By Richard Chambers | September 22, 2014
As internal auditors, we understand the importance of a strong tone at the top. It defines an organization’s culture and often the organization itself. A strong and positive tone sets a clear direction – operationally, ethically, and morally – and enables us to do our jobs and serve our stakeholders effectively.
But for some organizations, management and/or the board may seem profoundly tone-deaf and unable to articulate a clear path or purpose. Or worse, the tone they do set is less than desired and perhaps even counter-productive. The impact may go unnoticed, or it may become quite visible: goals and objectives are missed, morale and productivity falter, revenue and profitability plummet.
When the tone at the top is deaf or flat, it’s difficult for anyone, including internal auditors, to determine a best course of action.
So, how can we as internal auditors proceed when the tone at the top is ineffective or, perhaps, even destructive and our ability to effect positive change is compromised?
The short answer: It can be tough.
The good news is that this problem is less common than in the past. Not that long ago, boards and audit committees were too often ignorant to certain management shortcomings. Tone at the top simply wasn’t on their radar. But since a number of spectacular corporate failures and legislation such as the Sarbanes-Oxley Act, boards and audit committees have become much more attuned to management’s ability – or inability – to lead.
One thing is clear: We cannot and should not try to coexist in an environment devoid of appropriate tone at the top. Where this situation exists, our priority must be to work tirelessly to educate and assist management and boards toward righting the ship.
In 2013, I penned an article for the National Association of Corporate Directors’ Directorship magazine, titled “Think of Internal Audit as the Conscience of the Organization.” I offered several questions directors should pose to CAEs toward gauging corporate culture. Internal auditors might consider asking themselves similar questions:
At the end of the day, it’s up to each of us to decide whether we can continue to work in a tone-deaf environment. Some auditors might thrive on being part of an effort to turn around a bad situation, but others may find the best course of action – when all else fails – is to “talk with our feet.” Leaving a troubled organization is a difficult decision, and that should be a last resort. But we all need to have the satisfaction of knowing that our hard work can make a difference. And the cold, hard facts are, where management is unable or unwilling, the opportunity for making a difference may be limited.
It’s crucial that each of us remembers our commitment to our organization and strives to effect positive change. We also need to assess what we hope to accomplish. Each organization is unique, and each internal auditor has unique goals and objectives. My hope is that we will all find a work environment in which we can make a difference. For some, that work environment may be one in which we face tremendous challenges. For others, we may need to know when to walk away.