Effective internal auditor management: Leading your people
ComplianceMarch 14, 2024

Effective internal auditor management: Leading your people

In the first two parts of this article series on changing the internal audit function we presented a framework for effective internal audit people management, comprised of four aspects of the employee lifecycle. This framework covers all the important touch points with your colleagues to make the employee experience as effective as possible and help to ensure that you can get the best out of all your people.

  • Attract is all about taking a long-term view of your resourcing needs and having the means to effectively attract and select people with the skills, knowledge, and attitudes you need.
  • Reward, at its simplest, is about attracting, retaining, and motivating audit staff who use their skills and knowledge to deliver your objectives. Ensuring that the reward system you have in place promotes the behaviors you have identified as being key to your success.
  • Manage is about ensuring that your people are led and motivated. To do this effectively, your managers require the proper tools and skills. This will mean that people are fully empowered to make decisions at the right level and at the right time. It also includes holding people accountable for their actions, through regular and honest feedback on performance.
  • Develop a focus on ensuring that you are successful in identifying and developing talent at all levels of your function, and that people are supported in the development of their capabilities, knowledge, and experience.

We also explored the first two characteristics of this framework – Attract and Reward. In this next article we examine the third aspect of our framework – effectively leading your people. To do this, management must have the proper tools and skillsets.

The three areas of focus in this article include the following:

Auditor performance management

High performing teams understand people performance management. They provide clear alignment running throughout their audit strategy – the articulation of what the audit function is attempting to achieve and how it will succeed (learn more about Audit Strategy) – through to the objectives of your chief internal auditor, her direct reports, and ultimately to everyone in the function. There should be a clear line of sight to functional objectives so everyone can see the contribution they are making to the overall purpose of the function. Internal audit teams that get this right have everyone pulling in the same direction and achieve better collaboration, greater creativity, and higher performance.

Let me illustrate with an example.

One function had an audit strategy that included four main strategic outcomes:

  • Business alignment
  • Effective stakeholder management
  • People empowerment
  • Excellence in delivery

Under each of these objectives they set out twelve strategic outcomes with a goal of what they wanted to be true over the next 5 years.

The four headings and the associated strategic outcomes then provided the framework for the Chief Internal Auditor’s objectives for the year. She determined two clear objectives under each heading, with eight in total. This articulated what she was personally going to focus on that year and what the Board should hold her accountable for delivering.

That then cascaded down the function with everyone’s objectives aligning to the four strategic outcomes, with a maximum of eight objectives in total. The results were hugely powerful as everyone was pulling in the same direction and working to achieve the same goals.

Simply cascading objectives in this way, although powerful, is not enough. They need to be kept alive through regular discussion and individual contributors need to be clear they are accountable for their delivery. To ensure this was the case, everyone had regular (at least monthly) performance conversations with their manager, focusing on these objectives using a simple three question framework to guide the conversation:

  1. What has gone well this month: Let’s enjoy this and learn from it?
  2. What has not gone so well: Let’s reflect and see how we might course correct?
  3. What support is needed for you to be successful over the next month?

This alignment of performance management was hugely successful. The function delivered on its strategic objectives for the year, received high levels of positive stakeholder feedback, delivered their plan with impactful findings, and resulted in a clear effect on the businesses control environment.


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Flip the function – Servant leadership

Internal audit functions that operate effectively have leadership that can manage broad teams and do so by operating with a servant leadership approach. They ‘flip’ the traditional hierarchical structure on its head. A servant-leader focuses primarily on the growth and well-being of people and the teams to which they belong. While traditional leadership generally involves the accumulation and exercise of power by one at the top of the pyramid, servant leadership is different. The servant leader shares power, places the needs of others first, and helps people develop and perform at their highest levels possible. Learn more about servant leadership and how you can ‘flip your function’ here.

Active management

Whilst leadership at the top is important, it’s the levels below this leadership – sometimes referred to as middle management – that are crucial when it comes to successful audit delivery. They are the key to ensuring consistent quality in our work and efficiency of operation. This requires managers (especially those that lead your audit engagements) who can operate in an active manner. Planning and prioritization, stakeholder management, team development, and engagement are often managed in a passive way, not an empowering or active approach. As part of this, fundamentals such as effective meeting facilitation, action planning, managing challenging conversations, and strategic thinking are often inconsistently practiced and can often lead to significant process failure and therefore require rework, which inevitably results in unnecessary delays. All of this leads to reduced and variable performance.

Addressing and fixing this form of passive management provides a significant opportunity for sustained operational performance and a win-win as it will also lead to a step jump in engagement of employees and their overall satisfaction with the contributions they are making. To learn more, download my case study of one organization’s successful shift from passive to active management.

This concludes our exploration of the relevant aspects of ensuring that people are led effectively. In the final article in this series we will explore how you can successfully identify and develop talent at all levels of your function and ensure that people are supported in the development of their capabilities, knowledge, and experience.

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Jonathan Chapman
Consultant specialising in risk and internal audit transformation
Jonathan Chapman is an expert on internal audit functional strategy and change management.
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