Effective internal auditor management: Retaining talent
ComplianceFebruary 20, 2024

Effective internal auditor management: Retaining talent

In part 1 of this 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 helps 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 characteristic of this framework – Attract – which involves examining recruitment selection techniques, using AI, and effective onboarding of new colleagues. In this next article we explore the second aspect of our framework of effective internal audit people management – Reward. As with each article I write, my hope is that there are one or two ideas that you can take away and be able to implement within your organization.

The two areas of focus in this article include – independence of the reward decision, and the employee value proposition:


Those of you who follow my ideas on effective internal audit know that I normally dismiss structure and process around independence, rather suggesting that independence is all about mindset. However, reward is one area where I do think some process is important.

Although I normally do not refer to IIA standards as I generally find them overly prescriptive, I will make an exception here. 

“The Chair of the Audit Committee should be responsible for recommending the remuneration of the chief internal auditor to the remuneration committee. “

“The remuneration of the chief internal auditor and internal audit staff should be structured in a manner such that it avoids conflicts of interest, does not impair their independence and objectivity and should not be directly or exclusively linked to the short-term performance of the company”

These two quotes are taken from the UK Internal Audit Code of Practice, published by the IIA. It’s likely there will be similar local guidance in your area.

The question that needs to be asked is — Do your remuneration arrangements meet these two criteria? In particular, if you incorporate bonuses into your pay structure, on what basis is the pool for the bonus set? How much does the profit for this period influence the amount and could this influence auditor judgement? For example, if you found a problem in some aspects of the financial performance that you know will lower the overall level of company profit, and therefore the resulting bonus pool, could it influence whether or when you raise that point? I suspect not, but weakening the link between the bonus pool and absolute financial performance can help with this.

In a recent webinar, more than 1600 attendees were asked about their remuneration arrangements, specifically who sets the remuneration for the Chief Internal Auditor. The results show that while a good proportion have their remuneration set independently by the audit committee, many do not and in around a fifth of responses the auditors questioned did not know.

Who sets the remuneration of your Chief internal Auditor/ Head of IA?

Who sets the remuneration of your Chief internal Auditor/ Head of IA?

Employee value proposition

Next is the importance of identifying and communicating all that is rewarding about your organization, your function, and your specific role. High performing internal audit functions will have developed their employee value proposition. That is the statement of what is rewarding about working for the internal audit function, a subject that would typically cover areas that include:


Does your organization have a particularly worthy purpose that you can emphasize and share? This may be significant for those that may be working in ‘not for profit’ or public sector organizations where the focus is generally on a worthy higher purpose. I have written extensively on internal audit purpose, more of which can be found here.

Career opportunities

Internal audit offers the opportunity to spend time with, experience, and learn more about all aspects of a business. It is a window into the organization with a clear view of the many opportunities beyond audit.

Variety of work

Also related to career development and opportunities, internal audit functions are likely to offer a variety of work, duties and responsibilities. If you have multiple business lines, the auditor could get a chance to see each of these. And of course, this includes work across all the functional areas such as finance, HR, legal, risk, operations etc. Variety is an appealing aspect in a role. If it is offered, sell it as a benefit of working for your internal audit team.


Many of you will be investing heavily in technology for your data analytics and exploring AI in your audit work. You may also be a function with a culture of encouraging innovation and experimentation in your work. Again, this is a compelling part of any proposition.  One organization I have worked with used to offer a 1/2 day every two weeks to their auditors to spend time away from their routine audit work to work on areas of personal interest. This attractive feature resulted in a variety of developments in areas such as data analytics and creative audit methodology development. Another organization ran regular innovation hack days where auditors could work and collaborate with colleagues on a business problem or opportunity they identified, taking the idea through to implementation in the same day. A fulfilling exercise to see immediate change from your ideas and effort.


An increasing focus is the support given to colleagues to manage their well-being. This may be as simple as free gym memberships and access to mindfulness apps, to more structured well-being programs, paid time off for life events, and employee assistance programs where colleagues can access life coaching, money management support, and legal advice. If these wellbeing programs are offered, then shout it out.

Total reward

Finally, make sure you communicate all that is offered in your remuneration package. Far too often, organizations undersell what employees are offered. Sure, base salary is important, but of equal importance is your pension provision and wider benefits that often include life insurance, critical illness coverage, and health benefits. You may also have access to other benefits such as car leasing, bike subsidies, and continual education allowances and support. If this is the case, make sure this is fully understood.


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The employee value proposition is often developed through workshops and dialogue across the audit function, allowing for a free and open discussion of why people work in internal audit and for your company. This discussion alone will often result in engagement benefits and lead to a better articulation of the proposition for future colleagues.

This concludes our exploration of rewarding the behaviors needed for your internal audit function to be successful and to consistently attract those that will help do this. In the next article we will explore how to ensure that your people are effectively led, motivated, and held accountable for their actions, and that your managers have the tools and skills needed to be successful. 

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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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