Maximizing Audit Leadership Potential

By tapping into their leadership potential, internal auditors can help influence their organization’s success as it wrestles with decreased revenues, regulatory changes, fraud prevention, and heightened market pressures. 

Robert C. McMillan, CIA

 

As organizations continue to wrestle with decreased revenues as a result of the sluggish economy, regulatory changes, fraud prevention, and heightened market pressures, their internal auditors can help influence their organization’s success by tapping into their leadership potential. Leadership competencies are one of the biggest risks in any organization, yet 70 percent of organizations rate their leadership development efforts as ineffective, according to Development Dimensions International Inc.’s Global Leadership Forecast 2011, which compiles perspectives from more than 2,600 organizations on the current state of leadership and future talent-related needs.

For organizations to overcome complex business risks, internal auditors need to begin influencing the decisions, direction, and delivery of solutions to the challenges that plague the industry.

 

THE LEADERSHIP CHALLENGE

 

Leadership, unlike an organization’s goals and objectives, is a complicated concept to define, measure, or evaluate. However, leadership is not based on position, power, or authority — it is based on a person’s ability. Some organizations define leadership based solely on decision-making authority. Other organizations mistakenly judge leadership through performance evaluations, which typically are based on achievement of business goals and objectives — regardless of casualties (e.g., ignoring employee concerns or creating a difficult work environment) as a result of the behaviors used to meet the goals. These are artificial measures, because someone may be able to achieve results while demonstrating poor leadership behaviors and actions. The ability to influence often is overlooked, but it is one of the most important components of leadership.

Auditors can maximize their leadership potential by following four steps to define leadership and build a leadership system for their organization.

Ask Tough Questions
Defining leadership begins with internal auditors challenging themselves, the audit team, and the organization to answer several simple yet provocative questions:

  • What leadership skills does the organization expect of its auditors?
  • How is audit leadership viewed within the organization?
  • Does a system to replicate desired audit leadership behavior exist within the organization?

View Everyone as a Leader
Many people embrace a traditional view of leadership that suggests everyone is not a leader and that leadership is based solely on appointment, title, or position. However, leadership can be nurtured and refined. Whether an auditor is assessing the control environment, evaluating cash management practices, reviewing bank reconciliations, or communicating recommendations, the auditor is demonstrating leadership.

Recognize Tomorrow’s Success
Recognizing success is only as good as the organization’s system of leaders. Similar to the control environment in the financial services industry, the leadership environment can make or break an organization — just as its control system can. To experience success, an organization cannot afford to have a weak leadership environment. Auditors must step out of a “followership” position and step into a leadership position to help solve financial services industry challenges.

Discover and Build Leaders With a Leadership System
To influence decisions, directions, and delivery of solutions to financial services industry challenges, auditors will need a leadership system that helps determine:

  • True leadership potential.
  • The right leadership style based on personality and working environment.
  • How to embrace a leadership role.
  • How others within the organization rate leadership contributions.
  • Steps to help improve leadership influence.

Auditors also may find it helpful to identify their team and organization’s leadership traits and styles within a universal system that evaluates all levels of auditors. Doing so can help the auditor develop an action plan and foster growth in the areas of leadership — awareness, acceptance, acknowledgement, achievement, acceleration, and agility — to maximize impact and potential.

 

SUCCESSFUL LEADERSHIP

 

The key to unlocking leadership potential and reaching success is not found in leading followers — the key is leading leaders. By undertaking this challenge, auditors can begin to build a leadership brand and reputation throughout their organization and begin to influence the decisions, direction, and delivery of solutions to current financial services industry challenges.

Robert C. McMillan, CIA, is the founder of Talent Soar LLC in Highland, Md. McMillan has 20 years of Fortune 500 experience in leadership development and maximizing employee potential and is the author of Overcoming You: Leadership, Professional Growth, and Development.

To comment on this article, email the FSA Times Editor, Shannon Steffee, at shannon.steffee@theiia.org.