Internal Audit - Leading as the Trusted Advisor

David Mallard
david@davidmallard.com
Internal Audit
Leading as the
Trusted Advisor

voice of the profession© David Mallard Consulting Pty Ltd
1. Are you perceived as a Trusted Advisor?
2. Love Internal Audit?
3. Recent Research
4. What Trusted Advisors do that others don’t
5. Capability Development
6. Communication, Influence and Relationships
7. Increasing Complexity
8. Navigating Complexity – the Integral Framework
9. Growing into a Trusted Advisor
Road Map for our session

Requires higher
levels of
‘systems and
people’
thinking
• D. Goleman, Emotional Intelligence: Why It Can Matter More Than IQ (Bantam Books, 1995)
EQ is twice as
important as
technical
competence*
Are you perceived as a Trusted Advisor?

Internal Auditors have the opportunity to
significantly influence the vitality,
wellbeing and the success profile of the
organisations and the people they work
with
DON’T YOU LOVE BEING AN
INTERNAL AUDITOR?
Internal Auditors are very fortunate.
They are in a unique and privileged
position at or near the apex of the places
they work with direct access to Directors
and Senior Executives

• We bring many strengths to our role
– Professionalism
– Objectivity
– Business acumen etc
• Like all professions, we also face our challenges.
Being ‘audited’ for many people can
be perceived as an uncomfortable
experience.
Who of us really likes being
reviewed/assessed/audited?
INTERNAL AUDITOR?

Do you think
Internal Auditors are
sometimes seen this
way ?
PEOPLE SKILLS?

DON’T YOU LOVE BEING AN INTERNAL
AUDITOR?

The question is:
• How do we not take this personally ?
• How do we build trusted and mutually beneficial relationships
with our clients?
• How do we build our personal and collective capability to
cultivate, maintain and leverage relationships
• How do we navigate Internal Audit toward Trusted Advisor status
INTERNAL AUDITOR?

There is regular
research published
about the state of
Internal Audit around
the world.
Within the context of
growing global
complexity and
increasing challenge
for Internal Audit let’s
examine a few
highlights of this
research.
Recent ResearchintoInternal Audit

2. An integral part of a complex web of
relationships
1. Internal Audit is a relationship and
communication business
3. Requires high levels of Emotional and
Social Intelligence to be successful
5. In a complex, volatile and changing
environment (VUCA) our experience
tells us that the ‘softer’ attributes of
Audit performance are increasingly
critical to the success of Internal Audit
functions
4.Mastering interpersonal and
communication skills is among the
most important capabilities that
successful internal auditors need.
6. As the role of internal audit evolves
and stakeholder expectations rise,
internal audit increasingly requires
competencies that exceed the more
traditional technical skills
7. The most effective Internal Auditor
possesses a broad range of non-
technical attributes in addition to deep
technical expertise.
8. People skills are vitally important to
internal audit’s ability to stay close to
company leadership and remain
aligned with the key strategies and
priorities of the organisation.
Recent ResearchintoInternal Audit

0
5
10
15
20
25
30
35
40
45
What Trusted Advisors do that
others don’t

What does this research tell you?
Moving toward Trusted Advisor status involves personal and collective
growth into many of the ‘soft spots’ identified in the research

What does this research tell you?
Moving toward Trusted Advisor
status is not about adding
another ‘App’ to your technical
toolkit. It is more about
investing in your
communication, influencing,
relationships and strategic
capabilities - extending beyond
traditional analytical thinking

Capability Development Takes Time
Horizontal Learning = Competence Development
More information, skills, competencies. Increases what
you know and strengthens technical expertise.
• Typical Audit, Risk, Compliance training
• Essential for using known techniques to solve clearly
defined problems
• Develops functional knowledge, skills, and behaviours
that strengthen your current level of capability

Capacity Development Takes Time
- Leading as a Trusted Advisor requires more
Vertical Learning = Mindset Transformation
More complex and sophisticated ways of thinking.
Improves how you think and how you interpret any
situation.
• Essential to address complex problems, cultivate high-
stakes relationships, and navigate rapidly changing,
uncertain circumstances
• Develops your mental complexity and emotional
intelligence, literally upgrading your internal operating
system for more wisdom and care

- The Complexity Gap

Vertical Development

PeopleDevelopmentResearchand
InternalAudit
Creative and
Relationship
Attributes
‘Compliance, Control, Protecting’
Task and Reactive
Attributes - often
where Internal Audit
is perceived as ‘living’

Research highlights a high correlation between individual development maturity,
‘creative’ leadership attributes and personal effectiveness, particularly in dealing with
the increasing uncertainty, ambiguity, volatility and complexity of interconnected
global business markets. Capabilities necessary for Trusted Advisors.
Relating, Self Awareness,
Authenticity,
Systems Awareness,
Achieving
InternalAudit

TRADITIONAL
AUDIT/COMPLIANCE
InternalAudit–leftandright

The
#1
problem in most
organisations
is that….
Communication, Influence and Relationships

eople
ommunicate
oorly
‘Communication
is Everything’
Lee Ioccoca
Nominated as one of the greatest
CEO’s of all time by Portfolio

- Common examples in the workplace

- Where do we begin?

Developing more effective communication and
relational capability begins with the recognition
that each of us is unique and different

As individuals, we each have a
communication and behaviour style
which we use on a daily basis often
with varying degrees of effectiveness
Our communication and behaviour
style is based on our individual needs

Behaviour/
Communication
Thinking
Feeling
Values
Beliefs
Needs
- The Whole Person Concept

So, what
are your
needs?

A needs driven
Behavioural and
Communication model
DiSC® - A User Guide to People!
Understanding peoples
needs is a key to
developing and effective
relationship

There are two basic needs that influence how
people behave in relation to one another
Need for Affiliation Need for Control

DiSC® is a doorway to
communication
It identifies the uniqueness in
ourselves and others

Dominance Influence Steadiness Conscientiousness
Control
Specialist
Social-Recognition
Specialist
Relationship
Specialist
Analytical
Specialist
 Pushy
 Severe
 Tough-minded
 Dominating
 Harsh
 Manipulative
 Excitable
 Undisciplined
 Reacting
 Egotistical
 Conforming
 Unsure
 Pliable
 Dependent
 Awkward
 Ambitious
 Stimulating
 Enthusiastic
 Dramatic
 Friendly
 Supportive
 Respectful
 Willing
 Dependable
 Agreeable
 Critical
 Indecisive
 Stuffy
 Picky
 Moralistic
 Industrious
 Persistent
 Serious
 Exacting
 Orderly
 Strong willed
 Independent
 Practical
 Decisive
 Efficient
- How others may see you

• DiSC describes behaviour does not
measure behaviour
• Your DiSC style is based on interpersonal
psychology and influences how you
interact with people
• Not for labelling, but for understanding
• There are no good or bad styles
• All have strengths and limitations
• Everyone is a mixture of styles
- In Summary

Trusted Advisors - teams and individuals
manage behaviours – each individual
manages his/her own behaviour and
helps others manage theirs
Your behaviour, your communication and
your relationship development approach
is like the tip of the iceberg because this is
what people experience of you

By first understanding how and why we behave
as we do, we can then begin to understand
others and build better teams and more
effective relationships.
This is critical for an effective Internal Audit
Service and team moving toward Trusted
Advisor status.

YOU Known
to Others
Not Known
to Others
Known
to Self
Not Known
to Self
Open
Hidden
Blind
Unknown
- Johari’s Window

A CONTEXT OF - GROWING COMPLEXITY
A recent study by IBM
identified the number one
concern of CEOs
worldwide as: ‘Perpetual
Whitewater’ characterised
by a global economy that
displays:

“There are no boundaries anymore.”
• Jeff Barnes, Head of Global Leadership, General Electric

Perspective – the Integral Framework
• Andrew Brown and I present the Institute of Internal
Auditors ‘soft skills’ programs. We tailor consulting
and development programs for organisations
informed by the Integral Framework.
• Integral thinking and application
 is a holistic perspective on organisational life
 is one of the more significant frameworks capable of taking into
account the rapid rates of change and complexity emerging in
the global marketplace
 It has significant application for career, leadership and
organisational development. Important in looking at how to
navigate within organisations as we progress toward Trusted
Advisor status.

Systems (Its)
• Strategy
• Structures
• Technology
• Policies
• Finance
Behaviour (It)
• Capability
• Performance
• Language
• Accountability
• Results
Intentional (I)
• Attitudes
• Engagement
• Perspective
• World View
• Awareness
Culture (We)
• Relationships
• Politics
• Culture
• How we do
things here

INDIVIDUALCOLLECTIVE
INTERIOR EXTERIOR
LANGUAGE OF:
THOUGHTS &
FEELINGS
LANGUAGE OF:
BEHAVIOUR & ACTION
LANGUAGE OF:
RELATIONSHIP
& MEANING
LANGUAGE OF:
SYSTEMS & STRATEGY

TRUSTED
ADVISOR
Displays
Passion
Understand
Client
Needs
Is Reliable
Is Authentic
Gets Close
and
personal
Connects
Emotionally
Is Credible
Long term
Relations
Puts Client
First
Displays
Genuine
Interest
Growing into a Trusted Advisor
– 10 behaviours

If you have the desire to move toward Trusted Advisor status in your
organisation, there is a personal and collective development
commitment required for both horizontal and vertical development.
This would involve both formal experiential learning programs, on
the job action learning, coaching and mentoring as well as specific
stretch assignments over time.

How will you know when you are there?
Your customers will tell you!

In the final analysis of assessing your desire to grow
toward Trusted Advisor, it fundamentally depends on
one statement.
This statement underpins all of the learning programs
myself and Andrew Brown present, both for the
Institute of Internal Auditors and otherwise.
‘For things to change, first I must change’
It is a simple and as complex as that!

So the question for each of you:

Beginning the Journey:
1. Self-Awareness & Authenticity
2. Communication and Influencing
3. Taking an Integral Perspective
4. Growing Through Goals
5. Building Effective Relationships
On the Journey:
6. Values Based Leadership
7. Negotiation & Courageous
Conversations
8. Adapting to a changing
workplace & world
9. Knower/Learner
10. Victim/Responsibility
11. Developing other People
Consolidating the
Journey:
12. Overcoming Your Immunity to
Change
13. Authentic Dialogue
14. Whole Systems Thinking
15. Partnering for Value
16. Influencing Across Boundaries
Audit, Risk & Compliance
Trusted Advisor Development Program Overview

Interested in exploring the
Audit, Risk & Compliance
Trusted Advisor Development Program
for your team?
0408 549 092

0408 549 092

Internal Audit - Leading as the Trusted Advisor

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