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DUE DILIGENCE HR AUDIT
Due Diligence HR Audit
Acquisitions has many aspects, but one of the most important is human resources due diligence. When one firm acquires another, it also takes on the human capital behind that firm. A relationship is established between two HR teams as they evaluate human resources policies, procedures, and talent in the team itself as well as the company.
Due diligence is all about the HR team acquainting itself with new leadership, gaining the trust of new employees, and being empathetic to those affected by the acquisition. It isn’t something most people deal with on a monthly or even yearly basis, however. So, here’s everything you need to know.
Due Diligence HR Audit Coverage
The information systems team of the HR department needs to conduct an employee census off the bat. This census contains names, positions, salaries, and the date of hire for every employee affected by the acquisition.
It also contains confidential information related to employee relations, including any issues currently in litigation. This allows the acquiring company to fully understand the employee body they are taking on as well as any potential liability from litigation.
At the same time, it reveals any agreements the acquired company held with their employees from union efforts to pay raises. The acquiring company can then determine if their agreements and incentives are better, or find a unique path to encourage productivity by combining company efforts.
It’s highly unlikely that two companies share the same policies, procedures, and training methods. HR’s job is to ensure both companies offer the mandatory employee benefits and make the transition of these new policies as simple as possible.
Due diligence HR Audit will also review all of the employment files from both HR departments, checking for consistency and completeness. Records ranging from emergency contact information to work eligibility documentation and commendations should be reviewed.
- Census info
- Benefits plans
- Compensation plans
- Employment agreements
- Union Contracts
- Organization Structure
- HR Compliance risks
- Pending employment lawsuits
- Open requisitions
- HR technology systems
- HR contracts/vendor obligations
- HR Policies
- Leadership/Mgmt practices
- Culture/ Values
What to Focus
- Any potential human resources issues that could result in a change in monetary value for the organization.
- Any cultural differences between the two workplaces that could greatly impact that success of the merger or acquisition.
- Areas where more information is needed to make a solid recommendation
Due Diligence Audit Process
- Problem Definition: Is the current management team not meeting your long-term goals, or do you want to evaluate your future management team before a potential merger or acquisition?
- Data Collection: We interview and test the management team members, and possibly other key people, to chart their ability, personality and potential.
- Analysis: The basis of data collection is linked to your current organisational structure and long-term business goals.
- Report: We compile insights and recommendations for any structural changes of your management team – or a recommendation for, or against, a proposed acquisition.
- Governance: The organization has appropriate structures in place to provide effective oversight of HR. Also, Roles and responsibilities related to oversight of HR are clearly defined, coordinated and communicated.
- Planning: An integrated HR planning process is in place that supports the objectives of the organization.
- Accountability: HRD roles and responsibilities are clear and support the achievement of objectives.
- Client Service: HRD services are being provided in a timely and effective manner. HR policies/directives have been developed that comply with current Labor Law.
- People: HR guidelines, tools and reports exist to support the management of human resources.
- Compliance: Compliance with HR policy requirements is monitored on a regular basis and corrective actions are taken in a timely manner.
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Frequently Asked Questions
We provide HR Audit services to all types of small- and medium-sized businesses in Indonesia, usually with 5 to 250 employees, and have been in operation for 3+ years. We’ve worked with businesses in all kinds of industries, ranging from construction companies to manufacturing operations to professional services firms.
Our HR Audit services are offered either on a project basis or on a retainer basis, with a specified scope and fixed-fee pricing. We offer very cost-effective solutions so you can focus on building your business. Following our initial consultation, we provide a written proposal clearly outlining the deliverables and fixed-fee pricing.
We do not provide project nor consulting on an hourly-basis. We often are contacted by potential clients as a last resort when issues have become big problems, such as for terminations. Instead of focusing on solving your HR issues, the focus is instead on “clock-watching”, which neither we nor our clients like. We offer the cost-effective for the do-it-yourselfer, or various retainer options which clients can take advantage of which cover periodic HR inquiries. To learn more, contact us for more information.
Of course – simply complete the Request for Quote form or have a quick call at (+62) 8111 623 549. It’s Free.
With an individual HR professional, your benefit is limited to one person’s expertise. With a project collaborative, you glean from the collective knowledge, perspective, and experience of an expert auditor in project team without the price tag of an in-house HR department.
We offer custom HR audit solutions rather than using cookie cutter approaches. Unlike consulting firms, we both audit and provide recommendation for changes to improve your business. Other firms tend to be either high tech or high touch; we are both.
We understand that compliance can be scary and overwhelming. That’s why we are meticulous in our assessments and thorough audit in our corrective measures. We guarantee that when we’re done, you’ll have nothing to fear come audit time. We have team which are always updated on the Government of Indonesia’s Employment law, regulations and it’s derivatives.
Take a deep breath—that’s why we’re here! We can help you identify which audit services you require right now, establish a timeline and checklist for future needs, and preserve anticipated root-cause of problem effective and efficient overall HR Operations.
Our HR menu, so to speak, includes the following HR Audit projects:HR Operations Audit; HR Compliance Audit; and Due Diligence for Merger and Acquisition Audit. We price competitively and offer clear proposals prior to beginning any project work.