According to International Organization for Standardization (ISO), a process is a set of interrelated or interacting activities that use inputs to deliver an intended result. These inputs and outputs may be tangible (materials, components or equipment etc) or intangible (data, information or knowledge etc).
However, mere presence of a process for an operation does not necessarily mean that the operation is healthy, productive or optimal. This depends on the efficiency and effectiveness of the process itself. And in order to evaluate the effectiveness and efficiency of the processes in place, companies conduct process audits.
What is process audit?
Process audit refers a scientific and systematic study and analysis of the operational processes to evaluate its effectiveness, efficiency and optimal competencies. The efficacy of the processes reflects the health of the operations of a business. In process audit, the focus is on how the process is defined and managed in the backdrop of achieved results.
For example, several companies conduct yearly recruitment campaigns from B-schools across the country. The purpose of process audit here is to establish whether the recruitment process was designed and managed keeping in mind all the relevant considerations.
- Was the manpower planning report available?
- What are the pools of recruitment available? Could the manpower gap have been fulfilled by exercising internal options like promotions, transfers, training and development?
- What were the options available for new recruitment pools? (job portals, college recruitment, resume database etc)
- On what basis, were the b-schools identified and selected for recruitment? (Functional specialization, past employment records from college/university, B-school / university rankings etc)
- Were the job description criteria available before selection tests and personal interview?
- Was the selection tests designed by functional or training experts?
- What was the percentage and composition of the candidates who appeared for the selection test? (Numbers, specializations etc) What were the reasons of non-appearance of candidates who opted out of the placement opportunity?
- Was the selection test conducted in close supervision of company representatives?
- Did the interview panel comprise of concerned functional heads including HR?
- What was the basis of evaluating and rating a candidate in the interview round?
- How many of those selected – accepted the offers, joined service or declined to accept / join?
- Was there a scope of negotiation in terms of salary, posting locations etc?
Why is process audit essential?
The purpose of process audit is to evaluate the accuracy, robustness and flawlessness of a process. From the example used above, a company may have the option of hiring employees from several pools of recruitment. Let us say, the company used the campus placement method and successfully closed the recruitment campaign. But could the company have selected any other method and be more efficient? The answer lies in process audit than subjective assessments. Did the company consider the pros and cons of the other available options for external recruitment like job portals, existing resume databases, employee referrals etc? What were the reasons behind selection of one source and rejection of others? Process audit asks these tough questions which help companies assess and improve the processes they are following in executing their business operations.
How to check the operational health of a business by conducting process audits?
Process audit should start from the beginning of an operation. This is to ensure integrity of a process from its inception and eliminate root level loopholes.
1. Identify participants in the process; the process owners.
The first step is to list out all the stakeholders and participants ( the process owners ) in the entire process (at any stage). For example, in a recruitment operation, various participants involved are HR department, placement cells of colleges and b-schools, representatives from job portal companies, training department and functional heads and experts. This will help a company identify participants who might have not been given due consideration in the existing process.
2. Reassess the process sequence
In this stage, the entire process sequence goes through re-validation. It follows a logical step-by-step identification of the series of activities in a process ( in consideration of the possible outcomes at each stage ). It provides a network of the sub-processes and the working inter-relationships amongst the sub-processes and the process owners. Any actual deviation from this identified process sequence indicates that there is a process violation. For example, conducting recruitment interviews and selecting candidates for marketing division without intimating the concerned marketing head will be a gross violation of process in any prudently managed company irrespective of the quality of candidates selected.
3. Process requirements
After reassessment of the process owners and the process sequence, the next step is re-evaluation of the process requirements at each stage of the process.
- What are the standards of inputs and outputs (deliverable) at each stage / sub-process?
- What are the resource requirements at each sub-process? (Skilled manpower, information, support functions etc)
- Was proper resources made available at each stage?
- Who is the process owner? What are his functions and responsibilities?
- Was process ownership and accountability communicated to the process owners?
- Was proper authority delegated to the process owners?
4. Competency Mapping
Rocess ownership is a crucial responsibility. Process owners are expected to be good communicators; of possessing leadership qualities and this is apart from the required functional skills and knowledge. With the help of job analysis and understanding of process requirements, these desirable behaviors and traits can be identified. The process of identifying these key competencies or behaviors is called competency mapping. Competency mapping can play a crucial role in process audit as it provides an opportunity to compare the desirable competencies in process owners vis-à-vis their actual competencies.
Processes are crucial for execution of various operations in business. It provides a blueprint for the operational activities. And this blueprint, which comprises of the routine activities, becomes a habit for the employees. It is what can slowly become an integral part of the organization culture. So, it becomes imperative that companies evaluate their processes from time to time by conducting process audits and keep a check on the health of their operations.
To know more about “Process Audit – Scorecard For Your Organization’s Health” get in touch with our Retail Experts on [email protected]
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Author Bio
Rupal Agarwal
Chief Strategy Officer
