By Kimberly Kafafian

You may be familiar with a financial audit, but what about an HR audit? Getting a pulse on your organization’s policies and procedures can be just as valuable as understanding your numbers. If you want your workforce and bottom line to thrive, it’s important to assess if your HR practices are running optimally, in compliance with regulations, and aligned with your strategic goals. Unfortunately, in my experience I’ve found that this task is often overlooked or not even considered. Many leaders simply don’t understand the advantages of investing in this valuable tool or the gains it can unlock. Let’s break down exactly what an HR audit entails and why you should conduct one.

What is an HR Audit?

An HR audit is a comprehensive review of your HR policies, procedures, documentation, and systems to assess their effectiveness, efficiency, and compliance with legal and regulatory requirements. In essence, it’s a proactive check of your HR functions that identifies areas for improvement and growth. Regular HR audits can help you strengthen operations, reduce risks, and create a workplace culture that fosters engagement, performance, and growth.

At Monarch Consulting, our HR audits focus on the following key areas:

Compliance Review

We take a deep dive into our client’s policies, procedures, and documents to ensure that they comply with all the current regulations.

Talent Management

Evaluating recruiting methods, onboarding systems, performance management processes, and employee development initiatives uncovers weaknesses and opportunities to drive success.

Compensation and Benefits

Assessing pay structures, benefit offerings, and employee satisfaction provides the intelligence you need to ensure your employees feel appreciated and rewarded, which is important for attracting and retaining talent.

Employee Relations

Analyzing employee feedback, workplace culture, and communication practices empowers you to create an environment where everyone feels valued and respected, helping to drive engagement, innovation, and the bottom line.

Documentation and Record-Keeping

We look at the accuracy and completion of record management, along with identifying appropriate digital tools to streamline processes so HR teams can put their efforts toward strategy rather than manual tasks. 

Why an HR Audit Should Be a Vital Part of Your Organization’s Strategic Planning Process 

Regular HR assessments provide the insights leaders need to position the company for long-term success while creating a work environment that supports employees at every level. Over the course of my career as an HR professional, I’ve seen first-hand the advantages comprehensive audits provide.

1. Ensuring Compliance and Reducing Legal Risks

Compliance is one of the top challenges organizations face as understanding and navigating employment laws can be quite complex. And non-compliance can be costly, as you face fines, lawsuits, and damage to your company’s reputation. An HR audit helps mitigate these risks by ensuring your policies and procedures align with current local, state, and federal regulations, and identifying and addressing potential issues before they escalate.

2. Improving Operational Efficiency

HR functions like recruiting, hiring, onboarding, payroll, performance management, and employee training are essential to the smooth operation of any organization. Inefficiencies in any of these areas can lead to wasted resources, poor applicant/employee experiences, and a lack of alignment with business objectives. An HR audit helps identify areas where you can make improvements. Perhaps a complicated onboarding process is frustrating new hires. Or maybe your performance management system isn’t providing the actionable feedback employees need to grow. An audit helps you enhance these processes.

3. Boosting Employee Engagement and Retention

Employee engagement is critical to retention, productivity, and overall business success. A poorly executed HR function can result in dissatisfaction, which may manifest in higher turnover rates and decreased performance. Auditing your HR functions can help you assess how well your HR practices are working to create a positive, engaging environment where your employees are motivated to do their best. For instance, evaluating your benefits offerings, compensation structures, and career development opportunities can ensure they are competitive and aligned with employee expectations.

4. Aligning HR Practices with Strategic Business Goals

HR can best drive growth when its practices align with the company’s values and overarching goals. The audit process assesses how well your talent management strategies, such as recruitment and training, coordinate with your business needs. It can help identify gaps in employee development programs or reveal opportunities for optimizing workforce skills. Aligning HR practices with business goals enables you to better support growth initiatives.

An HR Audit Spurs Long-Term Success

An HR audit can help your organization run more smoothly, stay compliant, and grow efficiently. Because it is inherently proactive, you can identify potential problems before they become major challenges, as well as uncover opportunities to mitigate risks and foster employee engagement and retention. Audits give you actionable recommendations for positive change.

By Kimberly Kafafian

“What kind of benefits do they offer?” This has become a buzz phrase for today’s job searchers. Over the last few years, benefit packages have taken a front seat, as employees seek a better work-life balance that salary alone just can’t provide. So how do you create the right package to attract and retain the right workforce? Here are some strategies we use when helping our clients build their benefits offerings.

Strategies for Building a Better Benefit Offering

Understand Your Workforce

Not all employees are interested in the same benefits. You need to dig deep and determine what each demographic is desiring. For example, younger workers may be more focused on a flexible work schedule and retirement plans, while older employees may want to be able to work remotely to care for children and aging parents, as well as have opportunities to phase into retirement. How do you find out this information? Conduct surveys and focus groups to get a pulse on what really matters to your teams, as well as what benefits you are currently offering that are actually being used.

Provide a Varied Offering

You want your benefits package to be attractive to workers of all demographics, so be sure to hit on offerings that provide value to your entire workforce. For example, even if only a portion of your employees take advantage of eye or pet insurance that’s enough of a reason to offer it.

Don’t Overlook Soft Benefits

Benefits don’t have to offer a financial value in order to be valuable. Flexibility as to when you work and where you work is in high demand, as is a great culture. Promote an environment where collaboration and innovation is valued and celebrated both among onsite and remote workers.

Voluntary Benefits Are Appreciated

Everybody loves a great deal, so consider adding voluntary benefits into the mix. Some popular options include life insurance, additional disability insurance, gym memberships, financial counseling, student loan repayment programs, pet insurance, legal counseling, and identity theft protection.

Determine Your Budget

While you may want to create a golden package with all the bells and whistles, first analyze your finances to see what you can afford to allocate to benefits. You don’t want to create a package that you need to cut down the line. That will lead to an unhappy workforce.

Vet Providers and Vendors

Before you make any leaps, do your research to find the right insurance providers and benefits vendors for your business needs. Professional employee organizations could be a good option for insurance as they can help reduce costs. Other things to consider include the vendor’s user experience along with how easy the platform is to integrate into your systems. You want platforms that are easy to access and that provide optimal support.

If you need assistance creating your employee benefits package, our team of experienced HR professionals can help.

From on-demand to year-long support, Monarch helps manage your people, reduce your administrative workload, and free up time so you can focus on business success.

Call or email us to arrange a complimentary consult.

By Dan Darabaris

Offering a great benefits plan is key to attracting and retaining workers. Today’s talent is not just looking at compensation, but considering the whole package you offer before they even apply! To remain competitive when it comes to recruitment, you’ll want to go above and beyond mandated benefits. Hopefully, you know what those are so you are compliant, but if you’re unsure, we’re going to break them down for you.

Benefits Required by Law

As you’re putting together your benefits program, it’s important to note just what benefits you must provide. Some benefits are state regulated, while others are required by federal law. Generally, there are three types of employee benefits that all employers must provide regardless of where the business is located. These are standard in every state, across all industries. 

Social Security and Medicare

Social Security and Medicare are actually considered statutory benefits that are partly funded by the employer and the employee through taxes mandated under the Federal Insurance Contributions Act (FICA).  Both of these benefits are not accessible until later in life. Social Security is available to those that have worked for a minimum of 10 years and have paid Social Security taxes. If you are disabled under the age of 65, you can also receive these benefits. Employers and employees each pay 6.2% of wages up to the taxable maximum of $160,200 (in 2023). Medicare is available to those over 65 who have paid Medicare taxes for at least 10 years. The current Medicare tax rate is 1.45% of gross wages for the employer and 1.45% for the employee, for a combined total of 2.9%.

Unemployment Insurance

Employers are also mandated to contribute to unemployment insurance at both the federal and state levels. This is a benefit employees may receive as a result of layoffs or wrongful termination. Although contribution to unemployment is required at both the federal and state level, the benefit is administered at the state level, so the amount that each employer is required to pay varies from state to state. Regardless of the amount, every state must provide this benefit for both part-time and full-time workers.

Workers Compensation Insurance

As of June 2023, all states but Texas require that employers carry workers compensation insurance. This benefit covers those employees who are unable to work because of a workplace injury or illness. If the employee becomes injured or ill as a result of their regular job duties, the employer is required to pay for their medical bills and a certain amount of income while they recover. Employers typically have the option of obtaining private workers compensation insurance or purchasing a policy from a state run program.

Additional Mandated Benefits for Employers with 50 or More Full-Time Employees

In addition to the above, organizations employing 50 or more full-time workers must also provide two additional mandated benefits.

Health Insurance

These larger employers must provide health insurance to their workforce with employee contributions for individual health coverage not exceeding a specific percentage of their income. For 2023, that percentage is capped at 9.12% 

Family and Medical Leave

Workers at larger companies also benefit from the Family and Medical Leave Act (FMLA), which requires companies with 50 or more employees to provide up to 12 weeks of unpaid leave with protected job security during a 12 month period for qualifying family and medical reasons, such as the birth of a child, a serious or chronic illness, or caring for a family member with a serious or chronic illness.

State Mandated Benefits

Disability Benefits

A few states also require employers to provide for disability benefits. This benefit applies to workers who miss more than a week of work due to illness or disability. As of June 2023, the following requires employers to provide disability benefits:

• New York
• New Jersey
• Rhode Island
• California
• Hawaii
• Puerto Rico

Paid Sick Leave

More and more states are requiring employers to provide paid sick leave. Although long-term medical leave is provided for under the FMLA as mentioned above, there is no federal law requiring employers to provide for paid leave for short-term illness. So, states and local governments are starting to lead the way, with some expanding the coverage to include the employee’s child, spouse, registered domestic partner, parent, parent-in-law, sibling, grandparent, grandchild, or any person whose relationship with the employee is the equivalent of a family relationship. It’s important to know what your state and local governments require.

As an HR professional with years of experience, I recommend to my clients to think of the above benefits as the bare minimum. If you want to attract and retain a qualified workforce, your benefits package needs to be much more robust. Think seriously about also offering paid vacation time, retirement plan contributions, employee wellness programs, employee development programs, tuition reimbursement, pet insurance, gym memberships, or unique onsite amenities.

Hopefully this list helps clarify what employee benefits are mandatory. If you’re still confused, we can help you identify the right benefits to offer your workers.

From on-demand to year-long support, Monarch helps manage your people, reduce your administrative workload, and free up time so you can focus on business success.

Call or email us to arrange a complimentary consult.

By Dan Darabaris

Compliance can be a headache. And when it comes to employees, it’s already difficult to stay on top of which documents you need to maintain on file and where, without thinking about how long you have to hold on to everything. It’s enough to make your head spin! It gets even more complicated because you have to comply with federal laws, state laws, and local laws. And some requirements hinge on the number of employees.

To help you keep track of which files need to stay and those you can shred, I’ve compiled a list you can print out for easy reference.

Suggested Employee Record Retention Guidelines as of May 2023

Personnel and Employment Records

According to the EEOC, you must keep all personnel and employment records for one year from the date of termination. However, retention and record-keeping requirements vary by the type of document and the local laws. As a result, most businesses keep personnel and employment records for seven years. View the types of documents that fall under this category.

I-9

Federal law requires that you keep employee I-9 records for three years following the hiring date or one year following termination, whichever is later.

Payroll Documents

The Department of Labor requires you keep all payroll records for at least three years. This includes wage rates, payment dates/amounts, hours worked/wages paid per period, beginning/ending of workweek, overtime, annuity/pension amounts, fringe benefits, and other records.

Benefits Documents

You should maintain all employee benefits documents for six years after employee termination, such as election forms, 401(k) forms, plan termination records, financial statements, and COBRA documents.

Medical Records

When it comes to medical records, different laws can come into play. For this reason, experts recommend keeping them for at least seven years.

Because federal, state, and local laws can all impact retention requirements, I recommend following the 7-year rule for retaining employee files. Some laws, however, require longer retention for certain documents so it’s important to follow the statutory requirements that apply to your industry. 

How to Dispose of Employee Records

When the retention requirement period has expired, you can’t just toss the files in the trash. This could result in theft or misuse of employee information and expose you to investigations, fines, lawsuits, and more.

You should erase and destroy any digital files, and shred or burn any paper files. Hiring a certified document destruction company might be a wise decision.

By Dan Darabaris

While internet use is necessary for many jobs, personal use of the internet (online shopping, engaging on social media, general searches, watching videos, reading and sending emails, etc.) can impact a company on many levels. It’s important to have a policy in place to protect the organization and let employees know what they can and can’t do on their work computers. 

How Personal Internet Use Can Hurt the Company

Sitting in front of a computer all day, it’s tempting to let fingers wander away from work tasks to something more interesting. Maybe do a bit of shopping or scroll through social media feeds to see what everyone’s up to. The more time employees spend wandering, the less time they’re spending on their tasks. And less productivity means less profits. But it’s more than just the bottom line. When employees visit sites, they expose the company to dangerous viruses and cybersecurity threats that can result in unwanted access to proprietary data, client information or worse. And if employees access graphic materials, there’s also the issue of a hostile work environment.

Implementing a Personal Internet Use at Work Policy

Having a policy in place should hopefully deter employees from misusing work computers and the company network. Whether the policy is included within an employee handbook or provided separately, it’s important to have the employee sign a document saying they have received a copy. 

The policy should:

• State that employees shouldn’t expect anything they create on their business computers to be private, that such data belongs to the company
• Note that company-owned equipment can be monitored at any time and without notice, along with how it will be monitored, i.e., search history, downloads, hard drives
• Specify what is allowed and what is prohibited – you can make your list of what is prohibited as detailed as you like
• Define and provide examples of what constitutes personal internet use at work and improper use of company-owned equipment
• Notify employees of the consequences of violating the policy, such as a write up or termination of employment

To ensure you cover everything and are not violating any employee rights under federal or state law, you should consult your HR team and legal counsel when drafting the policy.