Research Approaches to Audits
Research is also used to evaluate HR activities. At times the research may be advanced, relying on sophisticated designs and statistics. But whether informal or rigorous, research seeks to improve the department's performance. Applications- oriented research efforts are called applied research. The most common. The use of an outside authority is another approach. Standards set by a cons tant or taken from published research findings serve as a benchmark for the audit team. For example, the consultant or industrywide research may indicate that the HR budget is usually about three-fourths of 1 percent of gross sales. This figure then serves as a rough guidepost in evaluating the department's o erall budget.
A stratistical approach relies on performance measures drawn from the company's existing information system. For example, company records often track turnover and absenteeism rates from one period to another. Changes in these data may be helpful in identifying how well HR activities and operating managers control these problem areas. Often this approach is supplemented with comparative data from external sources such as other firms or industry sources such as industry association surveys. This information often is expressed as ratios that are easy to compute and use. For example, if 8 employees in a workforce of 200 miss work on a particular day, the absenteeism rate is 4 percent: Likewise, a company that averages 200 employees during the month and has 12 quit finds that its turnover rate is 6 percent per month, or 72 percent a year.
Roy Rogers Restaurants, a major division of Marriott Corporation, operates 657 restaurants, primarily in the northeastern part of the United States. Entry-level managers are drawn largely from workers age 20 to 24. However, that age cohort will experience a decline throughout the 1990s. Making matters worse, company audits reveal an annualized turnover rate of 80 to 90 percent, the costs of which are conservatively estimated at $3 million a year.