The power of digital

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By Fraser Doig – Product Marketing Executive, Ideagen

 

 

 

Companies of every size will struggle with communication issues at one point or another. But as organisations grow and expand globally, the ability to communicate effectively gets more and more difficult and the associated risks get more and more critical.

Failures in communication and effective collaboration between the various arms of the business (as well as the all-important head) can lead to chronic workplace problems, such as frequent mistakes, a drop in efficiency, failed expectations and poor morale. Making developmental changes are a crucial part of improving those channels of communication and this is where the internal audit and risk management functions are perfectly placed to offer vital assurance that such changes are implemented and acting as intended. If managed correctly, honesty and transparency are paramount and, with them, a whole plethora of positive outcomes can be realised. In order to make the most of this however, building relationships and working collaboratively with the board, audit and the risk department as well as other stakeholders is the key to success. Thankfully, in today’s digital age, new and innovative software solutions are bringing ways to enable this type of interconnectivity, helping businesses across the world to grow, drive sales and improve customer experience.

Age of digital transformation

The driving force behind the need for more effective digital communications is that we are increasingly reliant on digital solutions to drive our business. New technologies are rapidly changing the way companies look at how they operate and communication is a key priority for now and the future. In order to stay relevant and continue to deliver value to customers in the age of digital transformation, it is imperative that businesses embrace not only the technological changes that are impacting the world, but also the cultural change that comes with it. This means critically evaluating what ‘business as usual’ looks like, identifying where the shortcomings are and taking action on what improvements need to be made.

The enormous value that effective communication brings to businesses – particularly though internal audit – is an area that Tracie Marquardt, chartered professional accountant and Europe’s leading audit communication specialist, is extremely passionate about. Marquardt has been training, coaching and consulting audit teams in Europe, Asia, Africa and the US since 2005, working with more than 20 of the DAX30, multiple European organisations and privately owned global companies.

Back then, Marquardt realised that there was a gap in the knowledge of many businesses: “Historically, technical audit skills were always thought to be the most important. Nowadays everyone, from the Institute of Internal Auditors (IIA) to LinkedIn groups, recognises that communication skills are even more important. One can learn the technical skills, but that’s not enough anymore to be successful. Relationships are key and communication skills help one build stronger relationships.”

Globalisation is one of the biggest drivers for this emphasis on communication. As well as physical borders, time zones, language barriers and cultural differences all impact an international organisation’s ability to convey their message in a clear and transparent way. Marquardt understands the important role internal audit has to play in enabling this.

“I believe internal audit is perfectly positioned to facilitate positive change in their organisations,” she says. “My passion is helping them communicate their key messages clearly, concisely and persuasively on an international stage. It’s important because auditors don’t just work in their native countries anymore: they travel the world and work in multicultural environments. Therefore, they need to be culturally aware and employ communication skills at every turn. My goal is to help them do their job successfully. Excellent communication skills ensure better audit results and therefore more added value to the business.”

This isn’t merely the opinion of one person: better communication is proven to bring added value to businesses, as evidenced by a Willis Towers Watson study, which demonstrated that, by implementing effective communication measures to share their value proposition across the business, organisations were able to generate 47 per cent higher total returns compared to organisations that failed to prioritise internal engagement.[1] When the needs of the business and the stakeholders are understood clearly, results can be delivered confidently and efficiently. These principles are just some of the benefits Marquardt sees coming from effective communication in internal audit.

“Audit departments can benefit enormously from this, as it helps to build trust and confidence and facilitates cooperation between different areas of the business,” she says. “Auditors have to walk the walk, not just talk the talk. By being curious and aware, as well as asking excellent questions and being excellent listeners, auditors can go above and beyond being mere box tickers to supporting the business’ decision makers with key insights.”

This is clearly seen as a must-have for organisations today. A recent IIA study, Core Competencies of Today’s Internal Auditor, found that communication skills ranked first and second for internal audit staff and managers.[2] Another IIA study found that more than 50 per cent of CAEs consider communication skills to be the top attribute they look for in new team members.[3] Without it, organisations risk creating a disconnected structure with little capability for collaboration and fragmented communication processes. Such an approach also fails to meet the needs of the senior executive management team and the board of directors.

“It doesn’t make sense for internal audit to work in a silo with no communication and collaboration with the rest of the business,” says Marquardt. “Knowing the objectives, understanding the strategies, risks and opportunities – this is the only way to truly add value to the business.”

Developing this close relationship with senior management is one of the best ways internal audit can prove to be invaluable to an organisation. When auditors know what the board really cares about, they are able to communicate exactly what it is the board needs to know, not what the auditor thinks is important. When they understand the objectives and strategies that are driving the business, the audit strategy is focussed on the right areas and risks – both existing and emerging. In order to do this effectively, it is widely recognised by institutions such as Deloitte[4] and the IIA[5] that innovations in technology are enhancing the impact and influence of both internal audit and risk management.

Digital communication: a step towards greater assurance

It is not merely the efficiencies of a more streamlined workflow and a central, paperless system that software can provide. Many organisations have come to realise the positive changes to organisational structure that occur in their business after implementing software. With a more structured, logical and productive way of working, employees become more forward-looking, they are more engaged with stakeholders and become more focussed on delivering great business value.

A UK-based financial company came to discover this when it implemented risk management software in an effort to integrate and digitalise its work. Since doing this, the firm have managed to transform the way they communicate risk throughout the business, as it now finds that everyone has ownership of their own risks and it has much better, useful conversations. Since implementing the software, the company has more effective discussions about emerging risks and is able to take a more forward-looking approach to future risks. Just as Marquardt instils the principles of effective communication into the audit departments she coaches, the software application helps this financial company’s employees work together to do their jobs successfully. All the firm’s risk managers are aware of what they need to do and they are able to provide updates in real time when everyone is together.

This change in attitude has had far reaching repercussions, enterprise-wide and has seen the software grow into an integral part of its operations. The software is now used by their compliance, audit and business continuity departments and is applied to a variety of functions, from data protection to incident and action tracking. Risk management – a function that was once considered to be the remit of a select few experts – is now on the radar of every member of the business and is being made visible on a departmental and an organisation-wide level. Whether it’s an internal auditor conducting risk assessments, a manager tracking actions, an analyst logging incidents or a senior executive accessing reports, the software brings it all together into a central system that gives everyone the complete picture.

“To truly see the value digital transformation can bring to the business, organisations must also embrace the cultural change that will allow them to adapt and grow”

These are benefits that have had a major influence over how the organisation operates: its culture has changed and the maturity of its risk function has significantly improved. This culture shift is the crucial difference that installing software has made to the business. Better communication means that there is less ambiguity, individuals are able to be more concise and be instigators of  positive change. When the work is made easier through software, organisations find that they can do much more and they can do it more efficiently and effectively. Being risk-aware has become a mindset and with that mental awareness comes a more tangible preparedness to deal with future and existing risks. With the software, the business now has better accountability, has improved the way it measures progress and increased the level of communication across the organisation from departmental staff to board members.

Engaging with board members on matters of issues such as risk was recently identified as a critical necessity by Gartner, the global research and advisory firm, in its examination of integrated risk management. What it found was that, at the pace with which the business risk landscape is evolving, many industries are struggling to keep up. In fact, 65 per cent of CEOs and senior executives believe their organisation is lagging in terms of level of risk management programme investment and maturity, and 74 per cent of global risk management executives state that their ability to forecast critical risks will be more difficult in three years. The primary reason for this, according to those surveyed, is a ‘continued lack of cross-organisation collaboration’. It is Gartner’s opinion that ‘by 2021, more than 50 per cent of large enterprises will use an integrated risk management solution set to provide better decision-making capabilities to propel digital business’.

For companies of every size, trying to communicate and collaborate through paper-based or legacy systems is almost guaranteed to lead to greater risk exposure. Manual processes are inherently slower, with more mistakes inevitably slipping through the cracks. Further exacerbating this, channels of communication often end up being a combination of paper and digital, using tools that have been acquired over a long period of time. This means that making changes to the status quo will be much more difficult. Communication in a digital business is fully integrated, meaning that vital information can be accessed quickly from a centralised location. Given that new risks are emerging almost daily and having a much greater impact on businesses than ever before, it is no wonder that more organisations are investing in software. Having the capability to transfer complex information between multiple stakeholders while under pressure is crucial for effective, informed decision making during a crisis, or indeed any high-stakes environment.

It is undeniable that digital transformation is a momentous driver of organisational change this century. It is up to those organisations to ensure that they take the necessary steps to keep up to date with these changes and don’t expose themselves to unnecessary risk. Implementing robust software that facilitates clear lines of communication and collaboration within the business is just one step on the journey towards technological maturity, but it is a vital one that enables developmental change and better assurance. To truly see the value digital transformation can bring to the business, organisations must also embrace the cultural change that will allow them to adapt and grow.

 

About the Author:

As Product Marketing Executive at Ideagen, Fraser Doig is responsible for understanding the needs of customers and how software can help them become leaders in their industry. Fraser brings to his role a desire to help organisations drive quality and control in their business processes as a way of achieving operational excellence.