Nicole Devine is the Consulting Chief People Officer for PBO Advisory Group. She helps companies plan and manage their HC and HR functions.
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The purpose of an HR assessment is broad. A thorough and effective assessment can align your business strategy with your HR functions. Assessments are a high-level overview of the entire HR system and how it interconnects with other “systems” within the company. The data collected begins to tell a story and allows you to build the foundation for an action plan to align your HR functions with your overall business goals. This will be a critical part of building your business case on where to invest in human capital programs.
During the assessment process, a company’s HR functions are thoroughly examined from three perspectives: compliance, people and systems.
Our team has conducted dozens of assessments for small- to mid-sized companies, in a wide range of industries. We have unveiled a consistent set of issues across all assessments, which we have detailed below.
This data provides a good indication of where companies’ HR functions typically need changes. This list of problems can be a starting point for the areas that should be reviewed within your HR department.
Compliance
HR compliance—defining policies and procedures and enforcing them—is the area in which all companies we have assessed fall short. Noncompliance can result in legal ramifications and impact culture along with your employer brand. Every employer should regularly evaluate their compliance policies to ensure they are being applied and carried out correctly.
Examples of compliance gaps we always see include outdated employee handbooks, outdated or nonexistent injury and illness prevention programs, and wage and hour issues (meal penalties not applied, overtime not calculated correctly, pay stub errors, etc.).
Other gaps include noncompliant personnel files and new hire documentation, a lack of audit systems, misclassifications of employees and independent contractors, pay transparency concerns, and challenges with background check compliance and sexual harassment training.
Systems
HRIS systems often fare better than compliance policies. However, we found that even the best systems are not always utilized properly. In fact, most organizations only use approximately 40% of the system they are paying for, which impacts the ROI. Effective systems can dramatically optimize the HR function and more easily demonstrate ROI as they reduce errors, optimize time (payroll dollars), enhance the employee experience and position you to pace growth.
In every assessment we conducted, we found multiple systems were being used to process HR functions. Multiple touchpoints were required, which impacted productivity and the employee experience, created errors and required intensive manual processes.
Other issues included HRIS systems that didn’t meet the company’s needs, were incorrectly implemented or lacked user training. Additionally, the systems were often not being utilized to their full potential, and no management reporting was being used to provide visibility into the human capital investment.
Best Practices
While every organization should customize its HR function to align with the business model, ensuring best practices is the gold standard. As that looks different for every company, certain best practices should be in place to insulate from risk and optimize the function.
In all our assessments, we found standard operating procedures need to be created or updated. Documenting the current process allows employers to provide business continuity during turnover, promotion, mergers/acquisitions, etc.
We also found offer letters missing pertinent information, as well as job descriptions that were outdated or not standardized. Performance management processes were not consistent, standardized or aligned to talent strategy. Compensation benchmarking was nonexistent, and wage ranges were not supported by relevant market data.
Getting Started
Using the above data, you can uncover where your company's HR functions may need changes. This list of issues can be a starting point for the areas that should be reviewed within your HR department. After your data has been compiled and analyzed, it can become the foundation for your road map for making changes.
Your team and budget can only handle so many projects at a time. A great place to start is by building out a rubric of how you are going to prioritize all aspects of your changes, such as budget, capacity and timing, so you know how to prioritize each issue.
A necessary next step is to engage with other relevant stakeholders to ensure your road map for change is also a priority to them. This could include the CEO, CFO and other C-suite leaders and division heads.
When prioritizing your projects, start with your identified compliance concerns. These should take precedence, as fixing them helps ensure risk mitigation. Whether your handbooks need updating, you have misclassified employees, and/or wage and hour issues have been discovered, tackle any problem that is legally mandated first.
As a next step, focus on problems that have the highest impact or the biggest bang for your buck. For example, while onboarding issues are important, they only affect new hires. However, performance evaluation changes or compensation adjustments will likely impact virtually all employees. HRIS systems will have a broad impact by streamlining processes and enhancing the employee experience, which is typically a good return on investment.
Change often takes time. To experience the full impact, allow two years. Change for change's sake isn’t what you should be striving for. Plan carefully and focus on the end goal.
Keeping It Going
To ensure your changes are lasting, establish or update your standard operating procedures so your new-found programs and processes are sustainable. We encourage clients to build an HR calendar to keep things on track. For example, new legislation typically becomes effective at the beginning of the year or in July. Markers on a calendar of these and other critical dates can go a long way to keep you in compliance.
Final Thoughts
Fixing compliance problems is only a portion of the results an assessment can produce for an organization. Real change comes when an assessment encompasses people, processes and systems and results in a road map to align the overall business goals with the HR function. Your business can become stronger when your HR department is working optimally as a business partner for you and your employees.
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