Human Resource Compliance Audits For Human Capital Risk Reduction

Mining is becoming more and more the backbone of major industrial opportunities but with these opportunities there is always a certain amount of risk. Human capital seems to present in one form or another when evaluating the major risk elements of major projects. This dimension is often underestimated or even ignored in some projects.

During the past 12 months a detailed risk survey was conducted with the assistance of leading mining companies that focused on information regarding the primary risks they faced. The results revealed that capital projects, labor budgeting, organization design, optimization of resources and people risks during ramp-up rated amongst the highest risk factors identified by the companies.

Burning Issue

One of the "new" burning issues that are becoming more and more of a priority is the topic of Human Resource compliance. Companies are required to comply with a range of laws, regulations and charters which create a risk in the regulatory universe.

Most companies have extensive experience in mitigating all their potential regulatory risks. In addition to the regulatory risk each company have a range of human resource policies and procedures.

It is non-compliance in this area that is generating the primary risk for most companies. Whilst the executive team may be under the impression that human resource risks are under control as a result of the company based human resource policies and procedures the reality may be completely the opposite.

Human Resource Compliance Audit

In order to ensure that the expectations of the executive team are based on reality it is the responsibility of the Human Resources division and its various departments to conduct of human resource compliance audits.

These audits should not only be conducted to confirm that the company complies with the complete range of human resource laws, regulations and charters that is applicable to mining companies, but also include human resource issues particular to the company. The issues particular to the company can normally be found in the human resource policies and procedures.

Conducting a human resource compliance audit poses another challenge as most human resource specialists are not qualified or experienced in the process of conducting audits.

It is one thing to use a checklist to see if certain human resource issues are complied with, but a completely different kettle of fish to conduct an audit. During an audit the facts needs to be established by checking records, interviewing staff and observing activities. These facts then needs to be verified by tracking back a representative sample of records to ensure that the human resource issues being audited do in fact comply with the relevant human resource laws, regulations and charters as well as the policies or procedures described in the company documentation.

It is also important that the human resource compliance audit team confirm that the policies or procedures described in the company documentation are not in conflict with the relevant human resource laws, regulations and charters.

Conclusion

Compliance to statutory human resource requirements is normally high on the agenda for most companies and when planning or executing major mining projects. The laws, regulations and charters that are applicable normally leave some room for interpretation.

It is for this reason that companies spend a lot of time effort and resources to develop human resource policies or procedures in order to ensure that the statutory requirements are translated into company specific documentation.

This will be a meaningless effort if the human resource component of the company does not ensure that all the rules are complied with. In order to minimize the associated risk of non -compliance suitable and sufficient human resource compliance audits should be conducted.

© Carl Marx