As chief audit executives find themselves in a highly visible, pressure-packed role, many have come to realize that business and financial acumen are no longer enough. "Relationship acumen"—the ability to establish and maintain strong connections with key stakeholders—is now also a prerequisite for success. Paper by: Korn Ferry and the IIA

1. The relationship advantage:
Maximizing chief audit executive success
by Richard F. Chambers, Charles B. Eldridge, Paula Park, and Ellen P. Williams
As chief audit executives (CAEs) find themselves in a
highly visible, pressure-packed role, many have come
to realize that business and financial acumen are no
longer enough. Relationship acumen—the ability to
establish and maintain strong connections with key
stakeholders—is now also a prerequisite for success.
Given most auditors’ accounting background, such interpersonal savvy
hasn’t been readily ascribed to the profession. Accountants, by nature, were
often green-eyeshade-wearing bean counters… but that stereotype has
crumbled. Corporations increasingly view the role as critical, and look
beyond the walls of internal audit when filling it; many make the position
a short-term, rotational, executive-development platform. Armed with
broader organizational experience, these non-traditional CAEs in fact
exhibit impressive relationship-building skills.
CAEs certainly need them. Most have dual reporting structures—to
the CFO, CEO, or another C-level officer (administratively) and to the
audit committee chair (functionally)—and so they must craft effective
relationships with both. That can mean navigating complex, competing
stakeholder agendas, including with external auditors, regulators, and
others. Thus, if management wants a CAE in a business partnering or
consultant’s role—which is increasingly the case—while the board is
looking for an advisor and internal watchdog, the CAE must traverse these
seemingly conflicting agendas and preserve a good working relationship
with everybody.
“We try to operate as a professional services organization,” said Mike
Cowell, who heads the internal audit function at TIAA-CREF. “We ask,
‘Who are our customers?’ and we focus on what they see as value and how
can we help them be successful. Yes, we must be an independent and
objective audit organization, but if we can do our work and deliver our
March 2011
Relationship acumen, or the
ability to initiate and develop
strong connections with key
stakeholders, is becoming more
crucial to chief audit executives,
who must navigate complex needs
and competing agendas of senior
managers and audit committees.

2. 2
services in a manner that helps business professionals succeed, ultimately,
we will get them to a place where they see value in what we do.”
Successful CAEs acknowledge that these competing expectations can be
uncomfortable and stress-inducing. On one hand, the CAE must be a keen
observer and assessor of organizational risks, which requires access that
comes only with a close working relationship with management. On the
other, this same CAE must remain objective, diligent, and guard the
independence of the internal auditing function. That job inevitably
results in the occasional unflattering if not damaging report about senior
executives. Such conditions easily can erode relationships over time; nearly
everyone associated with internal audit knows of a highly respected CAE
colleague whose career was upended by conflict with senior members of
corporate management.
But as Alex Stephanouk, vice president and internal audit director at Aflac,
put it, “Having high-quality relationships is not an accident. You have to
work at it purposefully.”
Attributes that add up for CAEs
To determine how effective CAEs build these high-quality relationships,
we spoke to more than a dozen veterans from the field and also a number
of audit committee chairs. Their comments reflected a wide range of
perspectives on how to manage these complex, intertwined relationships.
From those, we teased out some common themes.
It goes without saying that strong technical audit skills and business savvy
remain essential to today’s CAEs. But the attributes that constitute what
we’ve dubbed relationship acumen benefit CAEs in specific ways:
Positive intent: A fair, independent, and objective approach to the job that
projects the CAE has everyone’s best interest at heart. Makes clear that he
or she isn’t set on being right, but is set on finding the right answer.
Diplomacy: Direct, forthright communication (including listening) skills,
political astuteness, and sensitivity to the organization’s culture and how
things get done. CAEs need to be intuitive about people and have the ability
to read an audience. The best can be skillfully contrarian without being
confrontational.
Prescience: Spotting the risks ahead requires curiosity, an ability to see
matters with fresh eyes, and a willingness to question assumptions. Top
CAEs can “see around corners”—that is, anticipate needs before they’re
felt and issues before they arise.
Contributors
Hal Garyn
Vice President, North American Services
The Institute of Internal Auditors
Stuart Kaplan
Global Chief Operating Officer
Korn/Ferry Leadership and
Talent Consulting
Acknowledgments
Korn/Ferry and The IIA thank the CAEs
and directors who participated in the
creation of this paper.
Dennis R. Beresford
Ernst & Young Executive Professor of
Accounting at the University of Georgia
Director and Audit Committee Chair of
Doosan Infracore International Inc.,
Fannie Mae, Kimberly-Clark Corp.,
and Legg Mason Inc.
Mike Cowell
Senior Vice President, Chief Auditor
TIAA-CREF
Mark Gaumond
Retired Partner, Ernst & Young
Director and Audit Committee
Member of Rayonier Inc. and
Booz Allen Hamilton
Robert Guido
Retired Vice Chair of Ernst & Young;
Director and Audit Committee Chair
of Commercial Metals Company
and Bally Technologies Inc.
V. Ann Hailey
Director and Audit Committee
Member of W.W. Grainger Inc.
and Avon Products
Kiko Harvey
Vice President, Corporate Audit and
Enterprise Risk Management
Delta Air Lines Inc.

3. 3
Trustworthiness: A CAE must always walk the talk, keep confidences,
operate with integrity, and be mindful of maintaining credibility with
those he or she advises. While consistency and predictability may sound
boring, they’re desirable qualities in this job.
Leadership: A CAE must set the tone for the entire internal audit staff, to
be sure. But he or she must also be able to steer others toward consensus,
manage conflict, and gain alignment on issues. Being a leader also
contributes to comfort with other corporate leaders.
Empathy: CAEs must be able to understand and focus on each stakeholder’s
point of view, and be sensitive to those needs and feelings. He or she
must listen. A genuine caring about others amplifies all the other qualities
on this list.
Applying relationship acumen
Ken Robinson, CAE at Procter & Gamble, oversees a global internal audit
function with more than 150 people in six cities around the world. He
attributes his successful eight-year run at the $80 billion company to his
commitment to absorbing and understanding the business goals of his
colleagues. This didn’t stem just from casual business lunches and quarterly
meetings, but from previous experience: before joining internal audit,
Robinson was the senior finance manager in P&G’s personal beauty care
business and also ran global customer business development’s finance
organization. “I know the company very well,” he said.
Understanding the corporate culture earned him credibility in building
the internal audit organization he now oversees—but listening is a job that
never stops. “We spend a lot of time bringing senior leaders in to talk to
our group about what’s going on in the business and what they’re trying to
accomplish. It allows us to engage with them, but more importantly, it also
allows us to understand the business.”
Robinson employs what he calls “the customer relationship model,” which
he uses with all of P&G’s senior managers. It reflects his diplomacy,
trustworthiness, and positive intent right off the bat.
“One of the things that has worked for us is getting alignment up front,”
he explained. “We say to senior managers, ‘Now that we understand
the business, what do you expect of us and what do we expect of you?’
We drive this by establishing our credibility, by demonstrating our
commitment to transparency. We don’t pull any punches and we are clear
where we see concerns. We raise those concerns through the appropriate
channels. And most important, we are consistent. One of our challenges in
Acknowledgments
Continued
Leslie Heisz
Director and Audit Committee Chair,
Ingram Micro Inc.
Director, HCC Insurance Holdings Inc.
Jeanette Hughes
Vice President, Internal Audit Ingram Micro Inc.
Leon J. Level
Director and Audit Committee Chair
Levi Strauss & Co. and UTi Worldwide Inc.
Wolfgang Muehlbauer
Senior Vice President, Chief Audit Officer
adidas Group
Ken B. Robinson
Vice President – Finance, Global Internal Audit
The Procter & Gamble Company
Manny Rosenfeld
Vice President of Internal Audit
Commercial Metals Company
Julie Scammahorn
Senior Vice President and General Auditor
American Express Company
Joe N. Steakley
Senior Vice President – Internal Audit and
Enterprise Risk Services
Hospital Corporation of America
Alex Stephanouk
Vice President, Internal Audit Director
Aflac, Inc.
Brian Thelen
Vice President, Internal Audit Services
Delphi Automotive
Charlie Wright
Vice President, Internal Audit
Devon Energy Corporation

4. 4
the past in an organization as big as P&G has been an inconsistent approach
to audit from region to region around the globe. During my time as CAE,
we’ve been driving a consistent approach that helps build credibility.”
Forging a bond with the audit chair
Many CAEs report that the regular annual or quarterly meetings with the
audit committee chair are simply a starting point. CAEs and chairs who
establish stronger bonds tend to reap the benefits.
At American Express, for
example, CAE Julie Scamma-
horn, a veteran with twenty-
seven years of financial
experience, described how she
created a strong relationship
with one recent audit committee chairman. “It was important for me to
establish a relationship outside of formal company time,” she said. “Once a
quarter, we would spend a morning together to address concerns strategi-
cally and to discuss any issues we see forthcoming for the company.… The
audit chair knows that if I reach out to him outside of our established
meeting, the issue must be of importance and requires immediate atten-
tion.” That not only creates a stronger working relationship, but adds value.
At the same time, Scammahorn has built strong relationships with the top
fifty executives. If one of the executives encounters problems that become
concerns for the audit committee, Scammahorn works side-by-side with
the executive and attends all meetings in search of a solution. She recently
worked with a newly promoted business unit president in this manner
to resolve a challenging audit report. “Because of this, we have a great
relationship, and he calls me to get my advice on any sticky issues,”
she said.
For audit committee chairs, the CAE can be an invaluable conduit into the
company, someone with a unique perspective and the ability to influence
every part of the organization. Dennis Beresford, audit committee
chairman for Fannie Mae, among other boards, says the foundation of
an effective relationship is setting expectations and establishing lines
of communication. And a confident tone is important. Historically, the
CAE has been extremely deferential with comments like “I hate to bother
you but…,” a stance that rankles Beresford. “They should never feel that
way,” he stated.
For audit committee chairs, the CAE can be an
invaluable conduit into the company, someone with
a unique perspective and the ability to influence
every part of the organization.

5. 5
Beresford worries about the lack of self-confidence among CAEs. “They
may feel that they don’t have the necessary support,” he said. “The audit
committee chair needs to spend extra time with the CAE because they are
really alone at the top.” Another audit chair we spoke with concurred that
time with the CAE was well spent: “They have to know you won’t throw
them under the bus,” she said. “The audit chair’s approach should be:
‘What can I do to help without jeopardizing your key relationships?’”
At the same time, audit chairs expect more from CAEs than ever before.
Robert Guido, audit chair at Commercial Metals Company and Bally
Technologies, believes that CAEs need to be more prescient and diplomatic,
and show more leadership in staking out their influence with the audit
committee. “CAEs have to generate new ideas in order to provide value,”
Guido said. “They can’t always show up on the doorstep of the business
with bad news.” Relationship acumen, Guido pointed out, is based on the
idea that you build the relationship before you need it.
Developing your own relationship acumen
The abilities that got you the CAE
job—observing, absorbing, probing,
listening—should also be applied to
your own development.
Behavioral scientists have made strides over
the past decade in decoding the personal
attributes that lead to strong professional
relationships. Daniel Goleman’s seminal work,
Emotional Intelligence, brought these types of
“EQ” skills into stark relief against the more
“technical” skills prized within many corporate
functions. Building on that, Korn/Ferry’s
Lominger research, which identified specific
competences that correlate to high EQ,
clarifies how leaders can develop these skills
over time.
Experience is the best teacher, it
turns out. Korn/Ferry refers to this as
the “70-20-10” rule:
Key jobs (70 percent): It is essential that
before stepping into the CAE’s role, the
person has worked in jobs or situations in
which strong relationships are required in
order to succeed, and in which something
important is at stake. These might include:
change management roles, international
assignments, staff leadership without formal
authority, or turnaround situations in which
roles are not clearly defined. The research is
very clear that there are no shortcuts: people
learn far more from situations in which they
personally were stretched and challenged.
However, these experiences alone don’t
teach. What makes the difference is stopping
to reflect on what has been, and still can be,
learned. This extra step separates lifelong
learners from those who don’t grow over time.
CAEs, and aspiring ones, shouldn’t hesitate to
volunteer for or accept opportunities that
stretch your boundaries. That special project,
assignment, or transfer could be the fuel to
propel your career faster forward.
Mentors, coaches, and bosses (20 percent):
The second most important way to deepen
relationship acumen is through direct
coaching and feedback from others, both in
and outside of the organization. For current
and aspiring CAEs, this might require actively
seeking out some “tough love” on their people
skills. Cultivate relationships with mentors
who tell you not what you want to hear, but
what you need to hear. In addition, objective
measures, such as 360 assessments (which
proffer feedback from supervisors, direct
reports, peers, and clients), can provide
essential input.
Courses, seminars, and books (10 percent):
While they are valuable framing for our
developmental journey, these should not be
substituted for the experience and coaching
above. In ideal situations, course, seminar,
and book materials are integrated so as to
supplement the learning that occurs through
action.

6. 6
The CAE must reach out early and often to initiate
new relationships when personnel change.
“I put myself in the
shoes of the operating
people. I’ve been there;
I understand the
environment in which
they operate. Intent is
important to us, as is
the ability to adapt.”
Brian Thelen
Vice President, Internal Audit Services
Delphi Automotive
Experience leads to empathy
CAE Brian Thelen, considered a turnaround specialist, came to Delphi
during the transformation of the company. During his five years at Delphi,
he has worked through multiple transitions in leadership, including the
CEO and board members. He has found that empathy is a key ingredient
to building effective relationships.
“I put myself in the shoes of the operating people,” Thelen said. “I’ve been
there; I understand the environment in which they operate. Intent is
important to us, as is the ability to adapt. I don’t have a textbook where
every ‘i’ has to be dotted and ‘t’ crossed.”
Among his first moves leading Delphi’s internal audit function was to
make sure his staff understood the positive intent he wanted to project.
“Our aim is not to be punitive,” Thelen declared. “We’re advocating
behavior change. I don’t want my managers to hammer the organization;
I want them to coach it and help it become even better.”
Successful CAEs don’t take anything for granted, especially relationships.
At Aflac, CAE Alex Stephanouk created what he calls a “relationship
index” to rate and measure how well internal audit is working with key
stakeholders. “It’s easy to say, ‘I’ve got a good relationship with my audit
committee chair,’ but we struggled with how to measure all the influencers
to these key people,” he said. The index is set up to rate internal audit
against the goals it had set with stakeholders. How well, for example,
are action plans being implemented? Are customer satisfaction scores
improving along with management survey scores?
Long-term care
Successful CAEs understand that even in the best of circumstances, the
process of building and sustaining relationships is never-ending: senior
executives come and go or change hats, and the audit committee roster
changes. The CAE must reach
out early and often to initiate
new relationships when
personnel change. Tending to
long-standing relationships is
also imperative. Picking up the phone, or extending a lunch invitation to
talk through a touchy issue, pays enormous dividends to the CAE, and the
entire internal audit staff.

7. 7
Building trust and understanding requires an investment of the CAE’s time
and energy. It’s also a moving target. The needs and expectations of key
stakeholders are constantly evolving. Successful CAEs recognize the signs
of change and recalibrate.
Establishing and maintaining important allegiances changes the entire
CAE experience. Having the audit chair as an ally gains the CAE credibility
with the whole committee and inspires respect from management.
“One measure of success in building long-term relationships is receiving an
invite from a new business unit leader to send in the team to evaluate the
situation, to offer a view and perspective of where the business is today
(relative to others) and what is needed to be best of the best,” said Wolfgang
Muehlbauer, chief audit officer at adidas Group. CAEs report that they
know a bond is solid when a senior executive solicits their input or advice
outside of audit situations.
In the long run, success depends on a balanced mix of strong technical
knowledge and relationship acumen. One without the other inevitably will
result in diminished results or failure. As Stephanouk said, “No one will
tell you the truth unless they trust and value you.”

8. 8
Richard F. Chambers, CIA, CCSA, CGAP, is the President and CEO of The
Institute of Internal Auditors. He has more than 35 years of internal audit
and related experience. Prior to leading the IIA, Chambers served as national
practice leader at PricewaterhouseCoopers and held various internal audit
and inspector general positions with the federal government.
Charles Eldridge is a Senior Client Partner in Korn/Ferry International’s
Financial Officers Center of Expertise, a specialized, global group of more
than forty professionals dedicated to recruiting Chief Financial Officers
and their direct reports, as well as financial experts for board of director
positions. He is based in Atlanta.
Paula Park is a Senior Client Partner in Korn/Ferry International’s
Financial Officers Center of Expertise, based in San Francisco.
Ellen P. Williams is a Senior Client Partner in Korn/Ferry International’s
Financial Officers Center of Expertise, based in Stamford.
About The Institute of Internal Auditors
The Institute of Internal Auditors is an international professional association
headquartered in Altamonte Springs, Florida. It is the profession’s global
voice, recognized authority, acknowledged leader, chief advocate, and
principal educator. Members work in internal auditing, risk management,
governance, internal control, information technology audit, education, and
security. For more information, visit www.theiia.org.
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© 2011 The Korn/Ferry Institute