Internal Controls & Segregation of Duties in HR
When one person can hire, pay, promote, and terminate — you don’t have control. You have a vulnerability. That’s why internal controls and clear separation of duties matter in HR.
HR functions manage sensitive decisions — from hiring and pay to termination and legal disputes. Without internal controls and segregation of duties (SoD), even well-meaning teams can create dangerous blind spots.
What Are Internal Controls in HR?
Internal controls are systems, policies, or procedures that reduce the risk of error, fraud, or abuse in core HR activities.
They’re not about distrust — they’re about institutional integrity.
Why Segregation of Duties Matters
When the same person can initiate, approve, and execute an action (e.g., raise their own salary), the risk of fraud skyrockets.
SoD ensures that critical steps in a process are divided across different roles, creating a system of mutual oversight.
Key Areas for Internal Controls in HR
Payroll & Compensation
Dual approval for changes, automated reports, restricted system access.Hiring & Offers
Recruiter initiates, manager selects, HRBP approves.Expense Reimbursements
Policy limits, receipt matching, finance sign-off.Promotions & Pay Raises
Benchmarking, multi-step approvals, equity calibration.Disciplinary Actions & Terminations
Review by neutral HR partner or legal before action.System Access Rights
Role-based access control, revocation after offboarding.
How to Design Internal Controls in HR
Balancing Efficiency with Control
Too many controls can slow things down. Too few, and you’re exposed.
The goal is proportionality: controls that match the risk level of the decision.
Use a risk-based control framework, where high-risk actions (like terminations or executive compensation) require more rigorous oversight than routine approvals.
Monitoring and Continuous Review
Controls must evolve. As organizations grow, risk surfaces change.
Review control effectiveness through:
- Internal audits
- Incident tracking
- Feedback loops
- Process change assessments
Connection to HR Governance
Internal controls and SoD are mechanical expressions of governance. They give operational form to abstract ideas like accountability, oversight, and fairness.
Without them, HR’s decision power is unchecked. With them, it’s credible.