Is there a more complicated relationship on earth than Internal Audit and Management?
Management has more power than we do, but they can’t fire us. They don’t get to tell us what to do, but they have an opinion about literally everything we do. We can’t tell them what to do, but we are obligated to tell their bosses our opinion about them! I’ll bet if you think about the leaders of your company, you know offhand who is competent, respected and admired… And who isn’t.
This relationship can be fraught, but at the end of the day, Management needs you and you need them. If there is one thing you can do to be more effective in your role, right now, it is to strengthen your professional relationships with key leaders at your company in an appropriate way.
Today I want to talk about the Audit/Management relationship, explore why it is sometimes difficult and present ways to improve.
Consider your Org Chart
Building relationships with leadership is only possible if the CEO bond in your life is in good condition. Consider your company’s org chart and where you are on it. You or your boss should have a solid line to the Audit Committee (direct reporting) and a dotted line to the CEO (administrative reporting). This means that your Audit Committee has certain powers, such as hiring and removing the Chief Audit Executive and approving the annual Audit Plan. The administration of your role stays within the company, so your CEO or their designee should approve your expense reports, timecard, PTO, salary, bonus, etc.
This type of role relationship was created by people much smarter than me, for reasons beyond the scope of this post. While this is the proper organizational structure, you can’t deny that it is strange to be the auditor! Your conversations, interactions and relationship with the CEO will always be slightly different from everyone else with that much access to the boss.
The Audit/CEO relationship is absolutely vital and affects the company in many ways. It shouldn’t be a love fest, but if you aren’t on good terms it will be impossible to function effectively. I don’t have a lot of advice for fixing a broken CEO relationship. If there is not mutual respect, transparency and trust, you need to work somewhere else. Assuming the relationship is strong, you have a solid foundation to build upon as you work your way across your organization.
The C-Suite and Middle Management
Working with the next level down, which I’ll refer to as the commonly accepted C-Suite, is more complicated. Most companies have a Chief Financial Officer and Chief Operating Officer, at a minimum. Depending on your size and industry, you may have a Chief Human Resources Officer, Chief Technology Officer, Chief Accounting Officer, Chief Information Officer, Chief Creative Officer, Chief Lending Officer, Chief Risk Officer, etc. I use the industry term “Chief Audit Executive” to refer to whoever the ultimate audit leader is, but whether or not your company recognizes this title varies greatly. You might be on the C-Suite level, you might not. Regardless, with multiple people on the C-Suite, you’re dealing with different personalities, and as an auditor, you need to relate to everyone.
Most people who reach the C-Suite have a lot of professional success under their belt, and very strong personalities. Combined with their role power, expect to be challenged and questioned by them, and be ready to answer confidently. You might not get along with everyone here, but you should try to. I think many auditors would admit that at least one of their C-Suite relationships is difficult or strained. In most cases, I believe it is on you to make the effort here. A bad C-Suite relationship will get in the way of completing your Audit Plan, hurt your reputation, and undermine the relationships you are trying to build further down the org chart.
Middle Management are the folks in the trenches, handling the frontline and interacting with disgruntled customers. These leaders are a different type of busy than you are. You and many of the C-Suite are paid to think, while Middle Management is balancing operational tasks and real-time demands. There are a lot more personalities at play, and you may not interact with some of them, depending on the size of your department and how your work is distributed. At this level of the company, if a relationship is broken or strained, it might be prudent to just leave well enough alone. If the CEO and C-Suite are your allies, a spat with Middle Management here or there will not derail your Audit Plan. That being said, foster as many strong relationships with these folks as you can; some of them will eventually be on the C-Suite. Allies are great to have, regardless of their title or position.
Now that we have established the proper reporting lines and priorities for mending broken relationships, let’s discuss some strategies you can use.
Replace “Vs.” with “And”
I have worked and interacted with auditors who consider Management a foe, enemy or obstacle that needed to be overcome. Sometimes this mindset developed because of personality clashes that just couldn’t be resolved. I’ve also seen cases where this attitude was simply “how it is” from the auditor’s perspective. Regardless of your experiences or personal feelings about your Management team, I would encourage you to avoid this mentality.
First of all, you are all on the same team, you just have very different roles. Both of you want the company to be profitable, have appropriate controls in place, and maximize stakeholder value. Second, it is unhelpful to go into any interaction with a negative frame of reference. If you expect an interaction to be combative or adversarial, it will be. If you are difficult to be around, people will come to expect it from you, and knowing that is your general demeanor, they won’t go out of their way to work with you or be helpful. Wouldn’t make a difference anyway!
You don’t live on Audit Island; you are part of the company, and you need relationships in order to survive and thrive. Rather than Us vs. Them think Us and Them. Two groups with very different tools working toward the same goal.
Never Usurp Management
One of the first rules of auditing is never audit your own work. We all know this from auditing class, but it gets tricky when we have to draw that boundary in the real world. While each individual has their own interpretation of exactly where the line is drawn, and crossed, here are grey areas to avoid:
- Making Management decisions
- Writing policies and procedures (other than Audit documents)
- Speaking on behalf of Management to the Audit Committee or Board of Directors
- Performing a control function, rather than testing a control function owned by Management
Leaders do not want you to “tell them what to do” and that is not your job anyway! At some point in your career, you will be asked to make a decision that is not yours to make, or asked why you didn’t “catch” something that resulted in a loss. There are times when Management, the Audit Committee, Board Members or even regulators will expect you to defend Management decisions and actions. It can be an innocent case of forgetting where the line is drawn. It can also be an attempt to make a Management problem into Audit’s problem. Regardless of the motives, it’s always appropriate to remind people of what is and is not your role.
Just remember that Management owns their policies, controls and decisions. Even the best leader will forget this, or try to push responsibility onto someone else at some point. If you consistently stay on your side of the line, everything will be easier in the long run.
Build Personal Relationships
In addition to being organized, responsible and accountable at work, take any opportunity to build relationships on a personal level. Make sure to attend work parties and functions; socialize over food and cocktails, and get to know people and their families. Make the time for water cooler and coffee machine chats during your work day. Two minutes of your attention in the break room could mean a lot to someone. Ask people questions and get to know the other employees as more than auditees. When people see you as a human, relate to them and show interest in their lives, it will pay dividends at work. It’s also just basic human decency.
Accept What You Cannot Change
In addition to strong personalities common in leaders, you are probably dealing with individuals in mid-life or later. People who have been around the block, established themselves, and found a lot of professional success are not likely to change or adapt to your needs. You need to meet them where they are at, whenever appropriate. Accept and appreciate this, and find creative ways to get what you need. How to Win Friends and Influence People by Dale Carnegie is full of great advice.
On a different note, accept that you simply won’t be able to get along with everyone! No matter how kind, empathetic and patient you are, it just won’t happen. Someone will take issue with something you say or do, will not understand your role, or will find you irritating. You might remind them of a family member who rubs them the wrong way or a teacher they hated in high school; you really never know! You can’t win them all.
If everyone likes you, you are probably being too soft on some of them! Your role is to challenge, question and report, even if this hurts someone else’s feelings or career prospects. It’s about objectivity. Do your job, and accept that not everyone will appreciate it. If you approach your role as a generally pleasant person who sometimes has to say things that are hard to hear, you have hit the sweet spot! Professional, tough, but fair. Someone won’t like you for it; brush it off and move on.
Ask for Advice
You’re the person that others come to for advice in difficult situations. But sometimes, you need advice! Find someone on the C-Suite or in Middle Management who you trust and admire, and ask them for advice from time to time. What better way to build a strong relationship than to demonstrate that you truly respect and value their opinion?
A couple of caveats. First, take care not to be a drain on someone. Leaders like to solve problems, not listen to venting, so save that for your significant other or best friend. Second, be mindful of confidentiality. Think through what is and isn’t appropriate for the person to know, prior to asking for their advice. If you get to a point where you can’t tell them something, just be honest. “Sorry, I can’t disclose that part” is a perfectly acceptable thing to say.
Now I want to hear from you! Have you ever witnessed disputes between auditors and leaders that could have been avoided? Any other advice for building relationships in an appropriate way? Leave a comment and tell us about it!