serving the global internal auditing profession

21
Assessing Your Organization’s Culture Douglas J Anderson, CIA, CRMA Managing Director of CAE Solutions - IIA

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Page 1: Serving the Global Internal Auditing Profession

Assessing Your

Organization’s Culture

Douglas J Anderson, CIA, CRMA

Managing Director of CAE Solutions - IIA

Page 2: Serving the Global Internal Auditing Profession

Overview

• Additional Insights into Culture

• Approaches to Auditing Culture

• Gathering Audit Evidence

• Analysis and Evaluation

• Communicating Conclusions

Page 3: Serving the Global Internal Auditing Profession

Definitions of organizational culture

• Rossi & O’Higgins (1980)

– “Culture is a system of shared cognitions or a system of knowledge and beliefs.”

• Hofstede (1980)

– “The collective programming of the mind which distinguishes members of one human group from another.”

• Deal & Kennedy (1982)

– “The way things get done around here.”

• Drennan (1992)

– “How things are done around here.”

• House, Wright & Aditya (1997)

– “Distinctive normative systems consisting of modal patterns of shared psychological properties among members of

collectivities that result in compelling common affective, attitudinal, and behavioral orientations that are transmitted across

generations and that differentiate collectivities from each other.”

• Ogbonna & Lloyd (2002)

– “The collective sum of beliefs, values, meanings and assumptions that are shared by a social group and that help to shape

the ways in which they respond to each other and to their external environment.”

Page 4: Serving the Global Internal Auditing Profession

Culture

“Shaped by formal and informal”

“Values and how they are translated into actions and

outcomes”

“Behaviors employees have learned over time that work

best for them”

“Unique component of every organization’s personality”

Page 5: Serving the Global Internal Auditing Profession

Culture: Driven by People’s Actions

Page 6: Serving the Global Internal Auditing Profession

Effectiveness of Factors in Influencing Culture

1%

1%

1%

3%

17%

21%

55%

2%

9%

5%

13%

17%

33%

20%

Direct communication from other employees

Formal training on a code of conduct

Enforcement through disciplinary measures

Behavior modeled by other employees

Establishment of a code of conduct

Direct communication from executive mgmt

Behavior modeled by executive mgmt

1st 2nd

Page 7: Serving the Global Internal Auditing Profession

Cultural Web*

Paradigm

Stories

Symbols

Power Structures

Organiza-tional

Structures

Control Systems

Rituals & Routines

* Johnson, Whittington & Scholes (2012) Fundamentals of Strategy, Harlow: Pearson Education

Page 8: Serving the Global Internal Auditing Profession

Culture

• Macro vs micro

– “tangled undergrowth of subcultures”

• Risk, ethical, performance, collaboration, innovation,

entrepreneurial, compliance, etc.

• Best practices model

• Black/white

• Stable

Page 9: Serving the Global Internal Auditing Profession

Auditing Culture – The New Frontier?

Page 10: Serving the Global Internal Auditing Profession

Approach to Auditing Culture

Page 11: Serving the Global Internal Auditing Profession

Nature of Auditing Culture

Page 12: Serving the Global Internal Auditing Profession

Options, Options…

Identifying Culture

Concerns During

Specific Audits

Audits of culture

within business units,

geographies, etc.

Capstone or theming

reports based on

multiple inputs

A top-down,

enterprise-wide audit

of culture

Unstructured

Activities Providing

Culture Insights

Informal

Observations on

Culture

Address Culture in

Specific Audit Project

Reports

Analysis and Evaluation

of Information

Page 13: Serving the Global Internal Auditing Profession

Gathering Information on Culture

Audits of culture

within business units,

geographies, etc.

A top-down,

enterprise-wide audit

of culture

• Will objectives drive right behaviors

• Employee turnover

• Hotline activity

• Reaction to wrongdoing

• Reward programs

• Surveys

Page 14: Serving the Global Internal Auditing Profession

Employee Surveys

• Attributes of good questions

• Use of averages

• Perception

• Fear and bias

• Not an end point

Page 15: Serving the Global Internal Auditing Profession

Gathering Information on Culture

Identifying Culture

Concerns During

Specific Audits

Audits of culture

within business units,

geographies, etc.

A top-down,

enterprise-wide audit

of culture

Unstructured

Activities Providing

Culture Insights

Page 16: Serving the Global Internal Auditing Profession

Analysis and Evaluation

Identifying Culture

Concerns During

Specific Audits

Audits of culture

within business units,

geographies, etc.

A top-down,

enterprise-wide audit

of culture

Unstructured

Activities Providing

Culture Insights

Analysis and Evaluation of

Information

Page 17: Serving the Global Internal Auditing Profession

Analysis and Evaluation

Page 18: Serving the Global Internal Auditing Profession

Specific Red Flags

• Employees on edge, unsure of what is expected of them

• Leaders who are: autocratic, manipulative, close-minded, secretive, avoid responsibility

• Lack of communication

• Cliques in the organization

• Cutthroat with each other

• Ends justify the means

• Strong groupthink, peer pressure to get along or conform

• Fear of retaliation

Page 19: Serving the Global Internal Auditing Profession

Options, Options…

Identifying Culture

Concerns During

Specific Audits

Audits of culture

within business units,

geographies, etc.

Capstone or theming

reports based on

multiple inputs

A top-down,

enterprise-wide audit

of culture

Unstructured

Activities Providing

Culture Insights

Informal

Observations on

Culture

Address Culture in

Specific Audit Project

Reports

Analysis and Evaluation of

Information

Page 20: Serving the Global Internal Auditing Profession

Expect More on These Topics From the…

THE ESSENTIAL RESOURCE FOR AUDIT EXECUTIVES

Page 21: Serving the Global Internal Auditing Profession

The Institute of Internal Auditors

Douglas J Anderson

Managing Director – CAE Solutions

[email protected]

Thank You