Serving the Global Internal Auditing Profession
Transcript of Serving the Global Internal Auditing Profession
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Assessing Your
Organization’s Culture
Douglas J Anderson, CIA, CRMA
Managing Director of CAE Solutions - IIA
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Overview
• Additional Insights into Culture
• Approaches to Auditing Culture
• Gathering Audit Evidence
• Analysis and Evaluation
• Communicating Conclusions
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Definitions of organizational culture
• Rossi & O’Higgins (1980)
– “Culture is a system of shared cognitions or a system of knowledge and beliefs.”
• Hofstede (1980)
– “The collective programming of the mind which distinguishes members of one human group from another.”
• Deal & Kennedy (1982)
– “The way things get done around here.”
• Drennan (1992)
– “How things are done around here.”
• House, Wright & Aditya (1997)
– “Distinctive normative systems consisting of modal patterns of shared psychological properties among members of
collectivities that result in compelling common affective, attitudinal, and behavioral orientations that are transmitted across
generations and that differentiate collectivities from each other.”
• Ogbonna & Lloyd (2002)
– “The collective sum of beliefs, values, meanings and assumptions that are shared by a social group and that help to shape
the ways in which they respond to each other and to their external environment.”
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Culture
“Shaped by formal and informal”
“Values and how they are translated into actions and
outcomes”
“Behaviors employees have learned over time that work
best for them”
“Unique component of every organization’s personality”
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Culture: Driven by People’s Actions
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Effectiveness of Factors in Influencing Culture
1%
1%
1%
3%
17%
21%
55%
2%
9%
5%
13%
17%
33%
20%
Direct communication from other employees
Formal training on a code of conduct
Enforcement through disciplinary measures
Behavior modeled by other employees
Establishment of a code of conduct
Direct communication from executive mgmt
Behavior modeled by executive mgmt
1st 2nd
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Cultural Web*
Paradigm
Stories
Symbols
Power Structures
Organiza-tional
Structures
Control Systems
Rituals & Routines
* Johnson, Whittington & Scholes (2012) Fundamentals of Strategy, Harlow: Pearson Education
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Culture
• Macro vs micro
– “tangled undergrowth of subcultures”
• Risk, ethical, performance, collaboration, innovation,
entrepreneurial, compliance, etc.
• Best practices model
• Black/white
• Stable
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Auditing Culture – The New Frontier?
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Approach to Auditing Culture
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Nature of Auditing Culture
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Options, Options…
Identifying Culture
Concerns During
Specific Audits
Audits of culture
within business units,
geographies, etc.
Capstone or theming
reports based on
multiple inputs
A top-down,
enterprise-wide audit
of culture
Unstructured
Activities Providing
Culture Insights
Informal
Observations on
Culture
Address Culture in
Specific Audit Project
Reports
Analysis and Evaluation
of Information
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Gathering Information on Culture
Audits of culture
within business units,
geographies, etc.
A top-down,
enterprise-wide audit
of culture
• Will objectives drive right behaviors
• Employee turnover
• Hotline activity
• Reaction to wrongdoing
• Reward programs
• Surveys
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Employee Surveys
• Attributes of good questions
• Use of averages
• Perception
• Fear and bias
• Not an end point
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Gathering Information on Culture
Identifying Culture
Concerns During
Specific Audits
Audits of culture
within business units,
geographies, etc.
A top-down,
enterprise-wide audit
of culture
Unstructured
Activities Providing
Culture Insights
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Analysis and Evaluation
Identifying Culture
Concerns During
Specific Audits
Audits of culture
within business units,
geographies, etc.
A top-down,
enterprise-wide audit
of culture
Unstructured
Activities Providing
Culture Insights
Analysis and Evaluation of
Information
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Analysis and Evaluation
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Specific Red Flags
• Employees on edge, unsure of what is expected of them
• Leaders who are: autocratic, manipulative, close-minded, secretive, avoid responsibility
• Lack of communication
• Cliques in the organization
• Cutthroat with each other
• Ends justify the means
• Strong groupthink, peer pressure to get along or conform
• Fear of retaliation
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Options, Options…
Identifying Culture
Concerns During
Specific Audits
Audits of culture
within business units,
geographies, etc.
Capstone or theming
reports based on
multiple inputs
A top-down,
enterprise-wide audit
of culture
Unstructured
Activities Providing
Culture Insights
Informal
Observations on
Culture
Address Culture in
Specific Audit Project
Reports
Analysis and Evaluation of
Information
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Expect More on These Topics From the…
THE ESSENTIAL RESOURCE FOR AUDIT EXECUTIVES
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The Institute of Internal Auditors
Douglas J Anderson
Managing Director – CAE Solutions
Thank You