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6 ways to optimise company culture auditing

29 Dec 17 - 2:55PM  | Internal Audit & Control
6 ways to optimise company culture auditingAuditing culture remains a challenge for many businesses. Evaluating behaviour and attitudes within the work environment is often subjective and involves a level of ambiguity.

Nevertheless, the global financial crisis highlighted the toxicity that was prevalent in some workplaces across the finance sector. Organisations throughout most industries are now keen to address corporate culture in order to maintain compliance and rebuild trust with sceptical consumers.

But how can internal auditors effectively assess culture? Are there ways to make the intangible elements of culture more measurable? Let's look at some of the methods that businesses use to optimise culture-auditing processes.

1. Ensure the right tone at the top

The culture at most organisations is driven by the attitudes and behaviour of those at the very top. Board members and other senior leaders must recognise and promote the importance of a healthy corporate culture, as well as consistently demonstrate the organisation's ethical aspirations.

Boards must select the right CEO to embody the business's principles. Chief execs are the face of the organisation and stakeholders will look to these individuals to gauge an enterprise's moral compass.

Culture audits can therefore only be successful if auditors have senior management buy-in and a solid ethical framework from which to build upon.

2. Align culture audit expectations

The purpose of a culture audit is to ensure employees are adhering to the ethical and behavioural rules that senior management sets. But these guidelines may be broadly defined and open to interpretation.

Auditors must therefore have a clear mandate from the board that defines the scope of cultural audits and spells out specific expectations.

If auditors discover that senior management and employees differ in their understanding of codes of conduct and other cultural guidelines, existing frameworks and documents may need to be revised for better alignment.

This is likely to be an ongoing process that will need fine-tuning with repeated culture audits.

3. Understand the drivers of culture

There are several formal drivers of culture within organisations, according to Grant Thornton. These include:
  • Strategy;
  • Leadership;
  • People management;
  • Resource management;
  • Corporate responsibility; and
  • Process management and change.
Understanding how these drivers interact and relate back to a central business strategy is key.

Effective culture auditing requires professionals to design and implement a consistent, measurable approach to assessing each driver, while formulating methods of refinement and innovation where necessary.

4. Work with other departments

Internal audit has historically operated as a necessarily separate entity within organisations, enabling the department to offer impartial oversight and assurance.

This independence is essential when monitoring processes and controls but can prove a hurdle when trying to evaluate company culture, as auditors may lack crucial insight into how employees behave and interact day to day.

Observation and questionnaires can fill in some of these gaps, but employees who are aware culture is being audited are more likely to adhere to standards and practices over the short term.

Instead, internal auditors can obtain a more accurate picture of company culture by working closely with HR, compliance and risk departments.

5. Assess culture audit skillsets

Culture auditing may require different skills than are traditionally required for providing assurance regarding processes and controls.

Auditors with excellent interpersonal skills and high emotional intelligence can usually offer keener insights into the less tangible aspects of culture auditing, such as drawing inferences from surveys, interviews and staff observation.

At Barclay Simpson, we have seen a steady rise in demand for internal auditors with a combination of technical and interpersonal skills in recent years. Our research consistently reveals that employers continue to struggle finding professionals with the necessary stakeholder engagement skills.

Organisations must decide whether existing employees have the required skillsets to perform culture audits and how to proceed if not. Upskilling current workers, creating multi-disciplinary teams and recruiting new auditors may all be viable options.

6. Develop a meaningful reporting process

Effectively reporting the results of a culture audit and offering recommendations for improvements can be difficult for auditors who are inexperienced in this area.

Christos Skapoullis, head of internal audit at Cyprus's Bank of Piraeus, noted in an article for the Institute of Chartered Accountants in England and Wales that reporting is the most challenging part of a culture audit.

"Plain and straightforward corrective actions may only touch on the surface of the problem and not have the desired outcome, threatening the perceived value of the assignment," he stated.

"Meanwhile, an audit approach, which could be perceived as strict by staff in terms of applying the rules, may trigger employee dissatisfaction."

Businesses may also need to decide if internal auditors are in the best position to offer recommendations on how to improve culture, or whether drawing on the expertise of external consultants could help guide the process.

Culture auditing is becoming an increasingly important part of audit plans for many organisations, particularly in the finance sector. It is crucial that businesses have the right skills, experience and planning processes in place to perform effective audits in this area.

If you'd like to discuss your internal audit recruitment needs, please contact Barclay Simpson.

Our 2017 Compensation and Market Trends Report combines our review of the prevailing conditions in the internal audit recruitment market together with the results of our latest employer survey.

Image: StockFinland via iStockADNFCR-1684-ID-801843380-ADNFCR
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