Is Your Business Ready for HR Due Diligence? A Self-Audit for Australian Founders

Emily Gole

Sep 15

5 min read

Most founders don't think about HR due diligence until someone else forces the conversation.

An investor asks to look under the hood. A potential acquirer opens a data room. A strategic partner wants to understand how the business is structured on the people side. And suddenly, questions that felt abstract - are our contracts compliant? Do we actually have performance records? All become very concrete very quickly.

The problem isn't that founders don't care about getting this right. It's that when you're focused on growth, the people infrastructure tends to get built reactively. A contract here. A policy there. Performance managed informally because it's faster. Leave it long enough, and the gaps add up.

The good news: most of these gaps are fixable. But they take time. And time is the one thing you don't have when someone's already asking.

This self-audit is designed to help you assess where your business stands, before that conversation happens.

Person in an orange jacket writes on a clipboard, with a blurred bright indoor background.

What is HR due diligence?

HR due diligence is the process of reviewing a business's people practices, employment obligations and workplace culture - typically as part of an investment, acquisition or significant transaction.

It looks at whether the business is doing what it says it does on the people side. Whether employment contracts are current and compliant. Whether people are being paid correctly. Whether there are documented processes for managing performance and conduct. Whether the culture carries risk.

The businesses that come through it cleanly are rarely the ones that scrambled to prepare at the last minute. They're the ones that built their foundations deliberately, and maintained them as the business grew.

Even if you're not approaching a transaction any time soon, the questions HR due diligence asks are worth asking yourself. Because they don't just matter to investors. They matter to your team. And to your exposure under the Fair Work Act.

The five-area self-audit

Work through each area honestly. For each question, a simple yes / no / not sure is enough to start. The pattern of your answers will tell you where to focus.

Area	Audit Questions
Employment Contracts	Are all employment contracts current - reviewed in the last two years? Do they correctly reference the relevant Modern Award (where applicable)? Are casual employees' contracts compliant with current conversion requirements? Are contractor arrangements clearly distinguished from employment?
People Policies	Do you have written policies covering performance, conduct, leave and complaints? Are they accessible to all employees - not just filed in a folder nobody opens? Do your managers know what the policies say and how to apply them through regular training and education? Have policies been reviewed since your team size or structure changed significantly?
Performance & Conduct Records	Is there a consistent, documented approach to managing performance issues? Are performance conversations being recorded — even informally? If a Fair Work complaint were raised tomorrow, could you demonstrate a fair process was followed? Are conduct issues being addressed promptly and consistently across the team?
Remuneration & Award Compliance	When did you last verify that your people are paid at or above the correct Award rate? Has anyone checked the most recent Award review cycle for your industry? Are superannuation contributions being calculated and paid correctly? Are leave entitlements (annual, personal, long service) accruing and being applied correctly?
Culture & Engagement	Do you conduct exit interviews - and do you know what themes are emerging? Is your voluntary turnover rate increasing, stable or improving? When did you do your last engagement survey and did you actually act on the results? Have there been informal complaints or grievances in the last 12 months - and how were they resolved? Could you describe your workplace culture to an external party with confidence?

How to read your results

Mostly yes

You're in good shape. Your people foundations are solid and you've been intentional about maintaining them. The next step is making sure they're reviewed regularly - particularly as the business grows and employment legislation changes. A periodic HR health check will keep you ahead of the curve.

A mix of yes and no

This is where most growing businesses sit. You've done some of the work (probably the parts that felt most urgent) and the rest has been managed informally or deferred. The gaps are almost always fixable, but they need attention before they compound. Prioritise the areas where you answered no or not sure and work through them systematically.

Mostly no or not sure

You're not alone, and this isn't a crisis. But it is a signal that the people infrastructure hasn't kept pace with the business. The risk is that these gaps are invisible until something external forces them into view: a complaint, a Fair Work inquiry, a due diligence process, or a key hire who asks questions you can't confidently answer. The best time to start is now.

The most common gaps, and why they happen

In our experience working with growing Australian businesses, the same gaps come up repeatedly. They're not the result of negligence. They're the result of growth moving faster than infrastructure.

→ Employment contracts set up in the early days that haven't been reviewed since. Often missing correct Award references, casual conversion clauses, or updated position descriptions.

→ Performance managed entirely through informal conversation, with no documentation that a process was followed, even when the process was fair.

→ Award compliance assumed rather than verified. Particularly common when a business has grown into new roles or changed its operating model without updating its payroll approach.

→ Policies that exist on paper but aren't applied. The code of conduct in the welcome pack nobody reads. The performance policy that managers don't know exists. Companies are expected to train their people on these policies.

→ Culture risks that aren't visible in the documents. High turnover with no exit interview data. Informal complaints that were resolved without records. Patterns that tell a story an outside party can read even when internal leaders can't.

Where to start

If this audit has surfaced some areas of concern, here's a practical approach.

Start with contracts and compliance. These are the areas of highest legal exposure and the most straightforward to address. A review of your employment contracts against current Modern Awards and Fair Work requirements will tell you quickly where the gaps are.

Then look at your performance and conduct processes. If your managers are having all their difficult conversations informally, put a simple documentation approach in place. It doesn't need to be a 20-page framework, it needs to be consistent.

Then work through your policies. Not to create a 100-page policy manual, but to make sure you have clear, plain-language policies covering the areas that matter: performance, conduct, leave, complaints. Ones your team can actually find and your managers can actually apply.

Culture and engagement is the longest-term play. Start by putting exit interview conversations in place if you don't have them. The data takes time to accumulate but it's invaluable - both for improving retention and for demonstrating intentionality when someone asks.

A note on intentionality

The thing experienced due diligence advisors are actually looking for isn't perfection. It's evidence of intentionality.

Contracts that are current, clearly written and consistently used. Performance processes that are documented and applied fairly - even if they're simple. Pay structures that someone has genuinely checked against the relevant Award, not just assumed are right. Culture indicators that suggest people are treated well and problems are handled properly.

A business that has clearly thought about its people, that has built appropriate systems and reviewed them as the business changed, is a fundamentally different proposition from one that has grown fast and hoped for the best.

That's the difference this audit is designed to help you see.

Need help working through this?

People Design's HR Lift Off program is built for exactly this stage. We help growing Australian businesses build the people foundations that protect them - contracts, policies, performance processes, compliance - done properly and proportionate to the size and stage of the business.

If this audit has surfaced some questions, we'd love to have a conversation. Reach out to Emily directly: emily@peopledesign.com.au

Or take our free HR Pulse Check