When Rotation Doesn’t Work

A talent drain in the audit department prompts the CAE to examine corporate rotational practices.

Edited by Michael D. Marinaccio

Paul has recently been appointed chief audit executive (CAE) of a global consumer products company based in the United States. The company’s annual sales revenues exceed US $5 billion, and its product lines include many recognizable brand names. Paul covers his firm’s audit universe with a department of 15 professionals who possess varying backgrounds and experience.

Paul has observed two organizational practices that are negatively impacting the audit function’s performance. First, several internal auditors have been lured away to better positions in other areas within the company. These individuals were among the organization’s highest performing auditors, leaving Paul’s group short on skilled resources. And to make matters worse, several less-skilled, less-qualified employees were transferred to the internal audit function from other departments.

The staffing changes were made largely due to a corporate leadership rotation program conceived and sponsored by the current chief financial officer (CFO), to whom Paul has an administrative reporting relationship. The program was established to groom promising talent within global and corporate accounting and finance for future leadership positions. However, it was implemented without clear guidelines or a written policy and does not appear to be well-managed. Overall, the program seems to benefit those executives who make the strongest play to the CFO either to acquire high-performance employees from internal auditing or to dispose of their less-talented performers. In the past, movement in and out of the department occurred with minimal input from the CAE. Paul suspects the CFO may have forced the previous CAE to take on several unwanted resources from other departments under the guise of the rotational program while giving up his rising stars.

Paul believes the rotational program has adversely affected his department. He feels the departure of high-performance audit employees is having a lasting negative impact, both in terms of productivity and his group’s credibility across the company. How can Paul correct this situation? What are some of the challenges associated with implementing a rotational program?

Post your own thoughts on this scenario, or see expert commentary in the full version of the article.

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