4 PwC tips for effective talent management across internal audit

Internal audit departments are rapidly evolving, as modern risks increase in sophistication and the economic and political landscape – both at home and abroad – remain volatile.

 

Organisations now expect more from their internal auditors. The traditional focus on purely financial and compliance-based tasks is making way for a more holistic approach that involves integrated risk oversight and value creation.

 

The search for the necessary skills to strengthen internal audit departments has therefore become competitive. Our research has shown that 73 per cent of hiring managers are finding it difficult to recruit for internal audit positions.

 

Nevertheless, PwC’s 2016 State of the Internal Audit Profession Study found that an overwhelming 83 per cent of very effective internal audit departments excelled at talent management. Just 24 per cent of underperforming teams could say the same.

 

The big four firm has therefore published a new report highlighting crucial steps that organisations can take to optimise their talent management processes. Here are some of the key takeaways from the research:

1. Rethink talent acquisition strategies

Traditional talent acquisition often involves consulting a staffing plan, conversations between human resources and internal audit on necessary hires and a search for historically important skills. Departments are likely to be proficient in financial, operational, general IT audit and compliance areas.

 

Instead, innovative internal audit teams should consider:

 

Social media promotion: Increasing the brand’s prominence on social media channels helps companies engage better with millennials and is especially useful for recruiting across technology skills gaps.

 

Widening skills searches: Modern internal audit teams still need financial and IT specialists, but departments should cast their nets further to combat risk. Non-traditional backgrounds, such as engineers and supply chain professionals, offer new talent pools from which to select candidates.

 

Source rather than hire: Flexible sourcing can prove a better option in various circumstances, including:

• When essential skills are in short supply;
• For particular projects or workloads that occur seasonally;
• When an organisation lacks the resources to train or develop those with desirable skills; and
• Instances where additional technology, practice aids and other investments would be needed to support new hires with certain skills.

2. Focus on mentoring and development

Recruitment budgets are on the decline across UK internal audit departments. Barclay Simpson figures revealed that 32 per cent of teams claimed they had more money to invest in headcounts in 2016, compared with 40 per cent in 2015.

 

PwC noted that a growing trend in internal audit is to shift more resources to mentoring and development exercises. Millennials in particular favour a hands-on approach to training, and ‘apprentice models’ are becoming increasingly popular. These involve giving staff the necessary support structure to fully develop existing skills before applying them on the job.

 

To separate themselves from the pack, leading internal audit departments can:

 

Implement rotational programmes: Business acumen is a key skill in internal audit, so organising rotation schemes whereby audit managers work in other departments (and vice versa) can help develop a greater understanding of the wider organisation.

 

Encourage real-time development: Frequent, informal feedback is well received from staff, particularly younger workers. Developing a culture where employees are regularly kept updated on their performance and have input on how their training is conducted can prove effective.

 

Establish capability models: Organisations should work towards a comprehensive framework that informs employees what they need to achieve in order to progress within the business. Non-technical skills should be highlighted, including leadership and communication with the C-suite.

3. Transform performance management

Technology has become the driving force behind better performance management activities. Audit management systems (ADMs) are already in use across many internal audit departments to store documents and track issues, but the best firms are maximising utility by also optimising performance management.

 

Integrated ADMs ensure businesses can track company-wide data, compare results and test across audits to minimise manual intervention. These automated systems help internal audit teams improve performance, work towards organisational goals and boost productivity.

 

Over time, these systems will connect with other risk management and compliance departments across a range of functions, including analytics, reporting and risk assessment. Ultimately, teams will be expected to be familiar and fluent across these various technologies and leverage the insights they provide.

 

Internal audit should:

• Invest in the latest ADMs and align them with wider strategic business aims;
• Ensure staff are credentialed and credible in relevant audit areas, including emerging or specialised skills such as fraud investigation;
• Use external quality assessments for both compliance and the development of a strategic plan to drive initiative among staff.

4. Re-evaluate sourcing relationships

PwC’s research revealed that 73 per cent of very effective internal audit teams use cosourcing in order to supplement their existing talent. However, there appears to be a notable gulf between organisations that have optimal cosourcing arrangements and those that have ad-hoc or episodic approaches.

 

Top-tier internal audit teams often:

• Have secure strategic sourcing provider relationships in place;
• Emphasise the crucial nature of cosourcing in talent management;
• Evaluate sourcing partners on value and performance rather than just cost; and
• Are honest about internal weaknesses to ensure skills gaps are filled appropriately.

Alternatively, organisations can provide a significant boost to their internal audit teams during high-workload periods via interim staffing options through specialist recruitment firms such as Barclay Simpson.

 

We’ve found that an increasing number of hiring managers understand the importance of external resources. Eighty-two per cent would consider this approach, while 27 per cent already routinely or significantly rely on external resources.

 

Our consultants are always on hand to talk you through your available options and help you identify candidates to strengthen your internal audit teams for the future.

 

Click here to talk to a member of our team today.

 

Our 2017 Market Report combines our review of the prevailing conditions in the internal audit recruitment market together with the results of our latest employer survey.

 

Image: BalkansCat via iStock