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Summer Internship Project Report


HR Audit at Aditya Birla


University Roll No. 27300912004
Submitted in partial fulfilment of the requirements of
Summer Internship Programme

Under Guidance of

Ms Lisa Chakraborty
Manager (HR)
Pantaloons Fashion and Retail Ltd

Dr. Bijay Bhujabal

NSHM Business School Durgapur



I hereby declare that this project report titled HR Audit at

Pantaloons - is the result of my work at Pantaloons Fashion and
Retail Ltd., Kankurgachi, Kolkata as part of my Summer Internship
Programme. To the best of my knowledge and belief, this report is
original, except for the referenced material, and has not been
submitted to any educational institution for the award of any degree
or diploma.


Expression of giving thanks are just a part of those feeling which are
too large for words, but shall remain as memories of wonderful
people with whom we have got the pleasure of working during the
completion of project.
The completion of any project brings with it a sense of satisfaction,
but it is never complete without thanking those people who made it
possible and whose constant support has crowned my efforts with
success. One cannot even imagine the power of the force that
guides us all and neither can we succeed without acknowledging it.
The organization which not only traines a lot of Management
Professionals but also helps to understand the working environment
of company. I am thankful to Pantaloons Fashion and Retail Ltd,
Kankurgachi Kolkata which helped me to do so.
I have this great opportunity to express my deep sense of gratitude
and whole hearted thanks to Miss. Lisa Chakraborty (HR), for her
invaluable guidance, inspiration & encouragement. It is because of
her that I could synchronize my efforts.
I have the pleasure to express my deep sense of respect and whole
hearted thanks to Dr. Bijay Bhujabal, Principal (NSHM Business








encouragement. It is because of him that provided the path towards

the completion of the project.
I shall be failing in my duties until & unless I express my sincere
thanks to all the Staff members, both Operational & Back office, all
my friends whos suggestions and support helped me either directly
or indirectly to achieve success in my endeavour.


Chapter I


Chapter II

Retailing in India
The evolution of retail in India
Challenges to retail development in India

Chapter III

Study objective
Methodology of the Study

Chapter IV

Aditya Birla Group-A Company Profile

Aditya Birla Retail
Aditya Birla NUVO

Chapter V

Pantaloons Fashion and Retail Ltd- A Company

Private Brands Levels of Pantaloons Fashion

and Retail Ltd.

SWOT Analysis of Pantaloons Fashion and
Retail Ltd.

Chapter VI
Pantaloons Fashion

Human Resource Management Systems at

and Retail Ltd
Importance of HRMS
HRMS maintained in Pantaloons
Creation of HRMS login

Chapter VII

HR Audit
Approaches to HR Audit
Scope of HR Audit
Benefits of HR Audit
HR auditing done at Pantaloons

Chapter VIII


Chapter 1

Chapter I

etailing is a distribution channel function where one

organization buys products from supplying firms or
manufactures the product themselves, and then sells
these directly to consumers. A retailer is a reseller (i.e.,

obtains product from one party in order to sell to another) from

which a consumer purchases products. In the US alone there are
over 1,100,000 retailers according to the 2002 US Census of Retail

In the majority of retail situations, the organization from which a

consumer makes purchases is a reseller of products obtained from
others and not the product manufacturer. But as we discussed in
the Distribution Decisions tutorial, some manufacturers also operate
their own retail outlets in a corporate channel arrangement. While
consumers are the retailers buyers, a consumer does not always
buy from retailers. For instance, when a consumer purchases from
another consumer (e.g., eBay) the consumer purchase would not be
classified as a retail purchase. This distinction can get confusing but
in the US and other countries the dividing line is whether the one
selling to consumers is classified as a business (e.g., legal and tax
purposes) or is selling as a hobby without a legal business standing.
As a reseller, retailers offer many benefits to suppliers and
customers as we discussed in the Distribution Decisions tutorial. For
consumers the most important benefits relate to the ability to
purchase small quantities of a wide assortment of products at prices
that are considered reasonably affordable. For suppliers the most
important benefits relate to offering opportunities to reach their

target market, build product demand through retail promotions, and

provide consumer feedback to the product marketer.

Chapter II

Retailing in India


Chapter II
Retailing in India

etailing in India is one of the pillars of its economy and





GDP. The Indian retail market









US$ 450 billion and one of the top five retail markets in

the world by economic value. India is one of the fastest growing

retail markets in the world, with 1.2 billion people.
As of 2013, India's retailing industry was essentially owner manned





format convenience

stores and

supermarkets accounted for about 4 percent of the industry, and

these were present only in large urban centers. India's retail
and logistics industry employs about 40 million Indians (3.3% of
Indian population).





denied foreign


investment (FDI) in multi-brand retail, forbidding foreign groups from

any ownership in supermarkets, convenience stores or any retail
outlets. Even single-brand retail was limited to 51% ownership and a
bureaucratic process.
In November 2011, India's central government announced retail
reforms for both multi-brand stores and single-brand stores. These
market reforms paved the way for retail innovation and competition
with multi-brand retailers such as Wal-Mart, Carrefour and Tesco, as

single brand


such as

IKEA, Nike, and Apple. The

announcement sparked intense activism, both in opposition and in

support of the reforms. In December 2011, under pressure from the
opposition, Indian government placed the retail reforms on hold till it
reaches a consensus.

In January 2012, India approved reforms for single-brand stores

welcoming anyone in the world to innovate in Indian retail market
with 100% ownership, but imposed the requirement that the single
brand retailer source 30 percent of its goods from India. Indian
government continues the hold on retail reforms for multi-brand
In June 2012, IKEA announced it had applied for permission to invest
$1.9 billion in India and set up 25 retail stores. An analyst from Fitch
Group stated that the 30 percent requirement was likely to
significantly delay if not prevent most single brand majors from
Europe, USA and Japan from opening stores and creating associated
jobs in India.
On 14 September 2012, the government of India announced the
opening of FDI in multi-brand retail, subject to approvals by
individual states. This decision was welcomed by economists and the
markets, but caused protests and an upheaval in India's central
government's political coalition structure. On 20 September 2012,
the Government of India formally notified the FDI reforms for single
and multi brand retail, thereby making it effective under Indian law.
On 7 December 2012, the Federal Government of India allowed 51%
FDI in multi-brand retail in India. The government managed to get
the approval of multi-brand retail in the parliament despite heavy



opposition. Some





supermarkets like Wal-Mart, Tesco and Carrefour to open while other

states will not.

The Evolution of Retail in India

While barter is considered to be the oldest form of retail trade, retail
in India has evolved to support the unique needs of our country
given its size and complexity. Haats, Mandis and Melas have always
been a part of the Indian landscape. They still continue to be present

in most parts of the country and form an essential part of life and
trade in various areas.

The PDS or the Public Distribution System would easily emerge as

the single largest retail chain existing in the country. The evolution
of the public distribution of grains in India has its origin in the
rationing system introduced by the British during the World War II.
The system was started in 1939 in Bombay and subsequently
extended to other cities and towns. By the year 1946, as many as
771 cities/towns were covered. The system was abolished post war
on attaining Independence, India was forced to reintroduce it in
1950 in the face of renewed inflationary pressures in the economy.

A detailed discussion forms a part tracing the evolution of Indian

retail would be incomplete without a mention of the canteen Stores
Department and the Post Offices in India. The Khadi & Village
Industries (KVIC) was also set up post-independence. Today, there
are more than 7,050 KVIC stores across the country. The cooperative movement was again championed by the government,
which set up Kendriya Bhandars in 1963. In Maharashtra, Bombay
bazaar, which runs stores under the Sahakari Bhandar and Apna
Bazaars run a large chain of co-operative stores.

In the past decade, the Indian marketplace has transformed

dramatically. However, from the 1950s to the 80s investments in
various industries was limited due to the low purchasing power in
the hands of the consumer and the governments policies favoring
the small scale sector. Initial steps towards liberalization were taken
in the period of 1985-90. It was at this time that many restrictions
on private companies were lifted, and in the 1990s, the Indian


economy slowly progressed from being state led to becoming

market friendly.

While independent retail stores like Akbarallys, Viveks and Nallis

have existed in India for a long time, the first attempts at organized
retailing were noticed in the textiles sector. One of the pioneers in
this field was Raymonds, which set up stores to retail fabric. It also
developed dealer network to retail its fabric. These dealers sold a
mix of fabrics of various textile companies. The Raymonds
distribution network today comprises of 20,000 retailers and over
429 showrooms across the country.

Other textile manufacturers who also set up their own retail chains
were Reliance which set up Vimal showrooms and garden Silk Mills
with Garden Vareli. It was but natural that with the growth of textile
retail, readymade branded apparel could not be far behind and the
next wave of organized retail in India saw the likes of Madura
garments, Arvind Mills etc set up showrooms for branded mens
wear. With the success of the branded mens wear store, the new
age departmental store arrived in India in the early nineties.
Traditional formats
1. Itinerant salesman



Mandis, etc.

Established formats
1. Kirana
2. Convenience / Department stores
3. Company / Multi brand showrooms

4. PDS / Fair Price shops

5. Co-operative stores
6. Pan / beedi shops

Emerging formats
1. Exclusive retail outlets
2. Hypermarkets
3. Internal retail
4. Malls / Specialty malls
5. Multiplexes
6. Rural oriented formats
7. Fast food outlets
8. Service galleries etc.

This was in a sense, the beginning of a new era for retail in India.
The fact that post liberalization, the economy had opened up and a
new large middle class with spending power had emerged, helped
shape this sector. The vast middle class market demanded value for
money products. The emergence of the modern Indian housewife,
who managed her home and work led to a demand for more
products, a better shopping ambience, more convenience and one
stop shopping. This has fuelled the growth of departmental stores,
supermarkets and other specialty stores. The concept of retail as
entertainment came to India with the advent of malls. The
development of malls is now visible not only in the major metros but
also in other parts of the country.



Challenges to Retail Development in India

Organized retail in India is little over a decade old. It is largely an
urban phenomenon and the pace of growth is still slow. Some of the
reasons for this slow growth are

1. Retail not being recognized as an industry in India

Lack of recognition as an industry hampers the availability of
finance to the

existing and new players. This effects growth and

expansions plans.
2. The high costs of real estate
Real estate prices in some cities in India are among the highest
in the world.

The lease or rent of the property is one of the major

areas of expenditure; high lease rentals eat into the profitability of a

3. In addition to the high cost of real estate, the sector
also faces very high stamp duties on transfer of
It varies from state to state (12.5% in Gujarat and 8% in Delhi).
The presence

of strong pro-tenancy laws makes it difficult to evict

tenants. The problem is

compounded by problems of clear titles

to ownership, while at the same time, land use conversion is time

consuming and complex, as is the legal processes

for setting of

property disputes.
4. Lack of adequate infrastructure
Poor roads and the lack of a cold chain infrastructure hamper

development of food and fresh grocery retail in India. The



and food retailers

have to

invest a

substantial amount of money

and time in building a food chain



5. Multiple and complex taxation system

The sales tax rates vary from state to state. While organized
players have to face a multiple point control and tax system, there
is considerable sales tax




locations, retailers have to face a multi-point




introduction of Value Added Tax (VAT) in 2005, certain anomalies in

the existing sales tax system causing disruptions in the supply
chain are likely to get corrected over a period of time.


Chapter III

Study Objective and Methodology



Chapter III
Study objective and Methodology
Study objective

1. To understand what HR Audit is all about.

2. To go through process of HR Auditing adopted by Pantaloons

Fashion and Retail Ltd.

3. To go through HRMS of Pantaloons Fashion and Retail Ltd.

4. To analyse difference between Sparsh (the HRMS of Pantaloons

Fashion and Retail Ltd.

5. To find out the Gaps in personal file management.

6. To find out the employees life cycle management.

Methodology of the study



Scope of study
ltd situated at

The research done was exploratory in nature.

The store Pantaloons Fashion and Retail

Kolkata The study was entirely based on the
provided by the company.

Sources of Data

Secondary sources/ data the

personal file,

Secondary data was analysed from

company records i.e. employees

there sparsh account and other



Chapter IV

Aditya Birla- A Company Profile



Chapter IV
Aditya Birla A Company Profile


Aditya Birla Retail limited

The Group's foray into the retail sector began in December 2006
when it acquired Trinethra, the chain of stores based in south India.
May 2007 saw Aditya Birla Retail Limited (ABRL) launch their own
brand of stores called 'More.' ABRL's vision is "to consistently
provide the Indian consumer complete and differentiated shopping
experiences and be amongst India's top retailers while delivering
superior returns to all stakeholders".
Currently, there are over 513 supermarkets and 15 hypermarkets.
All the supermarkets are branded 'More.' and the hypermarkets are
branded 'More Megastore'. The company has over 9,000 employees







neighbourhood stores with the core proposition of offering value,

convenience and trust to the customers and averaging 2,500 sq. ft.
The hypermarkets are self-service super-stores offering value and
range in food and non-food products and services at a single
location. Hypermarkets are located in large catchment areas and
encourage mass consumption with discount prices and substantial
depth of assortment with an average store size of 55,000 sq ft
shopping area.
In May 2009 Aditya Birla Retail introduced a value proposition for its
supermarkets and encapsulated it into a promise of giving its
customers "Hamesha Extra" which has resonated with the consumer.
"Hamesha Extra" is the core essence of more. It means customers
will always feel that they have got something extra while shopping
at more. Within a short span of less than three years, More. Has a
strong membership base of over 3 million members as part of its
loyalty program. More has also launched a huge range of private

labels in food and grocery, staples and apparel which have already
obtained a significant share of category as well as salience with the
consumer. Aditya Birla Retail Ltd was presented with the "Master
Brand Award 2012" by the World Brand Congress on 14th February
2012 in Mumbai.
The Master Brand Award is conferred upon those brands that appeal
to a large set of consumers from premium to mass while constantly
keeping in mind a consumer centric approach. Aditya Birla Retail
Limited was presented the prestigious "Retail Best Employer of the
Year" award by the global jury of the Asia Retail Congress 2012 in
The Asia Retail Congress is Asia's single most important global
platform to promote world-class retail practices. These awards are
aimed at honouring the best, in the Asian retail scenario. The Asia
Retail Congress is represented by 100 countries across the world.


Aditya Birla NUVO

Aditya Birla Nuvo Limited (ABNL), a US $4.75 billion conglomerate by

revenue size, is part of Aditya Birla Group, a US $40 billion Indian
multinational company. Having a market cap of about US $2.5 billion
as on 30th November 2012, ABNL is present across financial
services, telecom, fashion and lifestyle, IT-ITeS and manufacturing
businesses. Powered by an intellectual capital of over 65,000
employees, ABNL touches the lives of more than 120 million Indians.
The razor-sharp focus on each business has made it a leading player
in most segments, including viscose filament yarn, branded
garments, agribusiness, textiles and insulators. Over the past few
years, Aditya Birla Nuvo, through its subsidiaries and joint ventures,
has made successful forays into life insurance, asset management
and other financial services, telecom, business process outsourcing
(BPO) and IT services.
With an optimum mix of revenue and profit streams, the company is
in a strong position to maximise long-term shareholder gains.
As a leading player, Aditya Birla Nuvo ranks as:

India's second-largest producer and the largest exporter of viscose

filament yarn.
The country's largest premium, branded apparel company.
Largest manufacturer of linen fabric in India.
Among the most energy-efficient fertiliser plants.
India's largest and the world's fourth-largest manufacturer of

Among Aditya Birla Nuvo's joint ventures and subsidiary

companies are:

Idea Cellular Limited, which is among the top three cellular

operators in India, in terms of revenue market share.

Birla Sun Life Insurance Co. Ltd., which is among the top five private
sector life insurance companies in India, in terms of new business

Birla Sun Life Asset Management Co. Ltd., which is the fourth largest
asset management company in India, in terms of assets under

Aditya Birla Minacs Worldwide Limited, which is the sixth largest

Indian BPO company by revenue size.




Chapter: - V
Pantaloons Company Profile
Pantaloons, Indias premium lifestyle apparel company offer chic and
trendy fashion to meet the youths ever changing needs. Pantaloons
reflect the ideology of keeping alive the newness factor through fashion
apparel and accessories that are visually appealing and fashionably
Since its inception, pantaloons progressed from retailing a mix of brands
to its own popular private labels, designed by the in-house design studio.
With a sharp focus on bringing the latest in fashion, the design studio
combines its prowess in design and aesthetics to present styles that keep
the consumer fashionably dressed each season.
Initially positioned as a store catering to the fashion needs of the entire
family, Pantaloons has transitioned to a fashion and lifestyle brand with an
emphasis on youth and a focus on designs that are inherently in sync with
current fashion trends. This compelling combination has helped
Pantaloons retain its place on the style radar of every consumer's
Pantaloons stores have an abundance of choices across categories that
range from western to Indian wear, formal to party wear and active wear
for men, women and kids. To add to the customer's choices that reflect
style, attitude, and comfort, Pantaloons has extended its horizons to

fashion accessories like fragrances, footwear, handbags, watches,

sunglasses and much more. With a chain of 71 fashion stores across 35
cities and towns, Pantaloons is constantly extending its footprint in India.
Pantaloons, previously controlled by the Future Group, have now been
taken over by Aditya Birla Nuvo Limited [ABNL]. ABNL is a part of the
prestigious Aditya Birla Group, a $40 billion Indian multinational, operating
in 36 countries across the globe with over 136,000 employees.
The Aditya Birla Group ranks high in the League of Fortune 500
Corporations of the world with a strong mix of talented and capable
personnel comprising of 42 different nationalities, who are credited with
anchoring the organisation and scripting one brilliant success story after

Backed by the giant conglomerates, ABNL and Future Group, both the
entities will work in tandem to derive operational synergies for back-end,
supply chain and other crucial value drivers of the business.
Pantaloons Fashion and Retail Ltd is India's fastest growing premium








products, the company brings the latest trends in fashion and clothing
styles to the apparel market.
The company offers an incredible and complete one-stop shopping
experience to its buyers through its vast collection of more than 100
prestigious brands for the discerning fashionista. The 72 aesthetically
designed stores spread across the country display a range of classy and
trendy merchandise that truly lives up to Pantaloons maxim of fresh
A typical Pantaloons store is spread across a sprawling retail space of
about 28,000 sq. ft., comprising a brand portfolio that runs across a wide
gamut of styles that spell class. The collection includes ready-to-wear
western and ethnic apparel for men, women and kids, complemented by
an exhaustive range of accessories.


The womens section houses the private labels Bare Denim, Bare
Leisure, Rig, Annabelle, Honey, and Ajile in western wear, as well as the
choicest ethnic wear from RangManch, Trishaa and Akkriti. Popular brands
like Lee Cooper, Biba and W are also available.
The private labels for men in western wear include Lombard, Rig,
Bare Denim, Bare Leisure and JM Sport apart from trendy brands like
Urbana, Scullers, John Miller, and Indigo Nation. Akkriti provides a wide
selection of ethnic wear.
Kids can choose from private labels like Bare Denim, Bare Leisure,
Rig, or indulge in exclusive brands like Lee Cooper Juniors, Chalk, Pink &
Blue, and Sach in addition to international brands like Barbie and Disney.
For the ethnic look, they can opt for traditional wear from Akkriti.
Pantaloons offer much more than just apparel. Customers can shop from
an assortment of watches from renowned international brands like Tommy
Hilfiger, Esprit, Kenneth Cole, Citizen, Timex, and Titan, among other
Trendy sunglasses from Polaroid, Guess, Police, Scott, I Dee and Allen Solly
are also available. The accessories and beauty segments display an
attractive collection of ladys handbags from Lavie, Caprese, Fiorelli and
Fastrack. Also available are products from colour cosmetic brands such as
Bourjois, Chambor, Deborah, Faces, Revlon, Maybelline, and Lakme, as
well as a wide collection of exotic fragrances.
With its overwhelming repertoire of lifestyle apparel brands, Pantaloons is
focused on growth while continuing to create fresh fashion. Pantaloons are
recognised by its warm personalised service that completes the core
proposition of this trendy chain.

Brands of Pantaloons Fashion and Retail


Bare Denim,
Bare Leisure,

5. Honey,
6. Ajile
7. RangManch,
8. Trishaa
9. Akkriti
JM Sport
John Miller,
Indigo Nation
Lee Cooper Juniors,
Pink & Blue,

SWOT Analysis of Pantaloons Fashion and

Retail Ltd.
Strength:1. It is Indias largest retailer having 1000 stores across 70 cities in

It is countrys largest retailer by market capitalization and revenue.
It manages high number of purchase orders.
It is always updated with changing consumer preferences.
Popular brand with a high presence across India.
Highly strategic human resource management and development. It

invest time and money in training people, and retaining them.

7. Being financially strong helps pantaloons fashion and retail ltd deal
with any problem, ride any dip in profits and out perform their rivals.
Weakness:1. It serves mass consumer base, still skilled labour force is not
adequate when compared with global standards.
2. Consumers from premium target group perceive it low quality brand.

3. Pantaloons do not function internationally, which has an effect on

success, as they do not reach consumer in overseas markets.
Opportunity:1. Increase in footfalls by increasing ATL-TV commercial promotions
2. India is fast emerging as retail hub for top brands as government
allowed FDI in single brand and multi brand retail.
3. Organized retail is only 4.5% of total Indian retail industry.
4. Huge untapped market.
5. Rural retailing.
Threat:1. Strong competition from unorganised retail sector in India.
2. Government policies are not well defined in emerging markets.
3. Online shopping is emerging trend in consumers due to
4. Being number one means that you are the target of competition.
(Extra competition and new competitors entering the market could
unsteady Pantaloons Fashion and retail ltd.)




Chapter: - VI
Human Resource Management System
HRMS stands for Human Resource Management System. HRMS is used for
hiring, training, managing, evaluating and maintaining information of all
employees (Human Resource) in an organization. In some cases HRMS
software is also known as HRIS, Human Resource Information System.
With the increase in Business complexity and competition, employee
management has become increasingly more complicated and difficult.
Employees expect more from their companies and companies expect
more from employees. To achieve the maximum in each case, a proper
system is required to manage employee expectations as well as their
Management of employees requires timely payroll management,
succession planning, recruitment of the right candidates, and
management of employees everyday needs like Leave approval, Expense
Claims management, and Payslip management. To enable a company to
get the maximum out of its employees, it needs to review their
performance, their attendance, and their career progression.
An HRMS Software should ideally provide all these functions to an
organization. Payroll Management is handled using the Payroll Module.
Hiring is managed through the Recruitment Module. Performance
evaluation is managed through the Performance Appraisal Module. Leave
Approval through HRMS eLeave Module and Expense Claims through
HRMS eClaims Module.


Importance of HRMS:Organizational Effectiveness:-

The human resource management system of a company has a significant

impact on individual and organizational effectiveness. A good HRMS brings
consistency in human resource management practices and improves
human relations in the company. An effective HRMS is focused on a
strategic objective and works by improving employee knowledge, skills,
motivation and contribution opportunities. Based on their overarching
goal, human resource management systems contribute to organizational
effectiveness in multiple ways.

Employee Commitment:-

An HRMS focused on increasing employee commitment will recruit

selectively, provide employees with intensive training, and offer a high
level of compensation.

Empowering Employees:-

The focus of an HRMS can be increasing the involvement of employees

and empowering them. Under such a system, employees are given more
decision-making power, and teamwork is encouraged.


HRMS maintained in Pantaloons Fashion

and Retail ltd.
Pantaloons Fashion and Retail ltd. Also maintain certain Human resource
management system and it named as SPARSH.
SPARSH- it is a place where all information about the employees are
stored. It contains sections like ESS (Employees Staff Service), employees,
employees appraisal, Attendance, and many more facilities. Every
employee can go through Sparsh with their unique ID and password
created by the department.

Creation of HRMS login.

HRMS login is created for benefit of employees working at


HRMS is created through hiring done by HR of Pantaloons.

During hiring an employee code is given which is also used as

unique identification code which is used as the username of their
SPARSH account and a default password is given to them which can
be further modified by the employees according to their preference.





HRM includes different functions like HRP, job analysis and design,
recruitment, selection, induction, performance appraisal, safety and
health, welfare, industrial relations and many more. These functions are
performed in furtherance of certain social, functional and personal
objectives. At this stage several questions crop up, for example:

Does the organization do the HRP regularly in various categories?

Does job analysis exists for all positions in the organization?
Are all potential sources of recruitment identified and evaluated?
Is there a performance evaluation system that helps asses past and

potential performance?
5. Is remuneration programme designed to motivate employees?
6. Does the HRM practice respond to individual employee needs and
7. Does the organisation have high quality of work life?
It is necessary to take a look at these questions. HR audit is highly useful
for this purpose. The Human Resources (HR) Audit is a process of
examining policies, procedures, documentation, systems, and practices
with respect to an organizations HR functions. The purpose of the audit is
to reveal the strengths and weaknesses in the Non-profits human
resources system, and any issues needing resolution. The audit works
best when the focus is on analysing and improving the HR function in the
organization. The audit itself is a diagnostic tool, not a prescriptive
instrument. It will help you identify what you are missing or need to
improve, but it cant tell you what you need to do to address these issues.
It is most useful when an organization is ready to act on the findings, and

to evolve its HR function to a level where its full potential to support the
organizations mission and objectives can be realized.

HR Audit means the systematic verification of job analysis and design,
recruitment and selection, orientation and placement, training and
development, performance appraisal and job evaluation, employee and






management, communication, welfare and social security, safety and

health, industrial relations, trade unionism, and disputes and their
resolution. HR audit is very much useful to achieve the organizational goal
and also is a vital tool which helps to assess the effectiveness of HR
functions of an organization.


1. Comparative approaches
2. Outside authority approaches
3. Statistical approaches

4. Compliances approaches
5. Management by objective


Comparative approaches: - In this, the auditors identify competitor

company at the model. The results of their organisation are compared
with that of the Model Company/ industry.
Outside authority approaches: - In this, the auditor use standards set
by an outside consultant as benchmarks for comparison of own results.
Statistical approaches: - In this, statistical measures are performance is
developed considering the companys existing information
Compliances approaches: - In this, auditors review past actions to
calculate whether those activities comply with legal requirements and
industry policies and procedure.
Management by objective approaches: - This; approach creates
specific goals, against which performance can be measured, to arrive at
final decision about industrys actual performance with the set objective.

Generally, no one can measure the attitude of human being. HR audit
must cover the activities of the department and extend beyond because
employees problems are not confined to the HR department alone. So it
is very much broad in nature. It should
evaluate the personnel function, the use of its procedures by the
managers and the impact
of these activities on the employees. It covers the following HR areas:
1. Audit of all the HR function.
2. Audit of managerial compliance of personnel policies, procedures and
3. Audit of corporate strategy regarding HR planning, staffing, IRs,
remuneration and

other HR activities.
4. Audit of the HR climate on employee motivation, morale and job
1. Audit of HR function: This involves audit of all HR activities. For each
auditor must
(i) Determine the objective of each activity,
(ii) Identify who is responsible for its performance
Review the performance,
Develop an action plan to correct deviation, if any
(v) Follow up the action plan.
The following criteria would help measure effectiveness of HR function.
Each statement has

a four point rating scale varying from very true to

not true.
1. In your company, all issues are closely related to every other
business process.
2. The HR department is represented in strategy building sessions of
3. The performance of HR department and the organisation are linked.
4. The HR function is given more importance than other functions
5. The HR managers have sufficient powers to suggest strategic
initiative to the top management.
6. The services of HR department are equally available to everyone.
7. The HR department plans the companys manpower need
8. The HR department links appraisal and compensation to corporate
9. The HR department meets individuals and organisations training
The HR department does not handle staff-welfare canteens,
or payrolls
HR department has knowledge of behavioural sciences and
The HR department gets feedback on its performance from
other employees.
HR practices are audited, their costs computed and then


2. Audit of managerial compliance: This involves audit of managerial

compliance of
personnel policies, procedures and legal provisions. How well re these
complied with
should be uncovered by the audit so that corrective action can be taken.
3. Audit of HR climate: The HR climate has an impact on employee
motivation, morale
and job satisfaction. The quality can be measured by examining employee
absenteeism, safety records and attitude surveys.
a) Employee turnover: It refers to the process of employees leaving
an organization.
Higher turnover involves high cost of recruitment, selection,
training, etc. High turnover may also lead to disruption of
production, problems in quality control, etc. Resignation, retirement,
death and transfers are unavoidable labour turnover. The specific
actions that will reduce employee turnover are better hiring







remuneration and growth opportunities.

b) Absenteeism: It refers to the failure on the part of the employees
to report to work. In other words, unauthorized absence continues
absenteeism. Absenteeism costs money to the organisation, besides





happens when employee or his family member is sick whereas

avoidable occurs because of night shifts, indebtedness, lack of job
security, unfriendly supervision, etc. Managers should take steps to
remove the causes. They should make the work environment such
that employees feel that it makes sense to work in the firm rather
than sitting at home and wasting time.
c) Accidents: Organization maintains records related to the accidents.
must have a safety plan, implement it and evaluate its

d) Attitude surveys: Attitude surveys are the most powerful

indicators of the organizational climate. It determines an employees
feelings towards the organisation, peer group,colleagues,
supervisors, etc. The surveys may be conducted by face-to-face
interviews but are usually conducted through questionnaires.
4. Audit of corporate strategy: HR professionals do not set corporate
strategy but they strongly determine its success. Corporate strategy helps
the organization gain competitive advantage. By SWOT analysis, top
management devises the ways of gaining and advantage. Whether the
company stresses superior marketing channels, service, innovation, or
some other approach, HRM is affected


Benefits of HR Audit
The team that is responsible for the audit should represent a cross-section
of the
organizations staff, including line staff, middle and upper management
and those responsible for HR functions. It provides the various benefits to
the organization. These
1. Getting the top management to think in terms of strategic and
business plans:
It may sound ironical that the HRD audit should begin with such strategic
plans, but in some cases, it has compelled the top management to think
about such plans. While some companies started thinking about them, a
few others started sharing these plans with a larger number of persons.
Since the employees cannot participate in an HRD audit without some
sharing of these plans, the audit has forced the top management to share
their plans which has resulted in increased employee involvement. In a
few cases a new system of annual planning and sharing of business plans
with the management staff have been initiated to enable them plan their
own activities and competency development programmes.
2. Clarifying the role of the HRD department and line managers in
In almost all cases, the HRD audit has been found to draw the attention of
employees at various levels to the important role of the HRD department
in current as well as the future. Enhanced role clarity of HRD department
and HRD function and increased understanding of line managers about
their HRD role have been the uniform results of HRD audit. The degree
may vary from organization to organization depending on other factors.
3. Streamlining of other management practices:
Most often HRD audit identifies the strengths and weaknesses in the some
of the management systems existing in the organization. It also points out
to the absence of systems that can enhance human productivity and

utilization of the existing competency base; for example, the MIS, rules
and procedures, etc. which may have an effect on the functioning of the
employees. In a few cases an HRD audit has helped the management look
at some of these sub-systems and work procedures. Preparation of a
manual of delegation of powers, clarification of roles and responsibilities,
developing or streamlining the manuals of financial and accounting
procedures and systems, strengthening the information systems, and
sharing of information are some of the resultant activities in this direction.
4. Better recruitment policies and more professional staff:
An HRD audit points out to the competence base required. It sets the
stage and gives direction for the competency requirements of employees
at various levels and thus provides a base for recruitment policies and
procedures. In some companies, it has resulted in strengthening the
recruitment policies and procedures. As a result of HRD audit, new
recruitment and retention strategies have been worked out.
5. Changes in the styles of top management:
One of the objectives of HRD is to also create a learning organization. A
learning culture can be created only if the top managers of the company
exhibit an HRD style of management. Such a style requires an
empowering attitude, participative style of management, and an ability to
convert and use mistakes, conflicts and problems as learning
opportunities. Some of the top-level managers in India have been found to
block employee motivation and learning through coercive, autocratic and
even paternalistic styles of management. In such cases the HRD audit has
pointed out the difficulties in developing and preparing the employees for
the future. This has helped to provide subtle feedback to the top
management and to initiate a change process.
6. Improvements in HRD systems:
The HRD audit has helped most of the organisations in taking stock of the
effectiveness of their HRD systems and in designing or re-designing the
HRD systems. The most frequently changed or renewed systems include
performance appraisal, induction training, job-rotation, career planning
and promotion policies, mentoring, communication, and training.
7. More planning and more cost-effective training:

HRD audits have been found to raise questions about the returns on
training. One of the aspects emphasized in the HRD audit is to calculate
the investments made in training and ask questions about he returns. The
process of identifying training needs and utilization of training inputs and
learning for organisation growth and development are assessed. As direct
investments are made in training, any cost-benefit analysis draws the
attention of the top management and HRD managers to review the
training function with relative ease. One organization strengthened its
training function by introducing a new system of post-training follow-up
and dissemination of knowledge to others through seminars and action
plans. Many organisations have developed training policies and
systematized their training function. Assessment of training needs has
also become more scientific in these organisations.
8. Increased focus on human resources and human competencies:
One of the results of an HRD audit is to focus on new knowledge,
attitudes and skills required by the employees in the organization.
Comments are made about the technical, managerial, human and
conceptual competencies of the staff at various levels. This differentiation
has been found to help organisations identify and focus sharply on the
competency requirements and gaps. The audit establishes a system of
role clarity and fixing of accountabilities. This can take place through
separate role clarity exercises or through the development of an
appropriate performance appraisal system. In any case the attention of
the organization gets focused on developing the competency base of the
organization. More sensitivity is developed to the missing aspects of
competencies. For example, one organization has been found to neglect
human relations competencies of their staff, resulting in a large number of
human Problems leading to wastage of time. Some of these got
streamlined and various HRD policies also got strengthened.
9. Strengthening accountabilities through appraisal systems and
other mechanisms:
An HRD audit can give significant inputs about the existing state of the
accountabilities of employees. This gets assessed through performance
appraisals as well as through the work culture and other cultural
dimensions. A number of organisations have introduced systems of


performance planning, sharing of expectations and documenting the

accountabilities of staff.


HR Auditing Done at Pantaloons Fashion

and Retail ltd.




HR Auditing done at Pantaloons carried few section and they where

SPARSH Audit:1. ESS ( Employees Self Service)
a) Sparsh Name: - Every employee can go through sparsh with their
unique Id and password created by the department.
In this part evaluation of employees name has been done on the
basis of documents provided by the employees at the time of joining.

Last months salary slip

Voter ID card
Pan Card
Bank A/C
P/F Slip


b) Date of Birth of employees in Sparsh :i. In this part evaluation of employees actual birth date is
been rectified with the help of
ii. Documents like PAN Card, Class X admit card, Voter ID
Card, Passport, Adhar card.
c) Father and Mothers Name in Sparsh:In this part evaluation of employees family details was
done with the help of Voter ID card, and Bank A/C
d) Address :In this basically the address was matched from
employees documents like Voter ID Cards, Ration Cards,
Electric Bill, Telephone bill, Driving licence.
e) Qualification:In this evaluation is been done with the help of
certificates provided by the Schools and colleges or any
other authorised institute.
f) Date of joining:In this the date of joining is matched with the date
mentioned in the joining report made at the time of
employees joining.
g) Contact number:In this verification of the contact number is done.
Whether the contact number genuine or not.
2. Attendance Gap Report Audit:
This is a type of audit where employees attendance is taken as key
point and according to this auditing is done. Here first of all total
number of employees are recorded then there week off and their
shift details are recorded. Then the data are audited and are tallied
whether they are correctly recorded or not whether the off days are
mentioned or not. and for example if any of the employee doesnt
have off days then the correction are made and the week off / shifts
are allocated to them.
Personal Dossier Audit:-


Another type of auditing done was Personal file auditing. This was done
with the help of checklist provided by the company according to the
Personal file checklist at Pantaloons

Initial joining and the checklist:In initial joining current checklist are provided by the company
to look forward and to collect the according to the checklist.
And the checklist is as follows;-

NameDate of birthDepartmentBand Joining report:

Offer letter (Duly acknowledge copy)

Interview Assessment form
Updated Resume
Appointment letter (Issued by future group) duly acknowledge
Joining report
Employment Application Form
Code of conduct
Provident fund nomination Form (form-2)
ESIC nomination form- Form 1 (If applicable)
Mediclaim/ insurance Form
Reference Check form (where possible)


Certificates: Residence proof

PAN CARD (DOB proof) (for Band 1 any other DOB proof applicable)
Education certificates
One cancelled cheque, of the salary bank a/c
Relieving letter/ acceptance of resignation letter
Last salary slip
Appointment letter of the previous employer & salary revision
Experience certificate
Income tax declaration form (In sparsh/ new ESS)
Form 16 (tds) certificates
3 passport size photo
2 post card size family photo for ESIC ( If applicable)
Medical report
Annual form:

Confirmation letter after 6/12 months

Transfer letter (when applicable)
Appraisal form & increment letter
General correspondence documents.

1) Employees life cycle:In these entire documents of an employee is recorded and audited
starting from initial joining till the exit of an employee. The file
consist of
Employees file open: - Joining docket
1.)Employee joining report
2.)Code of conduct
3.)Employees joining form
4.)Nomination & declaration form
5.)Employees Provident fund scheme
6.)Payment of Gratuity Act.
Closes with:-1.) Exit interview form
2.) Full and final statement
3.) Transfer order


Chapter VIII
Conclusion and Bibliography

Chapter VIII
The Human Resources (HR) Audit is a process of examining policies,
procedures, documentation, systems, and practices with respect to an
organizations HR functions. The purpose of the audit is to reveal the
strengths and weaknesses in the non-profits human resources system,
and any issues needing resolution. The audit works best when the focus is
on analysing and improving the HR function in the organization. The audit
itself is a diagnostic tool, not a prescriptive instrument. It will help you
identify what you are missing or need to improve, but it cant tell you what
you need to do to address these issues. It is most useful when an
organization is ready to act on the findings, and to evolve its HR function


to a level where its full potential to support the organizations mission

and objectives can be realized.
Finding out what is insufficient and inadequate is the first step toward
improvement. If deficiencies are identified, it is important to take steps to
correct those deficiencies.
Organizations should take that first step only when they are ready to act on the
findings, and to make necessary improvements in their HR skills, processes, and
systems. Improving the HR system takes some time. A work plan with a
timeline, accountability, and deliverables should be created after the team
reviews the completed audit and identifies areas where improvement is needed.
Follow-up and review should be a regular management function, performed on
an on-going basis. A healthy HR function in an organization is as important as the
physical and mental well-being of a human body. Typically the basic reason why
organizations prefer to conduct an HR audit is to get a clear judgment about the
overall status of the organization and also to find out whether certain systems
put in place are yielding any results. HR audit also helps companies to figure out
any gaps or lapses and the reason for the same. Since every company plans
certain systems and targets, an HR audit compares the plans to actual
implementation. The concept of HR audit has emerged from the practice of
yearly finance and accounting audit, which is mandatory for every company, to
be done by external statutory auditors. This audit serves as an examination on a
sample basis of practices and systems for identifying problems and ensuring that
sound accounting principles are followed. Similarly, an HR audit serves as a
means through which an organization can measure the health of its human
resource function.

Reference book
Human resource management and personal management K Aswathapa

Reference web site



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