We constantly survey and monitor the Internal Audit profession. We do this through our Talent Barometer and Diversity Barometer. These quarterly surveys allow us to provide data and analysis that empowers the profession to drive excellence.
If you would like to participate in future surveys and be emailed a copy of the quarterly reports please enter your details here:
In the meantime here is a bit more about what we are doing …
The Internal Audit Talent & Diversity Barometers are completed by our network of CAEs and CFOs. We also conduct a similar barometer across our candidate network, the results of which are integrated into the reports to provide context and a broader perspective.
The barometers provide real data from audit teams to give IA leaders, CFOs and Talent Teams insight into key trends, emerging thinking, forward looking and historical indicators around talent within the IA profession.
The data will enable you to benchmark and sense check your own talent processes and thinking as well as provide valuable insight for internal discussions around recruitment and retention.
Our IA Talent Barometer will be issued every other quarter and will sit alongside our INTERNAL AUDIT DIVERSITY BAROMETER which will be issued for the other 2 quarters of the year.
We know that finding the right talent is one of most IA leaders top challenges, and as the specialist Internal Audit recruitment firm, we are keen to ensure you can find, retain and develop outstanding teams for the long term. Part of this process is to keep you fully up to date with the market and what your peers, potential new hires, and current teams are thinking. We hope you enjoy reading our thought leadership, practical guides and barometer results and you find them of value.
Of course when it comes to recruitment, we are here to advise, collaborate and guide you to making the right hires for your team. Please reach out to us if you would like to talk.
I recently had a detailed conversation with one of the senior Internal Audit leaders in our network about diversity within company leadership. He had been tasked with specifically looking at the lack of women in senior finance positions. Clearly diversity covers a far broader area than simply the gender divide, but this article will focus on this particular issue.
This remains a critical problem for teams, companies and society, however the solutions are often crowded out by the volume and complexity of the variables involved.
There are many, and I won’t go into them all here. However I did want to highlight an obvious link that so often goes unmentioned.
Why is retention so important for diversity, specifically in closing the gap between men and women in leadership roles?
The reality is that those who follow the professional path of finance, of audit, are now evenly represented at the start of their career. If we look across the majority of teams in professional services, or in house, they are evenly split, on occasion we actually see a higher representation of female auditors.
So if that is the case; and this hasn’t just happened it has been the case for a number of years now, we should be seeing a natural levelling of any disparity of female leaders in internal audit.
… unfortunately we are not.
If this equality at the start of careers simply continued up the career ladder then all would, eventually, be well. However I am afraid to say it isn’t. The numbers are improving, but at a middle management level there is a disparity that should by now have gone away.
The premise of this article is that this is caused by retention issues and that teams and organisations need to focus their attention on how they are nurturing, developing and retaining female leadership talent.
Nurturing Female Leaders in Internal Audit
This is a complex area, and I am very conscious that generalisations can be misleading. Nevertheless there are certain key themes running through both the issues and the solutions. I will touch on three of them below, whilst acknowledging there are many others you could consider.
1. Behaviours and Competencies
If a cohort of well educated, high potential individuals are gender balanced, why when it comes to promotion do we still at times see an imbalance in outcomes?
Part of this is down to a historical cultural hangover as to what good leadership behaviours and competencies look like. What I mean by this is that some leadership behaviours are often described in masculine terms, which means that at times women are overlooked due to not being perceived to demonstrate these behaviours.
Much of this comes down to language. If we talk about “beating the competition”, getting a team “up for the fight”, “conquering the challenge”, the reality is that for most people, consciously or not, they perceive a leader who can “beat”, “fight” and “conquer” as male.
However if we look at the competencies required to achieve those aims in a modern business environment, there is no gender disparity whatsoever, and many female leaders would be better placed to achieve the desired outcome. Out dated language causes a perception issue.
“While Level 5 leaders can come in many personality packages, they are often self-effacing, quiet, reserved, and even shy.”
His analysis turns our outdated views on leadership behaviours on their head…
Another issue, again probably culturally driven is that many women often appear less keen to proactively push themselves forward for promotion. I do not feel qualified to comment on the reality and/or foundation of this, but without a doubt the perception this this is the case certainly exists.
In some organisations this makes senior leaders feel that women don’t want to be promoted, and in others they feel that this lack of push is in fact a missing leadership competency in itself.
2. Development and Promotion Process
As mentioned above there is still, both overtly and sub-consciously, a view that many women don’t want to progress on to positions of leadership so they will often miss out on development opportunities, mentors and conversations that help with the development and promotion process.
The process in far too many organisations is then based on who knows who best and is willing to advocate for them. This sits alongside an assessment of behaviours and competencies based on the cultural and language issue highlighted above.
Too few organisations have a leadership development programme that picks up potential early and nurtures and develops it. Therefore many are left to simply replicate the behaviours they see above them, which leads to repeating the same patterns and outcomes.
I always feel a little wary writing about this as a man. I have no wish to claim expertise, or experience I do not have, or to assume other peoples thoughts or feelings. However I do my best to observe and to listen, and I think it is obvious men also need to stand up and say that our system still doesn’t work properly.
The period of time during which children come into our lives still tends to stop the careers of many women. To be very clear I do appreciate that for many that is a choice and one they are very happy with. My point covers those women who genuinely would like to find a way to progress their career, and this includes those women who are happy with their choice only because the alternative work option is so deeply unattractive or simply impossible to make work. The detailed solution to this is too big and complex for this article, however two points are abundantly clear to me:
1. There is a cohort of highly educated, talented, and able female leaders in internal audit whose skill society and business are missing out on.
2. This is happening due to a lack of will to build a flexible system that caters for all aspects of a normal human life.
It is not beyond our capabilites to build systems that allow men and women to have families, to build careers and to be leaders of the future. We just need to invest the time and money to do it. The ROI on this investment is huge. To retain good leaders, to retain hard working, loyal, motivated, creative people will generate a return well beyond the costs involved.
We need to embrace in full concepts such as; flexible hours, flexible work locations, trust, mentor programmes, transparency, outcomes focus, inclusive cultures, and we need to have organisations that focus on the long term, developing individuals over time, understanding and nurturing their core skills, and ensuring promotion paths that look for those core skills, not outdated, poorly worded behaviours. We need to display a willingness to think outside the box, such as Term time contracts.
One size does not fit all, many women will still prefer to spend more time at home with children and many men will not. However this must not prevent the identification, nurturing and promotion of women with the potential for leadership, we are all lesser for the absence of a more gender balanced generation of leaders.
While Level 5 leaders can come in many personality packages, they are often self-effacing, quiet, reserved, and even shy. Every good-to-great transition in our research began with a Level 5 leader who motivated the enterprise more with inspired standards than inspiring personality.
ESG has been called the Mega Trend for the future of business; perhaps also the Mega Risk of the future?
Yes we are in the middle of the Covid-19 crisis but, as ever, the world and all its opportunities and risks do not stand still.
One of those key risks and opportunities that Internal Audit need to consider is the ESG agenda. If any of you aren’t familiar with ESG:
Environmental, social and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. Environmental criteria consider how a company performs as a steward of nature. Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits,internal controls, and shareholder rights. (Learn more about ESG criteria)
As an example of the issues that can come up under the environmental criteria, the WEF recently published an article focusing on micro plastics in our environment , it does not make for pleasant reading, and it got me thinking on the implications for business and Internal Audit.
How should Internal Audit Leaders be thinking about this issue and the broader ESG criteria?
11 billion tonnes of plastics will accumulate in the environment by 2025.
This article is focused on the perception that these issues create and therefore why the broader ESG agenda is becoming a key business risk and is critical for Internal Audit to take into account. The reason I say perception is that it doesn’t really matter whether you believe in or value all of the issues raised by the ESG agenda, but it does matter if your key stakeholders do and they start to perceive you as part of the problem.
If we take the plastic issue as an example, if your organisation is perceived to be contributing to this problem and is not being seen to be actively working to mitigate it this could create substantive business risk.
I’m not just talking reputational damage and the consequent risks to consumer behaviours and income streams. Increasingly investors are taking ESG seriously. It is clear to many institutional investors that the money is already (and will increasingly do so) flowing towards organisations with a strong ESG agenda. Ultimately the wrong perception of your behaviours will likely drive down your share price in years to come.
A clear example of the direction of travel of the ESG agenda is the LTSE (Long Term Stock Exchange) the LTSE lays down the gauntlet for stakeholder capitalism and the broader ESG agenda by focusing organisations on their long term delivery to their stakeholders rather than their quarterly profit figures.
Modern companies measure progress over decades, not financial quarters. Investors who invest long term want to know not just how companies plan to produce value in the next quarter but for years to come. Employees, customers, suppliers, and communities count on companies to uphold their commitments and to do right by society
My key point is that some sectors, such as; Tobacco, Pharmaceuticals, Energy, Defence are used to dealing with community resistance to what they do, most are not. What can seem a hypothetical conversation will for many companies very quickly become a critical business risk.
In a world dominated by the speed of social media and dealing with complex issues such as BLM, Covid, Global Warming etc. What might have been a trivial issue a few years ago could very quickly blow up into a critical issue that rapidly drives down your share price, income, profits and staff morale.
Internal Audit needs to be taking the ESG agenda and associated risks seriously and helping their leadership teams to do the same. In doing so there is a bright future for Internal Audit, not only helping to mitigate risks to the organisation, but in genuinely feeling they are making a contribution to society.
How can IAC help?
Here at IAC we ensure we keep fully up to speed with all issues related to Internal Audit so that we can provide the best possible service to our clients.
We are the Internal Audit Recruitment experts and our leadership team are passionate about ensuring Internal Audit Leadership is the very best it can be.
Harvard Business Review released this article by Zenger & Folkman some time ago, but the key message is timeless. The best performers don’t automatically make the best managers and leaders. So if you are planning on being a CAE, Internal Audit Director or Head of Internal Audit, it is critical to have the self awareness of your own current skills and the skills of those in your team.
We have written about leadership in Internal Audit many times before, and have pointed out how unsuccessful it is to promote people on time served, or on being the best performer in their current role. What is critical, are the skills and competencies that will make you great at the role you are moving into, rather than the one you are doing now.
The article explains that to be the best performer in a non-leadership role, individuals usually demonstrate competencies which leverage individual skills and individual effectiveness. Whereas the competencies of a good manager/leader require skills focused on others, rather than self.
Zenger & Folkman particularly highlight the following leadership competencies:
Being open to feedback and personal change. A key skill for new managers is the willingness to ask for and act on feedback from others. They seek to be more self-aware. They are on a continuing quest to get better.
Supporting others’ development. All leaders, whether they are supervisors or managers, need to be concerned about developing others. While individual contributors can focus on their own development, great managers take pride in helping others.
Being open to innovation. The person who focuses on productivity often has found a workable process, and they strive to make that process work as efficiently as possible. Leaders, on the other hand, recognize that innovation often isn’t linear or particularly efficient. An inspiring leader is open to creativity and understands that it can take time.
Communicating well. One of the most critical skills for managers is their ability to present their ideas to others in an interesting and engaging manner. A certain amount of communication is required for the highly productive individual contributor, but communication is not the central core of their effectiveness.
Having good interpersonal skills. This is a requirement for effective managers. Emotional intelligence has become seen as perhaps the essential leadership skill. Although highly productive individuals are not loners, hermits, or curmudgeons, being highly productive often does not require a person to have excellent interpersonal skills.
Supporting organizational changes. While highly productive individuals can be relatively self-centered, leaders and managers must place the organization above themselves.
The highest performers at a non-leadership level often scored poorly on the above competencies.
Clearly this is not the case for everyone and the very best leaders score brilliantly on both individual and leadership competencies.
However the key takeaway is:
If you are outstanding in your current Internal Audit role it does not mean you are ready for leadership. If you haven’t already done so, sit with a mentor and review how you would score on the above leadership competencies. In addition you should be very wary of automatically promoting your best performers without carefully considering if they have the different skills required for management / leadership.
Here at IAC we not only provide an Executive Search service to the Internal Audit profession but can also provide leadership development programmes for aspiring Internal Audit leaders. Please contact us if you would like to discuss the details.
For those responsible for considering risk and internal audit this is the next in the list of risks collated from the last couple of months of IAC webinars and surveys:
Covid “second wave” potential– are we ready and have we learnt important lessons from the “first wave”?
Of course with infection rates varying widely state to state and city to city, to talk of ‘waves’ is perhaps overly simplistic, but the key point remains, are we learning the lessons and preparing for the future?
It is conceivable that organisations adjust, adapt and re-set only to be hit by another period of reduced income, disrupted supply chains and remote working.
Organisations in the Northern Hemisphere are particularly nervous as to what happens when the winter flu season arrives whilst Covid-19 remains a threat.
What do you think? Has your organisation developed reliable enough systems and processes to ensure resilience if this occurs?
What can Internal Audit do to contribute to ensure preparations have / are being made?
Over the last couple of weeks we have been asking our global audience of Internal Audit leaders and team members, “Do you feel Internal Audit is currently valued within your organisation?”
We have over 200 contributors from various industries, and markets, and the answer is… 60% say yes, 40% say no. We have deliberately kept this un-targeted so that we didn’t bias the results. Respondents have self selected to respond so are more likely to feel strongly one way or another.
We deliberately kept this to one simple question to maximise the response in a busy and challenging time for everyone. There will be follow up surveys to seek to understand what has driven this result, however I wanted to provide some initial ideas as to what might be at play here.
I will assume that most people answered the question literally and not as to whether or not they felt personally valued. Therefore I’ll leave out all the factors that can effect whether an individual feels valued in work (critically important though these are, they are for another article.).
So what are we seeing that might explain this response?
I think that the current situation, as with all crises, magnifies whatever the status quo already was. On one hand there remain, unfortunately, organisations who treat Internal Audit as a regulatory or shareholder necessity, a box to be ticked. In these cases budgets will be quick to be cut and those teams will often feel even less listened to and more isolated than normal. However other organisations, hopefully the majority, do see IA as a value add partner, a team which can help to assist the organisation through the immediate crisis and the choppy waters ahead. This does not make them immune to budget cuts by any means, but if you feel part of the solution rather than part of the problem you will feel valued,
I suspect that most of those who responded will fall into one of those two camps. In which case I would suggest that this is, relatively speaking, a good news story. We are still in the midst of a huge social and economic global crisis and yet 60% of our respondents felt Internal Audit was valued. If that means 60% are being listened too then hopefully many organisations will be better able to weather the risks ahead as we progress through the recovery,
I did say I would skip the reasons as to why individuals may not feel valued, however I will mention one, and that is communication. Communication is at the heart of how any organisation functions; timely, transparent communication that gives real clarity as to what is happening, what actions are being taken and what is likely to happen next is critical. Get this wrong in a crisis and whether you value a team, or a person, or not, they certainly won’t feel like it.
My final point is that we have noticed something very unusual in the current crisis. Normally, in times of economic hardship, most people stick with the job they have unless forced to leave. They are motivated by security; job progression and higher pay can wait. Interestingly that dynamic is not as strong at the moment. If anything we are seeing a greater drive to move roles, and this has been picked up by other commentators and organisations. It may take some years to look back and explain this phenomenon, but I think it is down to two points:
1) Poor communication and decision making (although often understandable) during such incredibly fast moving and historically damaging events.
2) A lock down period during which people had time to step back and review their current situation. These times of reflection, holiday seasons see the same effect, always lead to a flow of people wanting to move on.
Therefore those organisations with teams who do not feel valued may well find that the need for security is not a big enough motivator to stay, and they may in fact lose people they would have otherwise expected to keep. This crisis has changed patterns of behaviour in unexpected ways and it will be very interesting to see how the next year or two evolves.
We will run further surveys to dig into the details of why people feel valued or not, and the results will be published in the months ahead. You can then re-read this and see if I was in anyway correct!
‘Lay first the foundation of humility…The higher your structure is to be, the deeper must be its foundation’ St Augustine
The concept of Humility attached to Leadership, along with Service and Leadership, can cause confusion. Some see words such as humility and service as ‘weak’, ‘passive’, and ‘submissive’. Which they therefore assume means these behaviours have no place in leadership. However humility and service have absolutely nothing to do with weakness or submission.
The following three examples which are role models for great leadership, are defined by humility and service, and could not be less weak or submissive…
The British SAS
US Navy Seals
The All Blacks (NZ Rugby Union Team)
These organisations know that to be as strong as they are, and to have leadership skills as strong as they have, they need to be rooted in humility and service.
For all three they are fighting for, playing for, a bigger cause, they are acting in service to something other than self. It is not personal ego, success, or position, but instead the team, the cause, the purpose is what they are serving. Serving to Lead is not about submission to others, it is about using all that you are to serve the group and the goal.
To do this effectively you first need humility. To serve the bigger cause, to be an effective leader, you need the humility to understand you don’t have all the answers you aren’t, and don’t have to be, the best at everything, and you have constant scope to learn, grow and be more.
To be clear you need confidence in yourself in order to be humble. Humility does not mean lack of confidence. As and when advantageous to the group, you still need to be able to make quick effective decisions, to lead by example and take responsibility. However you will be much better at doing that if you have built your skill sets as a leader on Humility
Golden Rule = Never assume you have it, it needs to be earned every, single, day.
This point cropped up as I was asked by someone, who had been newly promoted, how do they gain respect of those they are now responsible for.
The great news here was that they already realised that a job title does not equal respect.
I should point out that I do realise that with title, age and confidence, comes a degree of automatic respect. However that can disappear as soon as you open your mouth or take your first action, the Golden Rule still stands regardless of age, title or experience.
So that being the case, how do you build respect?
Honesty – Be truthful in all you say and do, makes people feel safe around you. You can also build respect when you can be honest about your own failings and difficulties.
Clarity – Be clear in your communication, let people know where they stand.
Consistency – Partners with Clarity. Consistency of your communication, combined with clarity, really helps people to know where they stand with you and what expectations are.
Confidence – This can be misunderstood as ego or arrogance, but true confidence gives others security that you back yourself to do what needs doing, how and when it needs doing. Respect will follow.
Self-Discipline – If you are on time, prepared, organised, never flustered then you will build respect. This again stems from the fact people trust and feel secure around you.
Decisiveness – When a decision needs making, make it, do not procrastinate.
Work Ethic – Work hard, but with disciplined balance. Set the example.
Mindset / attitude – Positive, can-do, growth, always see the opportunity and upside.
Delivery – Always do what you say you will do.
Fairness &Compassion – Be fair in all things and treat others with compassion.
Calm – Don’t panic, and don’t allow your emotions to harm others.
Others before self – Live by the principle of putting others before your self.
The nuances of the above can be more complex, but you never have to be perfect, no one is perfect. All you have to do is genuinely and sincerely attempt to live by the above every day and you will have respect. You are allowed to make mistakes, you are allowed to get some of this wrong, that is part of growing, and being open with that will also help to build respect.
Only promote, and hire, leaders who possess the necessary leadership competencies, values and behaviours, and who desire to help others.Never put someone into a leadership role as a next step promotion or reward for a job well done.
That one point, one singular point, would solve most of the leadership problems faced day in day out be most organisations.
I have spoken with countless leaders at all levels in many industries and time and again promotions occur because an individual is, or is perceived to be, good at their current job. The only recognised way of rewarding them is to promote them. They are then by default promoted into leadership roles they are not ready for, not trained for, and often don’t want.
This occurs with sales people, marketing, ops, police, technical specialists, doctors, teachers, lawyers, accountants the list goes on. Being outstanding at a profession, task or skill, does not in anyway predetermine that you will be good at leadership.
This is without comparison the biggest reason for leadership failure, but there is a solution.
There are three steps we can take:
Create progression and reward structures that allow individuals to be rewarded for success that does not force them into leadership responsibility. Salary, title, benefits can all be used along with adding responsibilities such as mentor that benefit all parties without taking someone away from what they are good at and love.
Create a system that picks up early those who demonstrate the basic leadership competencies, values and behaviours.
Build a training and development programme that develops these future leaders from an early stage so that values and behaviours are embedded early and can be built on throughout their career.
Allow movement between these two streams if people change their focus and abilities over time.
That then leaves us with a group of high performing, highly skilled delivery specialists doing that which they get most satisfaction from, led by a group of highly skilled and motivated leaders.
We have a productivity problem, not ground breaking news I know. There are no doubt numerous contributing factors to this, many of them technical and complex. However I believe there is an obvious win we are missing, and an obvious way to make all teams, all organisations more successful, productive and fulfilled.
Access the truly enormous potential of highly motivated people working as a team. Again, nothing ground breaking here, but what people may not realise is how astonishingly rare this is.
I have been a leader in recruitment for over a decade, and in a previous life I was a leader in the military. I have seen high performing environments and toxic environments. It is very clear to me that the vast majority of organisations are dramatically underachieving as although most aren’t toxic, most are failing to achieve an environment where they have an engaged, motivated and productive team.
My evidence for this? I now run a globally facing recruitment firm that works with hundreds of different organisations at any one time, thousands over the last eight years. The vast majority of whom are very lucky to retain any of their team for much longer than two to three years. My team’s recruitment skills are frankly being used too often, companies can and should be better at creating an environment where their teams thrive. Some companies will no doubt say why? aren’t we just spending money on free stuff, less work hours and ultimately lower productivity? Wrong.
I have learnt how companies can dramatically improve their; Hiring of the right people, Retention, Morale, Productivity, Profitability, Customer satisfaction, and team fulfilment. And my goal is to pass this on so that we can really make change happen.
At IAC we now have the Ten Point Plan that we know would increase the productivity of every team, every company and ultimately the UK. We are going to be consistently producing content on this, but in short the Ten Points are:
The Right People
Hiring/On boarding Process
Continuous and Rigorous Training & Development
Serve to Lead
Culture of Trust
None of these are revolutionary, none are new, but aligned as one set of consistently delivered processes they can and do have a dramatic impact.
Imagine the impact of every team increasing its productivity by a mere 5%? Every team we can work with to fully integrate the above will easily see an increase of 10%+
I am always keen to discuss these ideas, and love to speak around how they can be implemented. Please reach out anytime if you would like to hear more.