employee and compare it with the set
targets.

24
 PROCESS OF HR AUDIT

1. Identifying the Objectives of HR Audit

HR audit assesses the functions and activities to be carried out under the HR
department. The aim, schedule, and planning made by the HR audit should
move on the same track. It is necessary to ensure that these HR strategies are
in line with corporate strategies. There is a need for an improvement in the
way HR is managed.

2. Developing a Rough Audit Plan

An auditor should have an idea about what he has to do before implementing

the auditing process. An assessor should have a rough idea about the
manpower required, expected costs, and equipment needed for the entire audit
procedure. The best means by which relevant information can be gathered is to
prepare a framework.

3. Collecting Background Data

An auditor must have appropriate information about internal and external

factors that may influence the HR auditing process. External factors include
the competency level of the particular organization, the legal environment and
the entire summary of the organization. This information is known as
background data or background data

4. Determining the Technique of Data Compilation

o Some of the techniques used for data collection are the interview method, the
questionnaire method, the task force method, the observation method, etc.
Auditors can opt for one or more than one technique at a time.

25
o Besides this, the time required and cost of assessment are also decided in
advance so that the auditing process can take place effortlessly and effectively.

5. Finalising the Audit Plan

If there is a requirement for any improvement in the rough audit plan, changes
can be made at this stage before finalizing it.

6. Audit Data Collection

o In this process, the assessor gathers all the relevant information from various
sources and combines it to analyse the strengths and weaknesses of the HR
department.
o The HR auditor verifies the data collected from human resource management
with the final audit plan after receiving all of the data.
o At this stage, the assessor should keep in mind that the data must be collected
completely for the audit function to go smoothly.

7. Developing an Audit Report

o After gathering all the data regarding the HR functioning, an assessment

programme is conducted within different areas of the HR department.
o Along with this, the working atmosphere, functioning of employees, the
objectives of the HR unit, policies and strategies undertaken by HR audit and
HRIS are also included during the evaluation.

8. Decision Based on the Audit Report

o This is the concluding stage in which the organization makes appropriate

decisions after seeing the final audit report. Management even asks for
auditors’ recommendations so that the decision-making process becomes
easier for them.
26
 METHODS OF COLLECTING
INFORMATION OF HR AUDIT

QUESTIONNAIRE
METHOD

INTERVIEW OBSERVATION
METHOD METHOD

ANALYSIS OF
TASK FORCE
PREVIOUS
METHOD
RECORDS

WORKSHOP
METHOD

 Interview Method: Top management and senior management (Line

managers and employees) are interviewed by the HRD auditor. It is a
structured interview designed to solicit information on the perspectives
of respondents on the future growth plans and goals of the
organization, organization culture, working style, career development,
work flow system, leadership style, morale, motivation, vision, mission
etc. In view of the time and resources constraints, HRD auditor uses
sampling techniques to interview the employees.
 Questionnaire Method: Another method by which HR audit can
easily collect information from the employees is questionnaire method.
By this method, auditor can discover various aspects of the organisation,
e.g, whether the employees are happy with the working conditions, are
the human resources policies being followed systematically, how does
the senior staff behave with the employees, etc. But one thing that should

27
 be kept in mind before designing the questionnaire is that it should be
beneficial for the organisation and should be conducted within the time
and cost permitted by the organisation.
 Observation Method: Supportive environment plays an important role
in proper working of any organisation. Thus, HR audit should also
observe the environment in which the employees are working, it
includes: cafeteria, training centres etc. HR audit with the help of
observation method, evaluates the degree to which a healthy atmosphere
is present in the organisation.
 Analysis of Previous Records: HR audit can also analyse the previous
records of the employees to know their outlook towards the organisation.
Various training programmes can also be conducted to determine the
number of employees participating in it, what was the employees
feedback regarding the programme, what did they learn that was relevant
for the organisation, etc.
 Workshop Method: In workshop method, a large group of employees is
taken and then it is divided into small groups in order to conduct the
SWOT analysis on various dimensions of human resource development
systems. Each and every group has to make presentation on a particular
topic. The representative member from each group gives the presentation
in front of all the other groups for further discussions and suggestions.
 Task Force Method: A task force means a group of individuals who are
assigned with the responsibility to investigate problems and issues taking
place in the HR department. The main purpose of this method is to devise
corrective measures to the problems, which are working as an obstacle in
the path of HR development. HR auditor has a right to constitute this task
force.

28
 HR AUDIT CHECKLIST
Performing the HR Audit Checklist is vital for various segments of an organization. It
increases the chances of employee retention & business success for a long-term period. Here
are the different parts where HR Audit Checklist is performed:

1. Employee Documentation:
It checks the overall operations of the HRIS – Human Resource Information
System. Audit reviews this system to ensure that employees’ details are easy to
browse & track whenever required.
In employee documentation, HR audit checklist, personal files & I-9 forms
must be placed systematically. Also, audit checks these I-9 forms to ensure they
exist and are timely filed.It safeguards each employee’s confidential data. It can
be related to health, background, as well as career history

2. Employee Handbook:
Make sure that company laws adhere to the local, state & national employment
laws. It is done by taking a quick legal consultant glance over it.

29
It is aiming for the yearly employee handbook scrutiny. They are giving
employees the proper knowledge regarding the alterations made in the
handbook. Furthermore, they take their consent before implementing them

3. Employee Training and Development

It audits the irrelevant content from the training portfolio and also removes it.
The T&D program HR Audit checklist analyses the employee development
programs. Also. It searches for all the existing training gaps, statutory training
competition & whether every training is happening at the right time.
The training portfolio audit takes care of the following questions:
1. What is the employee feedback (whether positive or negative) over the
learning assets?
2. What is the total time consumed by these learning training?
3. What is the overall impact of the training on employee performance?
4. What if learning materials from training sessions are not available because of
technological changes?

4. Compensation and Rewards

It is developing a structure to promote competitive salary packages. Also, it is
done by analyzing the national pay scale.It removes all the pay-related
discrepancies due to gender, race, caste, colour, nation, or physical disability.

5. Selection and Onboarding Process

It is appropriately assessing the ATS – Applicant Tracking System. It keeps
track of all the applicants and selected employees’ data. Furthermore, it ensures
the smooth Selection and Onboarding Process that’s as per the pre-set needs of
the company.They are analyzing all the current recruiting tools utilized by the
company for hiring.

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6. Performance Review/Analysis:
They decide regarding a specific time for evaluating employees’ performances.
They develop a system for specifying the demotion & promotion parameters &
real-time employee performance.
They use the performance appraisal tool to cross-check if set expectations meet
the actual outcomes.They keep an eye on the existing system to promote
equality among employees.

7. Health & Safety:

Auditing allows ensuring that each employee is working in a safe environment
and is free from any threat to their health.
The health, as well as safety auditor, checks the company’s health and safety
policies, strategies, and protocols.It addresses two things priorly. First is if the
company’s policies regarding employee safety are appropriate. The second is if
the company is safeguarding the employee’s wellbeing.

8. Labour Laws:
Performing auditing for the labour laws is a recent belief. It came into the
picture because of its nonobedience to various laws made for workers.
The overall motive of the Labor law audit is to maintain the relevant awareness,
examination as well as track it. Labor & Employment law Audit has proven to
be a valuable tool for various firms. Also, it’s highly effective for keeping the
compliance related to employment, industrial & labour laws.
Auditing also helps to highlight all those fields where the employees are not
getting enough benefits from labour laws. It causes the firm to pay huge
penalties.

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 BENEFITS OF HR AUDIT:

STRATEGIC
LEVEL

OPERATIONAL
LEVEL

ADMINISTRATIVE
LEVEL

The main benefit of the HR audit is that it takes the HR to the next level –
aligned with the company goals, strategy and business results.

The benefits that the company might have from an HR audit are many, but
the most important of them are:

BENEFITS ON STRATEGIC LEVEL:

Identifies HR department contributions in the company;

 Makes the HR function business-driven and reveals ways to strengthen its

impact on achieving Company results;
 Ensures objective data and information needed for the Company strategic
planning.
BENEFITS ON OPERTAIONAL LEVEL:

 Helps align HR goals to corporate strategy and goals;

 Develops and improves professional image of the HR department;

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 Clarifies the HR department’s roles, duties and responsibilities, finds
critical HR problems and reasons for low productivity;
 Encourages for greater responsibility and professionalism among

members of HR department, and for more self-confidence in HR function

realization;

 Stimulates identity and alignment of HR policies and practices within the

company;

 Reduces HR costs, through encouraging function for more effective

forecasting and planning.

BENEFITS ON ADMINISTRATIVE LEVEL:

 Provides specific, measurable and verifiable data of the current state of

the function;

 Ensures timely compliance with legal requirements, company and

mandated regulations, and professional standards;

 Reviews employees files, records, registers and information;

 Reviews HR information system.

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 LIMITATIONS OF HR AUDIT:

AUDITS ARE PERCEIVED AS A THREAT TO

MANAGERS

ABSENCE OF
ESTABLISHED METRICS

LACK OF OBJECTIVITY

Audits are perceived as a threat to managers: In some organizations,

managers may have a feeling of fear about the HR audit. This is because
managers think that they will be caught for doing wrong acts, if they have
done any, and will definitely be punished for the wrong acts. An HR audit is
used by some unethical managers to induce obedience in employees.

Organizations reduce this fear of audit by not considering audit scores to

directly assess any manager’s performance. No punishment should be given, in
any case, as a consequence of the HR audit.

Absence of Established Metrics: In most organisations, the established

metrics and other performance standards used for assessing the effectiveness
of the HR audit process are lacking. This is one of the major problems for the
organisation. Therefore, senior managers are advised not to conduct audit
without appropriate metrics and performance standards. Measures and
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performance standards can be established by framing a meaningful audit
process.

Lack of Objectivity: Objectivity and other necessary skills are essential

for managers who are doing audits so that the interpretation of the data
collected can be done properly. The absence of objectivity hampers the audit.
Many companies, on the other hand, hire outside auditors with HR auditing
knowledge and skills.

Generally, experts themselves conduct an audit of the HR function. While

auditing, the senior audit expert should be familiar with some of the common
errors of interpretation, which may crop up while analysing the outcome of
employee opinion.

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 CHAPTER – 4

INTERPRETATION OF RESULTS

& modernisation since the early 1990sh provides tailored

36
 WHO CONDUCT HR AUDIT?

The audit is conducted by internal managers of the organization, as external

HR/Management expert or by a Labor Law expert.

In-charge of audit has excellent knowledge about HR policies and is able to

maintain a check list to check the existing policies with its present

requirements.

An audit conducted by outside HR expert adds extra value to the whole

process apart from giving an insight into the whole issue.

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 GGGGHR AUDIT SECTION WISE:

Performance
Management and HRIS
evaluation Recruitment

Resourcing Documentation

Training, &
Safety
Development

Employee Compensation
Relations and Benefits

Welfare systems Health

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RECRUITMENT AND SELECTION

39
 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.
This result indicates that the organization has followed the criteria
that HR policy needed.

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

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COMPENSATION AND BENEFIT:

41
Interpretation:

 45% 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 result shows that the salary structure and benefit policy of the
company had satisfied most employees and resolve grievance with
management.

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PERFORMANCE MANAGEMENT AND EVALUATION:

43
TRAINING AND DEVELOPMENT

44
 EMPLOYEE MANAGEMENT RELATION

Over the years as Corporate, Thermax 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.

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 CHAPTER-5

QUESTIONNAIRE

46
RECRUIITMENT AND SELECTION:

 Who is the recruiting manager?

 What’s your recruitment process for new employees?

 Who gives the go-ahead to call someone for an interview?

 How does the procedure of recruitment gets logged?

 What mediums are used to hire staff (social media, job portals, or

print media)?

 How are candidates selected?

 Are legal requirements met?

 Are the same processes used for all jobs, all locations?

 Are processes followed consistently?

 How does your organization deal with the complex issue of

reporting new hires on time?

 Are harassment, attendance, and wellness HR policies in place?

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COMPENSATION AND BENEFIT:

What are the different policy groups (e.g. management, clerical, union)?

How is base pay policy set?

What grading/job evaluation systems are used?

Are there up-to-date job descriptions?

What variable pay practices are in place?

How are pay increments decided?

What is the benefits plan?

Are the same processes used for all jobs, all locations?

Are processes followed consistently?

Is there a proper pay structure in place in compliance with the national

pay scale?

Are the supervisors and managers responsible for notifying the HR

department if an employee misses work due to a medical condition?

Are paychecks distributed on time?

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PERFORMANCE MANAGEMENT AND EVALUATION:

 Do you think the Performance Management System is clearly defined in

the organization?

 Do you think all the factors facilitating and hindering performance are

taken into consideration while appraising the performance?

 Goals set for Performance Evaluation are mutually decided goals?

 Do you think Performance Management System helps people set and

achieve meaningful goals.?

 You are satisfied with the weightage given against each activity that you

are supposed to perform in the specified period by PMS?

 Does the performance of employees improve due to the current

Performance Management System?

 Does the promotions are strictly based on Performance Management

System?

 Are you satisfied with the existing Performance Management System?

 Are you satisfied with the existing Performance Management System?

 Do the PMS implemented in your organization create a participative

environment?

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TRAINING AND DEVELOPMENT:

 How much training is given?

 How is the training program managed?

 Are there any staff development programs?

 Are the same processes used for all jobs, all locations?

 Are processes followed consistently?

 What kind of Training methods does the organization provide to train the

employees?

 Does Training helps to improve employee- employer relationship?

 How often the Training program are conducted in your organization?

 Does the training method focus on developing team work and leadership

skills?

 On what basis selection of training program is done?

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EMPLOYEE MANAGEMENT RELATIONS:

 Do supervisors work with staff to provide a positive work environment?

 Is the company’s attendance policy clear and communicated well?

 How are performance evaluations conducted? Do employees know

about the several types of assessments?

 Is there a way to assess the quality and volume of work done?

 Are the employment criteria following the anti-discrimination federal

laws?

 Is the company’s EEO statement clear and available to all employees?

 Is there any performance appraisal tool?

 What about exit interviews? Do they happen to find reasons for their

departure?

 Is there a way to file complaints against coworkers?

 To discourage retaliation against employees who exercise their rights,

are there policies in place that prohibit such actions?

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 CHAPTER- 6

OBSERVATION

52
 HRM is a strategic tool that helps an organization for sustainable
competitive advantage.
 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.
 This study has examined the HR auditing practices in Thermax: To reach
a conclusion, issues that have been addressed are the company’s practices
regarding HRM function auditing.
 Majority of respondents stated that future HR department forecast was
done by top managers; recruitment was done proactively by 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.
 Lack of case study material on human resource management auditing in
the corporation and other company context presents problems for both
researchers and practitioners.

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CHAPTER-7

SUGGESTION

54
o By auditing itself, the department finds problem before they become
serious. Effectively conducted auditing process can build a strong report
between the department and operating manager, and it can reveal
outdated assumptions that can be changed to meet the department’s
objectives and future challenges.
o After analyzing the questionnaires and having seen the available
document related to HR in Thermax Company, the following suggestions
are forwarded:
 The recruitment and selection process of the company should be
continued following the HR policy and procedures.
 The company will be advisable to revise, administer and improve
the current employee’s compensation and benefit scheme, unless
the labor turnover will be high in future
 The performance evaluation system should be clear, objectives and
related to the specific task and re-designing 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.
 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.

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 CHAPTER-8

RESEARCH METHODOLOGY

56
The study is exploratory in nature, on the sense that has been made to explore
the audit function in organisation. Data was collected by research method
through survey questionnaire.

DATA SOURCES:

Primary Data: The Primary data was collected from Human Resource
Management team.

Secondary Data: Apart from various websites is not limited, Journals, Academic
Reports, and Internet, used for this study

TECHNIQUE OF DATA COLLECTION:

Through survey I collected Data

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 CHAPTER-9

BIBLIOGRAPHY

58
 Recent Trends & HR Accounting T.Y.B.B.A textbook.

 https://www.startuphrtoolkit.com

 www.slideshare.net

 www.shrm.org

 www.thermaxglobal.com

 www.theinvestorsbook.com

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