Hr audit

HRD Score Card 2500 is a magnificent manual. The instructions are very detailed, comprehensive, clear,
lucid, simple, sequential, and easy to follow…
R. Girdharan
DGM, Reserve Bank of India
Dr Rao’s book converts the audit findings into measurable scores and presents the findings in a scientific
way that would help CEOs and HR chiefs to take remedial and timely interventions. If his approach is used
well for internal audits by competent HRD managers, the HR function can be aligned to serve the business
interests of the organizations. I strongly recommend the book to be used for internal audits of HR.
Dave Rose
Managing Director
Gujarat Guardian Limited
This book helps you rejuvenate your HR function and make it more strategic and business driven. It will
certainly help CEOs to demand and get the best out of their HR.
William J. Rothwell
Professor, Workplace Learning and Performance, Pennsylvania State University
The book is very novel, practical, comprehensive, and much needed for all of us in the HR profession. It is
lucidly written, with detailed guidelines on how to do the scoring. This makes the book an essential ‘do-
it-yourself’ companion for every HR professional. The model provides a good focus on implementation as
well as impact on the organization by giving 30 out of 70 points on these two aspects.
Arvind Agarwal
President, RPG Enterprises, Mumbai
In the competitive world of today, HRD is playing a vital role in the continuous improvement of the
organizational structures, systems, and management practices, and in winning over the hearts, minds,
and spirits of the employees. This book provides the depth and breadth of what all needs to be looked at in
HRD, including a quantitative measure to assess its effectiveness.
V. Ammineedu
HRD & OD Consultant and former Director (HR), BEL

HRD Score Card 2500
Based on HRD Audit
T.V. Rao

Copyright © T.V. Rao, 2008
All rights reserved. No part of this book may be reproduced or utilized in any form or by any means, electronic
or mechanical, including photocopying, recording or by any information storage or retrieval system, without
permission in writing from the publisher.
First published in 2008 by
Response Books
Business books from SAGE
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Published by Vivek Mehra for SAGE Publications India Pvt Ltd, typeset in 8.5/12 pt Stone serif by Innovative
Processors, Delhi and printed at Chaman Enterprises, New Delhi.
Library of Congress Cataloging-in-Publication Data
Rao, T.V.
HRD score card 2500: based on HRD audit/T.V. Rao.
p. cm.
Includes index.
1. Personnel management—Evaluation. I. Title.
HF5549.V392 658.3—dc22 2008 2008023490
ISBN: 978-81-7829-836-8 (PB)
The SAGE Team: Sugata Ghosh, Samprati Pani, and Trinankur Banerjee

Dedicated to the memory of my mother
Late Smt. Talam Devaramma
a self-made social entrepreneur
who always gave and never asked for anything in return

Contents
Foreword by Udai Pareek 9
Preface 11
Acknowledgements 13
Unit 1: Introduction to HRD Audit and HRD Score Card 15
• The Need for HRD Audit and What it Can Do
• The TVRLS Study on the Effectiveness of HRD Function
• HRD Audit of 12 Organizations
• What is HRD Audit?
• Organization of this Manual
Unit 2: HRD Systems and Strategies 27
• Introduction
• HRD Systems
• HRD Strategies
• Calculating the Final Score for Systems Maturity
Unit 3: In-depth Audit of HRD Systems 80
• Competency Mapping
• Manpower Planning Audit
• Recruitment
• Induction and Integration
• Performance Management
• Potential Appraisal and Assessment Centers
• Career Planning and Development
• Job Rotation
• Training and Learning
• Organization Development Interventions
• 360 Degree Feedback and Leadership Development
Unit 4: HRD Competencies 167
• Competencies of the HRD Staff
• Learning Attitude of Line Managers

8 HRD Score Card 2500
• Top Management Styles
• Learning Orientation of Non-supervisory Staff (Unionized)
• Credibility of the HR Department
• Final Competencies Score
Unit 5: HRD Culture and Values 209
• Rationale for Assessment System
• Octapace Values
• Organizational Culture
• Total HRD Culture Score
Unit 6: HRD Impact and Alignment 239
• Impact of HRD
• Conversion Table
• Dimensions
Unit 7: HRD Audit Instruments 252
• HRD Audit Questionnaire
• Types of Analyses
• TVRLS HRD Audit Questionnaire
• Career System
• Work Planning
• Developmental System
• Self-renewal Systems
• HRD
• HRD Function
• Competency Mapping (CM), 360 Degree Feedback (360 DF), and Assessment
and Development Centers (ADCs)
• Strengths, Weaknesses, and Suggestions
• Map Your HRD Practice-Profile
• Checklist of Activities
• Professional Preparation of HRD Staff
• HRD Climate Survey
• HRD Competencies Checklist
Unit 8: HRD Scores at a Glance 279
• HRD Systems and Strategies
• HRD Competencies
• HRD Culture and Values
• HRD Impact and Alignment
• HRD Score Card Certificate
Index 295
About the Author 298

Introduction to HRD Au dit and HRD Score Card 9
Foreword
Employee competency and Human Resource Development (HRD) systems have become more
strategic than before in the current global and highly competitive environment. While technology,
finances, and such other variables give limited advantage, organizations across the world are
realizing the unlimited advantage HRD can provide. It is being seen as influencing customer
loyalty, company revenues, cost reductions, quality improvements, and many other variables
impacting shareholder value.
It is over 34 years since we designed the first ever HRD department and laid the foundation
for what is known as Human Resource Function at Larsen and Toubro (L&T). It was sometime in
1974 when both T.V. Rao and I were sitting in Hotel Taj Bombay and going through our notes of
interviews with L&T managers. What started as an audit of the performance appraisal system after
our interviews with the L&T staff, turned out to be laying the foundation for what was to become
Human Resource Function, with HRD as its soul. It was in this hotel that we coined the term ‘HRD’
to integrate a number of things L&T managers were suggesting so as to improve the performance
appraisal system. We did not know then that Len Nadler had already suggested the term and
started using it in one of the American Society for Training and Development meetings. Nadler’s
book had not come into market and we thought that we are actually coining the term. Even after
HRD became popular, T.V. Rao wrote articles (for instance, ‘Human Resources Development: An
Old Wine in a New Bottle?’) suggesting the difference between the way Americans view HRD
and the way we have conceived the concept. While in USA it was a new name for training and
development, in India we conceived it as an integrated concept that promotes learning on a
continuous basis at the individual, role, team, and organization levels. It included various
subsystems like performance appraisal, coaching, potential development, career planning and
development, succession planning, training, and Organization Development (OD). Subsequently,
the State Bank of India and its associate banks introduced HRD and wherever some of us, including
late Prof. S.K. Bhattacharya and T.V. Rao, were associated in restructuring exercises, we began
to emphasize the need for HRD. T.V. Rao went on to start the HRD function at a public sector
undertaking, Bharat Earth Movers Limited (BEML), and experimented a lot with what we were
proposing. On his return from his work at BEML, we conducted a nationwide seminar at the
Indian Institute of Management (IIM), Ahmedabad, to test the chapters of our book Managing
Human Resource Systems. This seminar was attended by a number of people who later became
prominent leaders in HR, and CEOs. Dr Anil Khandelwal is one of them.
India has come a long way since then, especially in the last 30 years. HRD has become an
inevitable part of organizations, their growth, and change. It was in the eighties that the term ‘HRD’

caught on worldwide. Though it is one of the most well-articulated and well-defined systems in
India, most organizations rushed to use the nomenclature than to understand and implement its
spirit. Many untrained and ill-equipped executives were employed to man HRD departments. They
did not have a clue about HRD and often the organizations equated HRD with administration,
recruitment, and performance appraisals at best. They undermined the HRD focus on creating
capabilities at the organizational and various other levels, and enabling growth, integration,
purpose, and the like. Very few institutions prepared really good HR professionals, though they
used the HR titles in their diplomas and degrees liberally. It was after getting disappointed with
the state of affairs in HRD and the inappropriate use or limited exploitation of its potential that
we started a series of interventions to refocus the attention of CEOs and executives on HRD and
its true spirit. To this end we started the HRD audit.
Audit is essential for self-renewal. It also enables checks against some accepted standards
and principles. By now we have a well-defined knowledge of HRD, and we have also well-tested
principles of HRD.
In the first chapter itself, T.V. Rao describes some of the early organizations where we did the
HRD audit. Since the publication of the book HRD Audit: Evaluating the Human Resource Function
for Business Improvement (1999), HRD audit has become very popular. The Business magazine
Business Today has extensively used our audit tools in their special issue on people management
in the mid-nineties.
In the last decade, HRD departments have mushroomed. The information technology (IT)
sector and the new economy industries are the biggest users of HR. In some of the IT companies
there is one HR manager for every 50 employees. They may mostly be dealing with recruitment,
salary, and other forms of administration and facilities management than managing the learning
and capacity building at various levels. Only in a few organizations, learning and development
become the focus of HRD. In many new economy industries HRD has missed the bus in terms of
becoming the basis for creating knowledge managers. The changing world needs a lot of HRD.
Today, it is competencies of an organization and its employees that give it strategic advantage.
Given the strategic importance of HR and looking at the current state of affairs of most companies,
there is a great need for reviewing and renewing their HRD.
The HRD Score Card 2500 is a great tool in this direction. In the last five years, T.V. Rao and
his team have been working on HRD audit and its applications. They have held a number of
programs and trained a number of HR executives as HRD auditors.
This book attempts to assign a score for the state of HRD in any corporation. The score
assigned is for 2500 points of which HRD systems and strategies are assigned 1000 points; HRD
competencies 500 points; HRD culture and values 500 points; and HRD impact and linkages
another 500 points. The book is timely and very simple to follow for any HR manager or line
manager having the basic knowledge of HR. There are many unique features of the scoring system
proposed here. It takes into account most research available till recently in the field of HRD.
I congratulate T.V. Rao for this value-adding book for those who are interested in revisiting,
renewing, and rejuvenating their HR function and HR teams.
Udai Pareek
Former L&T Professor, IIM, Ahmedabad
Professor Emeritus, IIHMR & AHRD

Preface
We began to work on the Human Resource Development (HRD) audit in the early nineties when
the first systematic audit was conducted on Indo-Gulf Fertilisers in 1992. In the early nineties,
the late Aditya Vikram Birla had suggested that all the Birla units be audited by external agencies,
which led to our auditing a number of their organizations including Birla White Rajashree Cement,
Hindalco, and Renusagar Power. In the late nineties, the audit process was spread to organizations
like the Alexandria Carbon Black. With small investments, those who used HRD audit have been
able to reap good benefits.
When the Human Resources (HR) function improves in an organization, it delivers better
results. A good HRD audit will lead to enhanced utilization of talent and the professionalization of
the HR department. Competency gaps for good HRD get thrown up for all sections of employees
including the top management, line managers, field staff or workers, and, most importantly, the
HR staff. HRD audit also suggests the areas needing improvement in terms of the specific HRD
systems (all talent management systems), HRD climate, top management styles, HRD culture,
attitudes of line managers, and competencies of HRD staff.
In the last 10 years, we have done HRD audits for a good number of corporations and have
generated enough examples of audit. HRD audit has been extended to hospitals, Information
Technology (IT) companies, the new economy industry and even government departments.
T.V. Rao Learning Systems (TVRLS) has even started training internal auditors and certificate
programs to conduct HRD audits. Our website, www.hrdaudit.org, gives many details of our
efforts.
We are happy to bring out this volume with the intention of spreading the message of how
to conduct an HRD audit and make this knowledge available to many others.
How to Use this Volume?
This volume gives details of how one can conduct an HRD audit. An attempt is made to assign
points; 500 to 1000 points are assigned to each of the following:
1. HRD Systems (1000 points)
2. HRD Competencies (500 points)
3. HRD Culture and Values (500 points)
4. HRD Impact (earlier termed Business linkages) (500 points)

Thus, a total of 2500 points is possible. In the points system, it is possible to find the strengths and
weaknesses at a glance and initiate action.
Of the various sections audited in an organization, HRD systems occupy a special place.
These can be audited in two ways. The manual gives a methodology for mini audit through
the questionnaire method and also a detailed methodology for an in-depth audit. The user has
the freedom to choose any of the two methods. We hope that with the help of this manual,
organizations will now be able to conduct their own audits.
This manual has been prepared by using HRD Audit: Evaluating the Human Resource Function
for Business Improvement by T.V. Rao, 1999 (Response Books, SAGE India) as the basic text book. It
draws heavily upon the concepts and tools mentioned in this book. Referring to this book prior to
reading HRD Score Card 2500 will help the reader to follow the manual with little or no trouble.

Acknowledgements
Several people have helped me to shape this work and make it available for public use. Prof. Udai
Pareek, a long-term friend, philosopher, guide, and intellectual companion, has his contribution
by partnering various audits in the initial years. M.G. Jomon, currently a professor at XLRI,
Jamshedpur, did his doctoral research on the Human Resource Development (HRD) audit, which
has proved the impact of HRD audit beyond doubt. His subsequent implementation of the findings
of HRD audit in two different companies in two different locations has further strengthened this
belief. My colleagues at T.V. Rao Learning Systems (TVRLS) Pvt. Ltd are largely responsible for
trying to implement the concepts and the scoring system proposed in this book. Raju Rao and
Nandini Chawla have been companions in all our efforts to audit HRD in various corporations
and provide a basis for the work here. Shishir Mishra and Sonali Mungle coordinated the earlier
programs on HRD audit and helped many other managers to become audit savvy. Mr Santhanam,
the Management Development Program (MDP) coordinator at TVRLS, has organized at least three
HRD audit certification courses and another three HRD score card courses at Pune, Delhi and
Mumbai. This has enabled us to not only train HR professionals in audit, but also test out some of
the concepts. Ms Nidhi Vashishth, a consultant at TVRLS, has organized the first program with the
title of this book and enabled me to test out the score card. Though we have been using the score
card for many years since the last 15 years, this is the first time we organized three programs on
this title. I thank all the participants of the program for their valuable feedback and inputs on the
ease with which the HRD score has been used. Ms Merlin George, Manager 360 center at TVRLS,
has always provided the administrative support with a smile. My wife Jaya and daughter Kritika
have always encouraged me to take as much of their time as I needed to complete work on this
book as well as other professional commitments.
I also like to acknowledge the support given by the SAGE team, in particular Sugata Ghosh
and Samprati Pani.

Unit 1
Introduction to HRD Audit and
HRD Score Card
Consider the Human Resource Development (HRD) score cards of the following four companies:
1. Hospital
2. Logistics Company
3. Insurance Company
4. Automobile Manufacturing Unit
The score card is based on the evaluation criteria of maturity levels or effectiveness of various
dimensions of HRD as revealed by the HR audit:
A* = Highest score and highest maturity level
A = Very high maturity level
B* = High maturity level
B = Moderately high maturity level
C* = Moderate maturity level
C = Moderately low maturity level
D* = Low maturity level
D = Very low maturity level
F = Not at all present
Can you at a glance identify an action plan for improvements in each of these organizations?

At a glance you can perhaps make the following observations:
1. Hospital: The hospital has good (Human Resources) HR staff and a good learning culture.
However, the HR staff is not able to make any impact. There is very little learning culture and
the impact of HR is very low. The priority, therefore, is to enable the competent HR people to
focus on developing and implementing appropriate HR systems and get the systems linked
to the HR needs of the company. Developing relevant HR systems and making sure that they
drive customer care and other objectives of the hospital is a necessity. What if a detailed audit
of the hospital reveals that a large part of the HR competencies are attributable to the desire
of doctors to learn and the competencies of HR staff? What if the audit also reveals that if the
top management styles are made more supportive, the HR competencies will be on the top,
going to an A* rating?
2. Logistics Company: The logistics company has reasonably good systems, good competencies,
and good HRD culture, but it needs to be more aligned with business goals. The HR direction
should be made more business driven. Perhaps the employees, HR staff, and the HR systems
should incorporate more business concerns in their efforts and processes. It is quite possible
that in this company the HR impact is weak but intellectual capital formation is high.

Introduction to HRD Audit and HRD Score Card 17
3. Insurance Company: In the insurance company, there seem to be good systems and good culture,
and whatever systems they have seem to be aligned to business. However, competencies of the
HR staff and attitudes of line managers to learning need to be focused. If the competencies are
developed, the systems are likely to result in creating the right culture. Recruitment of good
HR staff and training of the line managers in learning attitudes would also help.
4. Automobile Manufacturing Company: This company has excellent HRD systems, with competent
HR staff and line managers, and a supportive top management. The result also shows good
HRD culture and values, and good alignment with business. Putting in more effort in creating
a lasting HRD culture and playing on the current linkages of HR with business would be
useful.
Thus the score card of a company can at a glance tell the Chief Executive Officer (CEO) or the
HR chief or the stakeholders of the company the exact standing of that company at a given point
of time on the four critical dimensions of strategic HR that impacts business. This score card is
established out of an HRD audit.
This manual is an aid to establish the HRD score card of a company through HRD audit. This
manual is all about how to audit HRD, its systems and processes, and strategies and practices; HRD
competencies of HR staff, line managers, and top management; how to find out the HRD culture
and values; and the impact of all these or alignment of all these with the business for which the
organization exists. This is an attempt to disseminate all that we have learnt in the last 35 years of
driving HRD in India and other Asian countries.
The Need for HRD Audit and What it Can Do
HRD today is seen more as a business and strategic partner than simply a function, and it is
indisputably one of the major contributors for building competing world-class organizations.
Organizations strive towards internalizing the HRD philosophy and principles—some even
making it a part of their mission statement. However, in our experiences with HRD in several
organizations, the function and systems evoke more criticism and cynicism. The most common
complaint that people from various organizations seem to make is that HRD priorities take a
backseat in the face of other business priorities. The raison d’être for this state is the poor linkage
of HRD and its various components to the overall business strategy. In quite a few organizations,
HRD unfortunately is seen as a ‘stand alone’ entity. Also there seems to be a certain ambiguity in
terms of impact of various HRD interventions on the organization’s performance and motivation,
as those responsible for conceptualizing and initiating good HRD in the organization pay little
attention to evaluation.
The TVRLS Study on the Effectiveness of HRD Function
Studies indicate that 30 years after the integrated HRD systems approach was made available in
India, there is very poor implementation of the same. The approach is very simple, and it has
evolved locally with the help of Indian managers. It is not well implemented due to the following
reasons:

1. Lack of understanding and appreciation of the top management, the significance of HRD,
and its linkages to business
2. Lack of competent HRD staff
3. Lack of professional preparation of HRD staff
4. Inadequate understanding of HRD conceptualizations and frameworks
Recent HRD frameworks are conceptually heavy, culturally not very sensitive to Asian cultures,
and are more sophisticated in terms of the larger number of variables they cover and the linkages
needed. For example, the strategic HR approach of Ulrich requires HR professionals to perform
multiple roles and achieve multiple objectives, starting from aligning HR with business to
initiating and managing organizational transformation (Ulrich 1997). This is a laudable objective
and requires a different quality of people to manage HR. They should, in fact, be CEOs or of
the caliber of CEOs. It is doubtful that those who cannot manage even six subsystems of HRD
in an integrated manner will have the organizational support and competencies to perform the
multiple roles envisaged by Ulrich.
The use of these frameworks and models to Asian organizations is doubtful unless
implementation problems like the ones mentioned earlier are taken care of. Most of these
approaches give a strategic role to HR and treat HR professionals as partners in business. Pareek and
Rao’s model gave this role to HRD in 1975 by assigning a transformational role to HR professionals
though HRD systems like Organization Development (OD), Performance Appraisal, Feedback and
Coaching, etc.
If HR professionals have to use any of these models, then the following are the important
prerequisites:
1. CEOs should be willing to treat their people (employees) as a strategic resource, and to give
HR the status it deserves. They should recognize HR professionals as competent and strategic
partners in business.
2. HR professionals should learn as much about business as they do about HR systems, change
management, and transformational technologies.
3. HR professionals should continuously enhance their HR competencies to keep pace with the
changing environment.
4. Their agenda and roles should be redefined to include involvement in business plans,
organizational structures, and all implementation activities. For example, the success of ERP
or SAP implementation will depend greatly on how well the change is orchestrated in terms of
employee involvement, and how well it is integrated into various HR processes, and planning
of HRD for Enterprise Resource Planning (ERP) and SAP.
5. There should be competent HR professionals available in the country (the number of HR
professionals who have become CEOs in the last 25 years is less than a dozen in the entire
country).
6. Administrative functions should be differentiated from HRD.
HRD Audit of 12 Organizations
A survey of the HRD audits done on 12 leading Indian corporations has indicated that the HRD
function is not as well-structured as envisaged in mid-seventies. The function seems to be a lot

more convenience-driven rather than systems-driven. It does not have all the systems that it ideally
should have as envisaged in the seventies. The systems are not well integrated. The integration
mechanisms are stronger, but the specialization does not get the attention it deserves. The structures
and competencies are not fully in tune with the Integrated HRD systems model offered by Pareek
and Rao. The HRD subsystems, however, have evolved and matured to a substantial degree,
especially the Performance Management System, and Training and Development system. OD and
Feedback and Counseling are in the next level of maturity. Potential appraisal, career planning,
and development are the least developed and used subsystems. The HRD departments need to
have professionally trained and competent staff. If they have to make an impact, they should
enhance the maturity levels of all these subsystems. These subsystems have a lot of potential for
giving competitive advantage through the development of employees and their competencies.
In another study by TVRLS (Mungale and Bhatiani 2003), perceptions of the HRD function
by 162 line managers from different organizations were assessed. These were drawn from 18
companies and included 3–10 line managers from each company. The line managers of each
company assessed the extent to which the HRD departments were performing 87 different
activities under eight different functions. The results were compared with the results of a similar
study conducted in 1991 on 53 organizations with one line manager drawn from each company.
With all the methodological inadequacies, this is perhaps one important source of data we have
to compare. The 2003 study used the same questionnaire with a four point scale, while the 2003
study used a six point scale. For comparison purposes, the scores were converted into percentage
scores for both the studies.
This study indicated a definite decline in the perceptions of the effectiveness with which the
various HRD functions were being performed as perceived by the line managers. First of all, the
percentage score is very low—all below 50 per cent, indicating that the functions are perceived
as being performed at a level below the theoretical average. Second, there is a definite fall in the
effectiveness with which these were being performed as compared to a decade ago. This is perhaps
an indication of the raising expectations of line managers from the HRD managers. This is also a
reflection of the falling standards of performance of various HRD activities.
Some of the other results of this study as reported by Mungale and Bhatiani (2003) are as
follows:
1. Among the various roles performed well in some of the companies, the top scoring roles
are those dealing with influencing personnel policies, ensuring the alignment of HRD with
business goals and strategies, and other systems, articulating HR philosophy, and liaising with
top management.
2. Monitoring HRD implementation and conducting human process research are the two poorly
performed functions across most organizations.
3. Creating a development motivation among line managers by organizing visits to other
organizations for them is one of the least-attended activities.
4. OD and self-renewal activities are also among the least effectively performed activities.
On the basis of these results, the study concluded the following:
1. HRD managers need to recognize stakeholders’ expectations and understand the overall
business and strategic context of their function. As the expectations from HRD function are
changing, they are expected to perform more value-adding functions and activities.

2. HRD functions should focus on intellectual capital generation activities, and at the same time
ensure a good return on investment (ROI) on training and other interventions rather than
merely facilitating in-house training activities.
3. HRD practitioners need to equip themselves with the capacity and competencies needed to
build the HRD function as a hands-on, proactive strategic partner with practical contributions
to organizational goals and performance effectiveness.
4. HRD practitioners need to strengthen their partnership and credibility with their stakeholders
by involving them in policy making and communicating constantly.
In order to develop HRD into its proper undertaking—that of a strategic business partner— it
becomes important for organizations to evaluate their components of HRD in terms of alignment
with business strategy and needs, and use this perspective to enhance and further strengthen
HRD. This evaluation is what the HRD audit attempts to do.
What is HRD Audit?
HRD audit is a ‘comprehensive evaluation’ of the ‘current HRD systems and strategies, structure
and competencies, culture, and impact’ in the context of the ‘short- and long-term business plans’
of a company. It starts with the long-term and short-term plans of the company and attempts to
assess the competency requirements of employees to achieve these plans. In the context of these
competency requirements, an attempt is made to assess:
1. the competencies needed at present;
2. existing systems to develop these competencies;
3. the adequacy/inadequacy or maturity levels of these systems;
4. existing structures and competencies and their adequacy/inadequacy;
5. commitment levels exhibiting mechanisms to further it or build work motivation; and
6. work culture and methods of building the same.
Most organizations undertake HRD audit to
1. align or realign HR with business goals;
2. make HR business driven, or make HR drive business;
3. take stock of things and to improve HRD for expanding, diversifying, and entering into a fast
growth phase;
4. promote more professionalism among the employees and the company by switching over to
professional management;
5. understand the reasons for lower employee productivity or turnover, employee attrition, and
to improve their strategies;
6. comprehensively review and improve the effectiveness of various HR systems like manpower
planning and recruitment, performance appraisal, training and development, career and
succession planning, etc.;
7. reorient the HR function and systems after organizational changes such as growth,
diversification, change in leadership, etc.; and
8. create a high return on investments on HR.

HRD audit is a comprehensive evaluation. The term ‘comprehensive evaluation’ indicates a
detailed study of various components of HRD against a conceptual framework as well as the
current business environment and requirements. Multiple methodologies are used ranging
from comprehensive individual and group interviews, from the CEO to the operator or worker
level (representative sampling done at all levels), to the study of secondary data available in the
organization in terms of records, etc.
HRD systems and strategies essentially include the choice of the organization to use various
systems and methods related to various HR functions like recruitment, performance management,
career planning, motivation, training and development, etc. These strategies could either be
derived directly from the business goals or aligned to the same. Certain focal points of the audit
of HRD strategies would include:
1. Culture building strategies: Along with upholding the dignity of individuals, to check if
the strategy aims towards developing a culture which harnesses professionalism, learning
through collaboration and experimentation, and values such as commitment, openness,
trust, accountability, etc.
2. Quality and customer orientation: Whether the strategy links employee satisfaction to customer
satisfaction through availability of high quality goods and services.
3. Communication strategy: Setting up a system which encourages information sharing. Audit the
strategy to evaluate if it promotes timely and close communication with employees and the
community at large for building stronger bonds.
4. Efficiency management and cost reduction strategy: Check if the strategy focuses on enhancing
operational and process efficiencies at various levels and in various areas along with cost
efficiencies where possible through employee participation, and whether it attempts to build
the same into the culture of the organization.
5. Employee engagement strategy: Aims at enhancing trust at work place, autonomous perception
of linkages between individual and organizational outcomes, and employee commitment to
work and the organization.
The HRD audit examines the alignment of HRD strategies and systems to business goals and
challenges. In fact, so high is the relevance of business needs or organizational needs and plans
that they are the starting points for the HRD audit. The auditors evaluate how well the HRD efforts
and strategy drive business goals and their achievement.
A system has its own objectives, components or elements, and a process. It has inputs, an
output, and a throughput. The purpose of any HRD system is broadly to build the competencies
and/or commitment of individuals, dyads, teams, and the entire organization as a whole through
a variety of instruments. Its objective is also to build a lasting culture so that the employees learn
and contribute their best on a continuous basis.
The HRD audit helps in assessing the orientation, processes and mechanisms, degree of
participation, cost-effectiveness, and efficiency of the overall HRD systems and subsystems in
the organization. These (manpower planning, performance management, feedback and coaching,
training, talent identification and management, etc.) systems may keep changing from time to time
as we discover new things. The HRD audit focuses on all systems that exist in a given organization
and assesses them for their clarity of objectives, structure (scientific base and comprehensiveness),
understanding by the users, implementation, and relevance in achieving organizational goals.

The audit helps to point out areas of modification for meeting the organizational needs in the
following areas.
HRD Competencies
HRD audit attempts to assess the competence of various personnel through knowledge testing,
attitudes and values testing, 360 degrees assessment, HRD function assessment, and assessment
centers. This covers the competency levels of the HRD department, line managers, top management,
union representatives, and the HRD staff. It also covers the professional preparation of the HRD
managers and the competency levels of the HRD department as a whole. The audit, therefore,
helps discover the areas of strength as well as the developmental areas, thereby strengthening the
HR effectiveness in the organization.
HRD Structure
While appropriate structure is required to manage the function given the importance and
complexity, common occurrence is indiscriminate expansion of the system due to lack of review
and streamlining. The audit attempts to evaluate the appropriateness of the structure, value
addition in terms of competencies and role performed, and the extent of support to the business
strategy.
HRD structure is very vital to the organization and deals with task structure, role relationship,
manpower, competence, infrastructure facilities, and organizational processes. The HRD audit
attempts to highlight the current status, strengths, weaknesses, cost-effectiveness, and other
vital elements of the HR structure, and aligns it in accordance with the business goals of the
organization.
HRD Styles
The effectiveness of various HRD systems and the extent to which they are likely to get the
desired results depend upon the style of the top management. Any HRD audit has to take into
consideration the styles of the top management and whether or not they are congruent with the
HRD philosophy. Indian managers have been found to exhibit three styles: benevolent, critical,
and developmental. While the developmental style is most congruent with HRD philosophy,
other styles may have to be used occasionally depending on the situation, person and nature
of issue. While a developmental and empowering philosophy should constitute the core of the
styles, effective use of the other styles may be needed to run the system or its subsystems.
HRD Culture and Values
The HRD audit also attempts to study the extent to which the organization has OCTAPACE
values and culture, that is, a culture which fosters Openness, Collaboration, Trust, Authenticity,

Proaction, Autonomy, Confrontation, and Experimentation. Such a culture can be built only by
an enlightened top management and hence the audit takes into consideration the styles of the top
management and whether they are congruent with the HRD philosophy or not. In case of lack of
congruence, the audit should indicate the current dominant styles used by most managers and
their impact on the employees.
HRD Impact
The audit also includes a study of the impact made by various HRD interventions in terms of their
contributions to outcome variables or process variables. The outcome variables are direct variables
like the financial variables (cost reduction, revenue generation, profits, etc.) and process variables
are those that are in terms of talent management or intellectual capital formation (customer
capital, structural capital, emotional capital, relationship capital, etc.). These variables are not
easy to measure, and often these are difficulties attributable only to HR. However, recognition or
acknowledgement by managers themselves is an indicator of the impact.
This HRD audit manual aims at measuring the HRD in organizations. An attempt has been
made to quantify the variables involved and thereby simplify the measurement. The components
of each HRD issue have been identified and the indicators under each component have also been
spelt out. These components and indicators have been assigned numerical values with relative
weightage to enable an internal/external auditor to perform the HRD audit. This manual includes
sections on HRD strategies and systems, HRD competencies, HRD values and culture, and HRD
impact.
The evaluation by the auditors on all aspects aforementioned is then represented in the HRD
score card.
HRD Score Card is an assessment of the HRD maturity level of any organization. It assigns
a four-letter rating which represents the four critical dimensions of HRD contributing to
organizational performance, namely, HRD systems maturity, HRD competencies in the company,
HRD culture and values, and HRD impact (earlier labeled as business linkages).
Using multiple methodologies, any organization can be assigned a score. Such scoring is assigned
by the auditors, and the HRD audit is the ideal time to assign such scores. The system is intended
in due course to become like the ISO certification system.
In order to evaluate the aforementioned aspects, the following multiple methods are used.

Interviews
Individual interviews with the top management are conducted to capture the top management’s
thinking on the future plans and opportunities available for the company. Interviews with other
levels of managers and staff are conducted in groups to collect information about the effectiveness
of the existing HRD systems, culture, skills, styles, etc.
The utility of interviews in the HRD audit are as follows:
1. Aids the auditors to capture the main concerns of the primary stakeholder
2. Helps in getting detailed information, which can be re-clarified
3. Helps revalidate the inputs and strengthen observations, which makes the entire audit very
dynamic
4. Helps in gaining first-hand access to and understanding of feelings and perceptions of the
people
Group Discussions and Workshops
In large organizations, diagnostic workshops could be conducted for a participative diagnosis and
evaluation of various aspects of HRD.
Observation
The auditors also observe various aspects of the organization in order to evaluate the work place
and work atmosphere and assess the extent to which a congenial and supportive climate exists
in the organization. Observations are mainly made with respect to physical facilities and living
conditions, meetings, discussions and other transactions, celebrations and other events related to
organizational life and culture, training, and other HRD-related facilities including the classroom,
library, training center, etc.
Analysis of Records and Documents
A scrutiny of the annual report, performance appraisal forms, training documents, employees’
records files maintained by the HR department, in-house journals, and periodicals is carried out to
assess various strengths and weaknesses of HRD.
Questionnaires
A number of questionnaires are used to extract information about HRD systems, processes, styles,
and competencies. Instruments used for this purpose are outlined later in this book (see Unit 7).
Who Will Do the Assessment or Audit?
The following are the likely auditors who can use the system:
1. External auditors
2. Internal auditors

3. Internal team of auditors consisting of HR specialists
4. In-house team or internal task force consisting of line managers and HR specialists
5. In-house team without any HR specialists
Who is an Auditor?
An auditor is a person who is trained specially in HRD audit. Both the Academy of HRD and
TVRLS conduct certificate programs and trainer programs in HRD audit. A trained auditor has the
following knowledge, attitude, and skills:
1. A thorough knowledge of various HR systems, their objectives, components, relevance to
organizations at different stages, their functioning, implementation difficulties, indicators of
success, world class practices, and benchmarks wherever applicable and available
2. Knowledge of the HR departments, their role, competencies, and HR competency models
3. Knowledge of the principles of human development and growth
4. Knowledge of the role of line managers, and an appreciation for the role played by top
management and their styles, and attitudes of line managers in managing their own
development
5. Knowledge of various assessment methods, tools, and techniques
6. Assessment skills in terms of skills in observation, questionnaires, use of secondary data, and
interviews
7. A positive attitude to audit—an attitude to view audit as an empowering tool and not a fault-
finding tool
HRD Audit Dimension
Points
Main Area Categories
HRD Systems and
Strategies
1. HRD Systems: Objectives, Structure, Understanding Implementation
and Business Relevance of Manpower Planning, Performance
Management, Training, Recruitment, OD and Self-renewal, etc.
840
2. HRD Strategies: Quality, Cost, Customers, Culture Building,
Entrepreneurship, Communication and Commitment.
160
HRD Competencies 1. Competencies of HRD Staff 200
2. Learning Attitude of Line Managers 100
3. Empowering Styles of Top Management 100
4. Learning Orientation of Non-supervisory staff 60
5. Credibility of HR Department and its Activities 40
HRD Culture and
Values
1. OCTAPACE Values 160
2. Organizational Culture 340
HR Impact and
Alignment
1. Talent Management (5 × 50) 250
2. Intellectual Capital (10 × 20) 200
3. Financial Contributions (1 × 50) 50
Total 2,500

8. Communication skills in terms of presentation of the audit report verbally, or in writing using
PowerPoints, etc.
The first five competencies can be acquired by any professional in HR from a HR school and by
reading books like Designing and Managing HR Systems by U. Pareek and T.V. Rao (Oxford & IBH),
HRD Audit by T.V. Rao (Response Books) and other books by Dave Ulrich (The HR Champions or
HR Value Proposition, etc.).
Skills in points 6, 7 and 8 can be acquired through special training and practice. Most managers
are required to have these skills as managers. Hence, line managers trained in HR, once they start
practicing under guidance, will be able to acquire the skills.
While the use of this manual is recommended under specialist guidance and after some initial
training, the intention of making this manual available is to enable more and more HR and line
managers to acquire the skills through guided practice. The manual itself is intended to work as a
guide for such practice.
Organization of this Manual
The next five units are meant to give detailed procedures for HRD audit. Units 2 and 3 are devoted
to the audit of HRD systems and strategies. Unit 2 is the main chapter that aids in audit. Unit 3
gives an in-depth audit of some of the most used HRD systems. It is an additional aid for a serious
auditor. Unit 4 gives detailed procedures and standards for assessing the HRD competencies of
HR staff, line managers, top management, and the overall competencies of the HR department or
function. Unit 5 presents audit process and standards for assessing the HRD culture and values.
Unit 6 presents the detailed procedures for auditing the business linkages or alignment of HRD
systems, culture, etc., with business. Unit 7 presents various questionnaires that can be used for
the HRD audit. Unit 8 presents the scoring sheets and scoring system for the HRD audit, and the
detailed process for arriving at the HRD score card.
The details presented should be good enough to be used by a professionally-trained manager
of HRD.
References
Mungale, Sonali and Ritu Singh Bhatiani. 2003. ‘An Evaluative Study of the HRD Function through HRD
Audit’, paper presented at the 4th Conference of Young Professionals of the National HRD Network, Delhi
Chapter.
Pareek, Udai and T.V. Rao. 2003. Designing and Managing Human Resource Systems. New Delhi: Oxford & IBH.
———. 1975. ‘HRD System in Larsen & Tourbo’, unpublished consultancy report. Ahmedabad: Indian Institute
of Management.
Rao, T.V. 1999. HRD Audit. New Delhi: Response Books (A Division of Sage Publications).
Rao, T.V., Raju Rao and Taru Yadav. 2001. The Effectiveness of HRD Function in India: A HRD Audit Study.
Ahmedabad: Vikalpa.
Ulrich, Dave. 1997. The Human Resource Champions: The New Agenda for Adding Value and Delivering Results.
Boston, MA: Harvard Business School.

Unit 2
HRD Systems and Strategies
Introduction
Systems are an organized way of making things happen. They help in planning, bringing
predictability, professionalism, discipline, and security. They also help organizations get branding.
A system must be infused with spirit, and be governed by norms, values, and rules. While all these
can be a part of a system, they cannot replace the system itself, and the way it is implemented.
For example, an ‘HRD spirit’ is essential for effective implementation of HRD. Without spirit,
no one can be committed to development—either one’s own or that of others. However, there
is no simple way to ensure that the HRD spirit is present in each individual in terms of effective
implementation of HRD.
A system has its own objectives, components or elements, and process. It has inputs, an output,
and a throughput. The purpose of any HRD system is broadly to build the competencies and/or
commitment of individuals, dyads and teams, and the entire organization as a whole through a
variety of instruments. Its objective also is to build a lasting culture so that the employees learn
and give their best on a continuous basis.
In this chapter, an attempt has been made to take each subsystem of HRD, to audit its maturity
levels in an organization. The entire auditing is in concrete tangible measures to enable the auditor
to give points which will add up to give the final score of the subsystem. It is important to note
here that the questions to be asked while interviewing (as mentioned in this manual) are only
suggestive and illustrative. The actual questions, to a large extent, will depend on the behavior
and answers given by the interviewee. The questions as mentioned here attempt to give a clear
picture with regard to the kind of questions that can be asked during an interview.
The detailed list of all the systems and strategies of HRD (along with the subsystems) is as
follows:

HRD Systems and Strategies Points
HRD Systems
1. Competency Mapping 70
2. Manpower Planning 70
3. Recruitment 70
4. Induction and Integration 70
5. Performance Management 70
6. Coaching and Mentoring 70
7. Potential Appraisal and Assessment Centers 70
8. Rewards and Recognition 70
9. Career Planning and Development 70
10. Job Rotation 70
11. Training and Learning 70
12. Organization Development 70
Interpolated Score out of a Total of 840 ….
HRD Strategies
1. Communication 20
2. Employee Engagement 20
3. Quality-orientation 20
4. Customer–orientation 20
5. Efficiency 20
6. Entrepreneurial Spirit 20
7. Culture Building 20
8. Talent Management 20
Overall Strategy Score 160
Two systems of audit are presented in this manual: Mini Audit and In-depth Audit. The mini audit
is done on five dimensions for each system without going into details of how well the system is
structured and implemented. Mini audit can be done by the auditors using the same methodology
explained earlier: interviews (individual and group), observation, questionnaires, secondary data,
and documents.
In the in-depth audit, an attempt is made to get into the details of each component of
the system using the same methods. The points are scored on the basis of the presence of each
indicator, and the assessor has limited scope to bring in his or her subjectivity or judgment.
In this manual, only the mini audit is presented. Consult a separate manual for in-depth audit.
Rationale Behind Mini Audit
Since the time of the establishment of the first dedicated HRD department in the corporate sector
in this part of the world in 19751
, many organizations have taken up a systems approach to HRD.
A lot of literature has appeared in Asia. The following are the most common of the systems:
1
The first dedicated HRD department was conceptualized, designed, and established in Larsen and Toubro in
1975 with the help of Udai Pareek and T.V. Rao, two professors from the Indian Institute of Management
(IIM), Ahmedabad.

HRD Systems and Strategies 29
1. Performance management system
2. Performance feedback and counseling
3. Career planning and development
4. Potential appraisal and development
5. Training
6. Induction
7. Organization development and renewal
While these are the most common of the new systems, other systems like manpower planning
and recruitment existed in some form or the other even in the past. A recent survey auditing the
last 30 years of implementation of these systems by Rao et al. (2001) indicated that the most
frequently used HRD systems are performance management, feedback and counseling, training,
and select Organization Development (OD) interventions. The study revealed the following:
1. Most organizations seem to have well-developed performance management systems or are in
the process of having the same.
2. Feedback and counseling is the second system which only a few seem to follow. However,
this is integrated into the performance appraisal, and hence diluted. The feedback and review
discussions are conducted more as a formality than with a high development orientation.
3. There is no potential appraisal as a separate system in any of these companies. It is there as a
part of the performance appraisal in a few of these. Only one of the organizations is planning
to use assessment centers.
4. 360 Degree Feedback is being tried out in seven of the 12 organizations, either as part of
corporate initiative or on their own initiative.
5. Employee satisfaction surveys, TQM interventions, total productivity management, team
building workshops, visioning exercises, train the trainer programs, etc., are some of the OD
interventions being used by these organizations.
6. Training and development is well developed and well managed in these organizations. Internal
faculty has been developed in most of these organizations. Those organizations covered
under ISO certification programs have given a systematic and high emphasis to training and
development activities. They are still to graduate from a training and development orientation
to the creation of a learning environment.
The study also indicated that for effective implementation and utilization of the potential of any
HR system to maximize results, the system needs to
1. have very clear objectives relevant to the organization, its nature, growth phase, and other
contextual factors;
2. be structured or designed to suit the requirements of the company following all scientific
principles relating to the system concerned (for example, a training system should be designed
using the psychological principles of learning, and development);
3. be well understood by all the users (communicated well);
4. be implemented well; and
5. deliver results or produce the desired impact in terms of business goals or system goals.
It is these five aspects that have been taken into consideration in evolving the system of mini
audit.

The extent to which each of these elements is present is evaluated in this framework. Each
of these elements has been given a weightage of 10 points. On the basis of the experience of the
last 25 years of audit, two of the elements are given higher weightage. These are the design and
implementation elements. Unless a system is well structured, it will not deliver results. And unless
it is implemented seriously and appropriately with the spirit required, it will not give the fruits or
have credibility. Hence, the weightage and points given are as follows:
Dimension of the Audit Weightage and Points
Extent of clarity of objectives One (10 points)
How well structured is the system? How complete and scientific are the Two ( 20 points)
elements? How comprehensive are they?
How well are they understood? One (10 points)
How well are they implemented? Two (20 points)
Are they resulting in any tangible achievement of business goals? One (10 Points)
Extent to which it meets organizational needs
Total 70 points
How to Use the Audit Manuals?
In the sections that follow, guidelines to assess each of the HR systems are presented. Evaluation is
to be done on each dimension using a 10 point scale. The auditors or the audit team could collect
the information for assessment by interviewing a few line managers individually or in teams, or
collecting a stratified random sample of line managers who have been with the organization for a
minimum period (for example, at least two years if the organization is five years old or more, and
six months if the organization is relatively new).
The detailed methodologies of audit and how to use observation, questionnaires, and
secondary data are described in Rao (1999). The methods described in that book could be used to
arrive at the assessments suggested in this section. The questionnaires and other tools given in
Unit 7 could also be used for arriving at the points mentioned here for each system.
HRD Systems
Assess the extent to which each of the following HRD systems in an organization is mature.
For any system not included here, the auditor or the audit team is encouraged to use the
following framework of assessment:
1. Extent of clarity of objectives: How clear are the objectives of the system?
2. How complete and scientific is the system? How comprehensive is the system and the extent
to which it is structured well?
3. How well is the system understood?
4. How well is it being implemented?

5. What is the extent to which it meets organizational needs? Is the system resulting in any
tangible achievement of business goals? Does it make Direct or Indirect contributions?
(Direct: financial results or customer satisfaction or delight, cost savings, brand building,
shareholder value enhancement, business growth and expansion, diversification,
technological developments, enhanced efficiency, and effectiveness of operations; Indirect:
human capacity utilization, employee satisfaction, employee capacity development, creation
of the right culture and values, building professionalism, laying cultural grounding for the
future, etc.) ?
For assessments, use the scoring sheets provided in Unit 8.
Competency Mapping
Total Points = 70
Methodology
The following methods can be used to audit this system.
S. No. Methods Checklist of questions or activities for audit
1. Interviews Interview HR, the top management, and senior managers to find out the
following:
Whether competency mapping exercise has been undertaken? Levels for
which it is covered, availability of the list of competencies, methodology
that has been used for competency mapping, whether it is based on roles
set members or a scientific study of the role requirements, and whether
the data are made available to each individual concerned about the list of
activities and competencies.
Whether the list of competencies is shared with the role holders and their
seniors. Ascertain the use of the competency mapping exercise and the
benefits out of the competency mapping exercise.
Ascertain if it has been used for organizational restructuring, role clarity
exercises, recruitment, manpower planning, induction, training, coaching,
potential assessment, identification of fast trackers, mentoring, etc.
2. Observation Role directory, and competency mapping manuals or output of exercises.
Observe the extent to which the training, Performance Management System
(PMS), induction, etc., incorporate competency mapping exercises.
Examine the filled-in forms.
3. Questionnaire Develop a questionnaire on competency mapping. Use relevant questions
from the HRD audit questionnaire.
4. Secondary Data Look for the circulars, workshop outline, memos, meetings, etc., associated
with competency mapping exercises and their usage.
5. Documents and Reports Check competency directories, manuals, guidelines, policy statements,
training material, etc.

On the basis of the data in the preceding table, give points as follows:
1. Clarity of Objectives (10 points)
• Extent of clarity
• Existence of documentation
• Efforts made to clarify
• Comprehensiveness/coverage of efforts
Points Definitions, Criteria, and Standards
10 All employees appreciate the need for identifying competencies and the competency requirements
for each role.
There are well-identified and documented competencies for each role.
The purpose and use of competencies and competency directories are well shared and appreciated
by all. Documents have been circulated and employees have been given explanations.
All employees are aware of the competency requirements associated with their role.
8–9 One of the components (like efforts made or documentation, extensiveness of coverage, or depth in
explanation and internal consistency) is missing.
Not all employees have understood fully or are appreciative of the need for competency mapping
or role directory exercise. About 80 per cent appreciate and are clear about the same.
6–7 Two components are missing.
4–5 Some form of competency mapping has been done. Many employees are not clear. Clarity is not
fully ensured. Full efforts are not made.
2–3 Competencies have been identified for a few roles. Clarity is weak. Very little effort has been made.
Many people are not aware of the process and mechanisms.
0–1 There are no guidelines. No circular or statement. It is only loosely talked about, and no one is really
clear about the process or what is expected out of the process.
2. Extent to which it is well structured (10 points × 2 weightage = 20 points)
• Competencies cover technical, functional, managerial, behavioral, and conceptual categories.
• Knowledge, attitudes, skills, motives, and values are all covered.
• Competency mapping process is based on mission, vision, values, and long-term plans of
the company.
• Competencies identified are based on current role holders; their role set members,
successful past performers, their seniors, etc.
• Competencies are benchmarked and validated where data is available with international
standards.
• There are mechanisms to update the competencies once in one to three years.
• Employees are involved in such competency mapping and updating exercises.
10 All the indicators are present.
Excellent process and methodology followed in competency mapping.
Competency models evolved.
A detailed directory available, comprehensively covering all roles.

8–9 One of the indicators is weak.
4–5 Three components are missing. Many aspects are not clearly defined. Comprehensiveness is not
fully ensured.
2–3 The process followed in competency mapping is weak and leaves a lot to be desired.
0–1 Competency mapping is done systematically. There are no documents. It is only loosely talked
about, and no one is really clear about the process.
3. Extent to which it is understood (10 points)
• Awareness about competencies and their meaning
• Understanding the objectives of the exercise
• Understanding the way competency mapping can be put to use
• Understanding the benefits of the system
10 All employees (across functions and levels) are aware of the system, understand the objectives,
functioning, and benefits of the system.
8–9 One of the components (like awareness or understanding of meaning, understanding of process or
benefits of system) is missing.
6–7 Two components are missing. Understanding is not complete, but good enough.
4–5 Three components are missing. Many employees are not aware. Understanding is not fully
ensured.
2–3 Understanding is weak. Many people are not aware of competencies and their use.
0–1 There are no guidelines. No circular or no statement. It is only loosely talked about, and no one is
really clear about the system.
4. How well it is implemented (10 points × weightage 2 = 20 points)
• The extent to which it is shared
• Made available to each individual and departments
• Used for induction, PMS, recruitment, placement, and identifying potential high fliers
10 Competency lists are made available to all employees and their departments. It is used extensively,
starting from recruitment, training of recruiters, placement, manpower planning, induction,
retention management, incentives, PMS, promotions, potential identification, organizational
restructuring, etc.
8–9 It is used for most of the aforementioned.
6–7 It is used for some of the critical systems like recruitment, PMS, and promotions.
4–5 It is used in a limited way for one or two systems like PMS or recruitment or manpower planning. It
is not put to use that effectively.
2–3 Use of competencies for HR is weak. Very little implementation effort has been made.
0–1 It does not exist, or is not used at all.

5. Extent to which it meets organizational needs (10 points)
• Objectives of competency mapping activity
• Design of the system or competency mapping activity
• Functioning of the system or competency mapping activity
• Benefits derived from system or competency mapping activity
10 The competency mapping exercise has helped the organization in many ways: rationalization
of jobs, levels, fixing of responsibilities, enhancing accountabilities, role clarity, identification of
potential, manpower planning, matching employees and their talent with jobs, cost savings, etc.
8–9 It has given most of the above benefits though not all.
6–7 It has given many benefits, though not the best.
4–5 It has given a few benefits.
2–3 It may have met one or two organizational requirements like ISO certification, but we have not
got enough out of this system. The return on investment (ROI) is weak.
0–1 There are no benefits out of this. This has either not been done, or it did not give any significant
results.
Manpower Planning
Total Points = 70
Methodology
The following methods can be used to audit this system:
1. Interviews Interview HR manager, line managers and functional heads, and ascertain their
level of clarity. Compare the objectives they state with those that exist on
paper.
Interview HR staff to ask about documents and objectives, etc.
2. Questionnaire Relevant items of HRD audit questionnaire.
3. Secondary Data Look for any reports related to situation analysis, manpower demand or supply,
manpower planning, departmental requests for manpower to HR department,
industrial engineering department studies, reports of consultants, etc.

10 There is a system and stated set of guidelines, and a policy write-up or document of manpower
planning.
The guidelines are comprehensive and explain all aspects including the role of the line managers
and HR.
Guidelines for manpower requisition are given. There are no ambiguities.
Efforts have been made to clarify and make documentation accessible to all concerned.
4–5 Three components are missing. Many employees are not clear. Clarity is not fully ensured. Full
efforts not made.
2–3 Clarity is weak. Very little effort has been made. Many people are not aware of the process and
mechanisms.
clear about the process, or what is expected out of the process.
2. Extent to which manpower planning process is well structured (10 points × 2
weightage = 20 points)
• Situation analysis (internal needs, employee turnover, retirements, outside demand,
availability, market situation, etc.)
• Manpower demand analysis
• Manpower supply
• Manpower plan
10 There is a system for regular situation analysis, manpower demand analysis, manpower supply, and
manpower plan.
The system is comprehensive and covers all aspects.
A comprehensive manpower plan is developed based on the situation analysis, manpower demand
analysis, and manpower supply.
8–9 One of the components (like situation analysis, manpower demand analysis, manpower supply, or
manpower plan) is missing.
fully ensured.
2–3 Structure is weak. Many people are not aware of the process and mechanisms. There is very little
provision for regular analysis and updating.
0–1 There is no structure. It is only loosely talked about, and no one is really clear about the process.
There is no provision for manpower plan.

• Awareness of the system
• Understanding the objectives of the system
• Understanding the functioning of the system
8–9 One of the components (like awareness or understanding of objectives, understanding of process or
ensured.
2–3 Understanding is weak. Many people are not aware of the system.
0–1 There is no awareness or understanding. It is only loosely talked about, and no one is really clear
about the system.
4. How well it is implemented (10 points × 2 weightage = 20 points)
• Situation analysis
• Manpower demand analysis
• Manpower Supply
• Manpower Plan
10 Situation analysis is done regularly. Proper manpower demand and supply analysis is done.
Comprehensive manpower plan is prepared based on the analysis done.
8–9 One of the components (like situation analysis, manpower demand analysis, manpower supply, or
manpower plan) is not implemented.
4–5 Three components are missing. Situation analysis, manpower demand analysis, and manpower
supply analysis not done.
2–3 Implementation is weak. Situation analysis, manpower demand analysis, manpower supply analysis,
and manpower plan are not done properly.
0–1 There is no analysis done. No manpower plan. It is only done on an ad hoc basis.
5. Extent to which organizational needs are met (10 points)
• Objectives of the system
• Design and structure of the system
• Implementation and functioning of the system
• Benefits derived from the system

10 Objectives of the system are derived from some organizational needs. Design and structure of the system
fulfills some organizational requirements. Implementation and functioning of the system fulfills some
organizational requirements. Benefits derived from system address some organizational needs.
8–9 One of the components (like objectives derived from needs or benefits addressing needs, design or
functioning fulfilling requirements) is missing.
4–5 Three components are missing. Objectives not derived from organizational needs. Design is
not fulfilling organizational requirements. Full efforts not made in implementation to address
organizational needs.
2–3 Linkage to organizational needs is weak. Very little linkage has been found.
0–1 There are no linkages between system and organizational needs.
Recruitment
Total Points = 70
Methodology
1. Interviews Interview new recruits who were subject to the recruitment process, and
ascertain their level of clarity. Compare the objectives they state with those
that exist on paper.
Interview line managers and functional heads, and ascertain their level of
clarity. Compare the objectives they state with those that exist on paper.
Interview HR staff to ask about documents, objectives, etc.
2. Observation Observe actual recruitment process in operation. Evaluate it for clarity.
4. Secondary Data Look for any records of recruitment process, interviews, applications, etc.
5. Documents and Reports Check manuals, guidelines, policy statements, training material, etc.
On the basis of the data in the preceding table, allocate points as follows:

10 There is a system and a stated set of guidelines, and a policy write-up or document of recruitment
process.
The guidelines are comprehensive and explain all aspects including the role of the interviewer.
Guidelines for interviewing and selection are given. There are no ambiguities. Efforts have been
made to make clarity and documentation accessible to all concerned.
efforts not made
mechanisms.
• Understanding the job to be filled
• Tapping the sources of recruitment
• Using various strategies for selection
• Setting the selection process
10 There is a system and a stated set of guidelines, and a policy write-up or document of recruitment
process.
The guidelines are comprehensive and explain all aspects including the selection criteria of the
interviewers. Training for interviewing is given. Efforts have been made to make documentation
accessible to all concerned
8–9 One of the components (like understanding the job to be filled, tapping the sources of recruitment,
using various strategies for selection, or setting the selection process) is missing.
fully ensured.
2–3 Structure is weak. Very little documentation has been made. Many people are not aware of the
process and mechanisms.
0–1 There are no documents. It is only loosely talked about, and no one is really clear about the
process.
• Awareness about the system
• Understanding the objectives of the system
• Understanding the functioning of the system

ensured.
clear about the system.
• Understanding the job to be filled
• Tapping the sources of recruitment
• Using various strategies for selection
• Setting the selection process
10 There is a clear understanding of jobs to be filled and a proper tapping of sources of recruitment.
Appropriate strategies for selection are implemented. A well-structured selection process is in place.
8–9 One of the components (like understanding the job to be filled, tapping the sources of recruitment,
using various strategies for selection, or setting selection process) is missing.
4–5 Three components are missing. Jobs are not well understood. Sources of recruitment are not tapped
well. Proper recruitment strategies are not implemented. Selection process is not functioning well.
2–3 Implementation is weak. Very little implementation effort has been made. There is little
understanding of jobs to be filled.
0–1 There are no guidelines. No understanding of jobs to be filled, or no strategies for selection. Selection
is done on an ad hoc basis.
5. Extent to which meets organizational needs (10 points)
• Design and structure of the system
• Implementation and functioning of the system
• Benefits derived from system
10 Objectives of the system are derived from some organizational needs. Design of the system fulfills
some organizational requirements. Actual functioning of the system fulfills some organizational
requirements. Benefits derived from system address some organizational needs.
functioning fulfilling requirements) is missing. (Contd)

4–5 Three components are missing. Objectives not derived from organizational needs. Design or process
is not fulfilling organizational requirements. Full efforts not made to address organizational needs.
0–1 There are no linkages between the system and organizational needs.
Induction and Integration
Total Points = 70
Methodology
Induction aims at three groups of employees: (i) new recruits to senior and middle level positions
from other companies; (ii) newly promoted or transferred insiders; and (iii) new entrants fresh
from colleges and educational institutions taken at junior levels. Induction programs traditionally
focused on the new recruits (category iii) and went to great lengths to induct them into the
organization. However, induction of middle and senior managers (outsiders as well insiders on
transfer or rotation) is equally and sometimes more important. The purpose of induction and
assimilation, therefore, is to ensure that all new placed employees will adapt and become full
contributors in the new organization faster, better and with fewer destabilizing effects to the
individual and the organization. A successful integration and assimilation is one in which both
the individual and the organization are transformed for the better, and are able to leverage each
others’ strengths to achieve mutually-beneficial goals. The individual and the organization need
to be treated together for this purpose. Assimilation of new employees begins at the point of hire,
and completes when the individual is a full contributor and no longer an outsider.
1. Interviews Audit should focus on all the new entrants to an existing organization or
position and all the recruits at all levels. These groups should be interviewed
individually and in groups to ascertain how they were inducted. Interview
new recruits into the company and ascertain the level of clarity they got
at the end of their induction and the extent to which they are aware of
the organization, its products and services, coverage, structure, processes,
norms and values, etc. Compare the objectives and the process they have
experienced with those that exist on paper. Interview top management, line
managers and functional heads, and ascertain their level of clarity on the
induction program. Compare the objectives they state with those that exist
on paper.
Interview HR staff to ask about process, documents, objectives, etc.
(Contd)

2. Observation Observe the actual induction program or process in operation. Evaluate it
for clarity and effectiveness. Participate in induction meetings, and observe
the care taken, seriousness attached, and details of time spent.
4. Secondary Data Look for any records of materials sent, design of the induction program or
integration and assimilation program, materials supplied prior to joining,
online kits available and their effectiveness, use of performance appraisal
formats and induction kits, letters of welcome and introductions, etc.
• Comprehensiveness of coverage of objectives
10 There is a system of induction and integration, a stated set of guidelines, and a policy write-up
or document about the induction process. The guidelines are comprehensive and explain all
aspects, including the role of the line managers, HODs, supervisors and the top management. All
parties participate in the induction process: current role set group of the new recruit, HODs, top
management, HR, and outgoing employees in case of transfers. The objectives cover all new recruits
to the organization as well as internal recruits for all positions. Transferred or job-rotated employees
are also inducted. Guidelines for interviewing and selection are given. There are no ambiguities.
Efforts have been made to be clear and make documentation accessible to all concerned and even
put on the website.
8–9 One of the components (like efforts made, or documentation, extensiveness of coverage, or depth
in explanation and internal consistency) is missing, or one of the components like assimilation and
integration of new recruits at higher levels is underplayed in the objectives.
6–7 Two components are missing, or some parties like the supervisor, the HOD, or the HR do not play
an adequate role.
efforts not made.
mechanisms. Induction and integration is done on an ad hoc basis, and it is left for different
departments to have their own objectives.
• Coverage of all employees: workmen, supervisors, new entrants, lateral recruits at all levels,
transferees, and job rotated.
• Covers all aspects: company, products, markets, technology, policies, personnel policies,
culture, competitors, facilities, values, top management, structure, and competitors.

• Uses a number of players, line managers, HODs, top management, and documentation.
• Using various strategies for induction: pre-joining induction, immediately after joining,
formal induction programs, informal meetings, and assimilation efforts.
• Uses all existing resources: Internet, online induction, and documentation.
• Ensures employee engagement and commitment; is managed like a system.
10 Induction is done for all categories of employees: workmen, support staff, supervisors, managers,
HODs, top management, CEOs, board members, and even covers visitors and consultants where
appropriate. The employee is inducted into the company’s products, markets, technology, policies,
personnel policies, culture, structure, competitors, facilities, values, top management, competitors,
business policies, etc.
A number of players are involved and all the players share the same objectives.
There is a system, a stated set of guidelines, and a policy write-up or document about the induction
process. The guidelines are comprehensive and explain all aspects of induction and assimilation
including the values, culture, etc. Formal induction program is well structured. Efforts have been
made to involve all concerned parties.
8–9 One of the components (like introducing to the company, its products, structure, etc.) is missing.
One of the important groups is not inducted, or there are minor gaps in the induction training
program or induction process for lateral entrants.
6–7 Two components are missing: employees are covered under induction or contents of induction.
fully ensured. New inductees are well inducted, but other inductees are neglected, or middle- and
senior-level induction is more comprehensive and lower levels neglected.
Induction process takes time and could be made more effective.
2–3 Induction program structure is weak. Very little documentation has been done. Many people are
not aware of the process and mechanisms. Most existing resources are not used, or all people are not
fully involved. The candidate takes time to learn about the company.
0–1 There are no documents. It is only loosely talked about, and no one is really clear about the process.
Very ad hoc and not well-structured.
• Awareness about the induction process system
• Understanding objectives of the induction process and the system
• Understanding of the process and functioning of the system
• Understanding of the role played by induction and the seriousness it needs from all levels
10 All employees (across functions and levels) are aware of the induction process and system,
understand the objectives, functioning, and benefits of the system.
benefits of system or its importance) is missing.

6–7 Two components are missing
4–5 Three components are missing. Many employees are not aware. Understanding is not fully ensured.
• HR puts in its best efforts. Seriousness is shown in ensuring all systems are followed by all.
• Line mangers and HODs take it seriously and make themselves available for the induction
and integration.
• New recruits have a well-structured program and it is implemented with reviews and
effectively all the time. Schedules are not changed.
• Various components, opportunities, and systems are used for induction: clubs, Internet,
online education, CDs, written materials, performance appraisals, KPAs, social get-
togethers, etc.
• Candidates also look forward to the induction program.
10 There is a clear understanding of the role of induction. All take it seriously. All resources are used.
Employees and top management allocate time needed. Induction is given highest priority.
A well-structured induction process is in place. Middle- and top-level induction is also given
importance.
8–9 One of the five components is missing.
4–5 Three components are missing. Induction is not well implemented. Proper induction process is not
followed.
2–3 Implementation is weak. Very few implementation efforts have been made. There is little
understanding of the induction of either new recruits or lateral recruits.
0–1 There is no formal induction. Everything happens ad hoc or informally, and most of the time it does
not happen. The organization has a long way to go.
5. Extent to which organizational needs are met (10 points)
• Objectives of the system meet the needs: reduction of adjustment time and getting down
to contribute.
• Design and structure of the system meets the needs of the company.
• Implementation and functioning of the system results in time management and quick
settling-down.
• Benefits are derived from the system. Employees develop a lot of company identity and
quickly.
• Employees get ready to contribute fast as a result of induction.

10 Objectives of the system are derived from organizational needs. Design of the system fulfills
requirements. Benefits derived from the system address some organizational needs. It helps people
to settle down fast, and start contributing with full commitment and understanding. Employees
feel as part of the family soon as a result of induction. Everyone gets to know all that they need to
know and more after induction. It results in time savings and cost savings. It also enhances mutual
understanding of people and appreciation of each other’s work.
functioning fulfilling requirements) is missing. A few employees are not inducted sufficiently and a
few aspects are ignored.
6–7 Two components are missing from the list.
4–5 Three components are missing. Objectives are not derived from organizational needs. Design
or process does not fulfill organizational requirements. Full efforts are not made to address
organizational needs. Induction is conducted more as a routine.
2–3 Linkage to organizational needs is weak. Very little linkage has been found. Induction sometimes
goes in a different direction from what the business needs are.
0–1 There are no linkages between the induction process and the extent to which the system meets
organizational needs.
Performance Management
Total Points = 70
Methodology
1. Interviews Interview (appraisees and appraisers individually or in teams) who were subject
to performance appraisal process, performance planning, identification
of KPAs, etc. Interview those who had been through performance review
sessions recently or who are likely to go through them, and ascertain their
level of clarity. Compare the objectives they state with those that exist on
paper. Interview HR staff to ask about documents,objectives, etc.
2. Observation Observe actual performance review sessions in operation. Evaluate them for
clarity.
Examine the filled-in forms.
4. Secondary Data Look for any records of transactions between the appraisers and appraisees.

10 There is a system and a stated set of guidelines, and a policy write-up or document of performance
appraisal and management.
The guidelines are comprehensive and explain all aspects including the role of the appraiser and
appraisee.
Guidelines for performance appraisal are given. There are no ambiguities. Efforts have been made to
make clarity and documentation accessible to all concerned.
8–9 One of the components (like efforts made, or documentation, extensiveness of coverage, or depth
in explanation and internal consistency) is missing.
efforts are not made.
mechanisms.
• Performance planning
• Performance analysis and review
• Performance development and counseling
• Performance ratings
10 There is a system and a stated set of guidelines, and a policy write-up or document of performance
management. The guidelines are comprehensive and explain all aspects including the performance
planning, performance analysis and review, performance development and counseling, and
performance ratings. Trainings for performance appraisal and review discussions are given. Efforts
have been made to make documentation accessible to all concerned.
8–9 One of the components (like performance planning, performance analysis and review, performance
development and counseling, performance ratings) is missing.
fully ensured.
2–3 Structure is weak. Very little documentation has been made. Many people are not aware of the
process and mechanisms. There is very little provision for training.
0–1 There are no documents. It is only loosely talked about, and no one is really clear about the process.
There is no provision for training.

1. Awareness about the system
2. Understanding the objectives of the system
3. Understanding the functioning of the system
4. Understanding the benefits of the system
6–7 Two components are missing
ensured.
1. Performance planning
2. Performance analysis and review
3. Performance development and counseling
4. Performance ratings
10 Performance is regularly planned in advance. Performance review discussions are done involving
performance analysis, development, and counseling. Performance ratings are given objectively.
8–9 One of the components (like performance planning, performance analysis and review, performance
development and counseling, performance ratings) is missing.
4-5 Three components are missing. Performance is not planned properly. Performance analysis and
review is not done systematically. Performance development and counseling is not focused in
review discussions. Performance ratings are not given objectively.
2–3 Implementation is weak. Very few implementation efforts have been made.
0–1 There are no guidelines. No training or support. It is only reviewed on an ad hoc basis.
5. Extent to which it meets organizational needs (10 points)
• Design of the system
• Functioning of the system
• Benefits derived from system

10 Objectives of the system are derived from some organizational needs. Design of the system fulfills
requirements. Benefits derived from system address some organizational needs.
functioning fulfill requirements) is missing.
4–5 Three components are missing. Objectives are not derived from organizational needs. Design is not
fulfilling organizational requirements. Full efforts have not been made to address organizational
needs
0–1 There are no linkages between the system and organizational needs.
Coaching and Mentoring
A system to ensure continuous motivations and talent utilization is through coaching and
mentoring processes.
Total Points = 70
Methodology
1. Interviews Interview mentors, protégés, and new entrants who were subject to the
mentoring process. Interview those who had been through coaching or
counseling sessions recently, or who are likely to go through them, and
ascertain their level of clarity. Compare the objectives they state with those
that exist on paper. Interview HR staff to ask about documents, objectives,
etc.
2. Observation Observe actual mentoring sessions or coaching sessions in operation. Evaluate
them for quality and effectiveness
3. Questionnaire Coaching effectiveness questionnaire. Relevant items of HRD audit
questionnaire.
4. Secondary Data Look for any records of transactions between the coaches or mentors, and
their subjects.

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