Developing a scale to measure the efficacy of a risk-based approach to human resource audits in South Africa

Abstract

The aim of this study was to develop and validate a quantitative research instrument for evaluating the effectiveness of a risk-based approach to human resource auditing (RBHRA) in identifying and mitigating human resource-related risks within South African organisations. Grounded in corporate governance principles and the King IV Reports, this research focused on four core constructs: HR governance (HRG), HR risk (HRR), ethical organisational leadership (EOL) and ethical organisational culture (EOC). A rigorous, multiphase scale development process was followed, comprising an extensive literature review for item generation, expert panel assessments and pilot testing for scale construction and item refinement. This was followed by online surveys for advanced statistical analyses to determine the reliability and validity of the scale.

Data were collected through an online survey administered to 230 HR professionals registered with the South African Board for People Practices (SABPP), representing a broad cross-section of industries. Reliability and validity were confirmed through high internal consistency (Cronbach’s alpha > 0.90; composite reliability > 0.80). Confirmatory factor analysis demonstrated that the fit indices of a single-factor model revealed a poor model fit (goodness fit index (GFI) = 0.50; augmented global fit index (AGFI) = 0.43; root mean square error of approximation (RMSEA) = 0.139) therefore a multifactor measurement model was supported.

The findings indicated that although governance mechanisms and HR auditing practices were being widely implemented, however notable gaps persisted in respect of risk awareness, whistle-blower protection, risk reporting procedures and the reinforcement of an ethical culture. Ethical leadership showed a moderate to strong positive association with ethical organisational culture highlighting its pivotal role in fostering risk responsive behaviours and strengthening organisational controls. The final instrument demonstrated strong reliability and validity. However, further validation using larger and more diverse samples is required for the purpose of broader generalisation.

The study makes three key contributions: theoretically, by introducing a validated RBHRA measurement scale that connects governance, ethics and risk management; empirically, by demonstrating its psychometric soundness; and practically, by offering a diagnostic tool for assessing risk focused auditing practices that provide actionable insights for enhancing governance frameworks and HRR mitigation strategies. Key recommendations include promoting employee participation in governance processes, continuously refining risk management systems and implementing incentives that encourage ethical conduct.

Overall, this research provides preliminary evidence supporting the use of the RBHRA in governance contexts that extend beyond a compliance-oriented paradigm, positioning RBHRA as a strategic mechanism for achieving organisational resilience, ethical stewardship and long-term sustainability.