by John E. Gray
It’s been my experience that the audit function and auditors are often undervalued and underused, especially in the federal government. Many of the audit programs that I’ve witnessed have been checklist-bound and focused on simply assessing compliance to statutory and regulatory requirements. Auditors plan audits based on the checklist, collect data, analyze results, identify compliance issues that need correcting (sometimes without regard to systemic vs. isolated), and then report on the findings. Corrective action requests are monitored until close-out, but opportunities for improvement usually remain embedded in the reports and aren’t examined by senior leadership. As a result many auditors feel that their skills and efforts don’t have much of an effect on daily operations or help advance organizational strategic priorities. Organizations—whether for profit or nonprofit—want success. To succeed, they must answer four basic questions:
- Where do we as an organization want to be in the future?
- Where are we now?
- How do we get there?
- Once we’re there, how do we stay there?
The answers to the first two questions define the value gap between current and future performance. To close that gap, leadership and management must define what needs to change and how best to implement that change so it takes hold and becomes the new way of doing business. The theme throughout all four questions is change. Leading and managing change will enable an organization to pursue the answers. It’s through managing that change that auditors can provide significant value.
When you think about it, auditors spend much of their time assessing what is happening in comparison to what is supposed to happen. That’s the input to change which requires process and resources. Therefore, change needs to be managed. Change management is usually pursued through project-oriented strategies and quality-based initiatives such as lean, Six Sigma, theory of constraints, ISO 9001, AS9100, total quality management, Baldrige criteria, balanced scorecard, or a combination of these approaches. Unfortunately, their success rates aren’t very good. Change initiatives fail for a variety of reasons but one that stands out from the rest is lack of leadership involvement and commitment. Success begins with leadership.
Successful organizations believe that coping with change is not a tactical activity but a strategic one. This means leadership is responsible for defining and adopting corporate strategies, structures, procedures, and technologies to deal with changes in external conditions and the business environment. Corporate change management strategies are critical, as are their associated procedures and technologies, but they don’t work unless there’s a formal structure in place with dedicated leadership and management. Formal management is needed to execute the change strategies. That’s the role of a change agent.
The traditional role of the change agent is one that primarily focuses on pursuing desired organizational direction through strategic planning and team-based project management and problem solving. It’s the team-based change management activities that demand formal leadership involvement and commitment. Teams require direction, commitment, support, resources, assessment, and rewards. This is a top-down strategic responsibility. Basically, teams need that formal structure to be effective.
A typical formal structure may include a champion, sponsor, change agent, project team leader, and project team members. Generally, the champion is the CEO of the organization. His or her role is to ensure that the change management process is properly designed and consistently deployed throughout the organization. A sponsor might be a division head or the individual responsible for the assigned process/project improvement. The sponsor supports the need for change by gaining support from the champion and ensuring that resources are available and assigned to the project. The change agent is a dedicated facilitator for the improvement projects. He or she will help management plan and complete the change initiative. Project team leaders are usually the process managers (middle management or line staff). They will be responsible for managing the technical content of the change initiative. Project team members are line workers who represent the process value chain by representing the suppliers and customers (internal and external). The organization must determine how these important functions will be staffed.
The staffing of these structures is usually a given as indicated by their position. However, the change agent is normally not a traditional organizational position. So where does the change agent come from? In most cases, the recruitment of a change agent is a delicate and somewhat subjective task; therefore, organizations need to make a wise decision. It begins by understanding what makes a good, effective change agent.
Because change agents focus most of their efforts on project teams, they constantly deal with people. Therefore, they need to have good soft skills and experience. In his book The Change Agent’s Handbook (ASQ Press, 1994), David W. Hutton writes that change agents should know and understand group dynamics and maintain effective team building, interpersonal, and networking skills. They should have enthusiasm, commitment, political awareness, and a tolerance for ambiguity. Change agents should be able to sense and manage controversy. They need to be consensus and relationship builders, as well as influencers, and be able to motivate people. Change agents should have effective oral and written communication skills, as well as a working knowledge of the organization’s core processes. Now that we know what it takes to be a change agent, where do we get one?
Organizations have several choices for bringing on a change agent. They can hire externally, enlist the services of a qualified consultant, appoint from inside the organization as a dedicated position, or saddle an existing employee with additional change management responsibilities and duties. Each approach has its pros and cons. It’s a good idea for an organization to first look at what it already has in terms of competencies, skills, talent, and potential within its ranks before looking outside for its change agent.
The best way to do this is to compare the required competencies and skills needed by both change agents and auditors, as shown in figure 1.
Figure 1: Change management: Direct comparison of change agent to auditor |
||
Change agent |
Required competencies and skills |
Auditor |
X | Interpersonal skills | X |
X | Problem-solving skills | X |
X | Attention to detail | X |
X | Cultural sensitivity | X |
X | Ability to work with groups | X |
X | Scheduling people, events, logistics | X |
X | Conflict resolution | X |
X | Oral and written communication | X |
X | Active listening, empathy, and paraphrasing | X |
X | Interviewing techniques | X |
X | Team-building skills | X |
X | Facilitation skills | X |
X | Presentation techniques | X |
X |
Verification and validation techniques | X |
X | Knowledge of organizational core processes | X |
X |
Working knowledge of data analysis tools | X |
X | Strategic perspective |
X |
X |
Process-based perspective | X |
Adapted from The Change Agent’s Handbook, (ASQ Press), by David W. Hutton
The competencies and skills needed by a change agent are identical to those required of effective auditors. However, the link between a change agent and an auditor is much more than knowing how to deal with people. It’s also about understanding the purpose of the change management and audit functions and their associated processes.
The purpose of change management is to recognize opportunities and build support through commitment, approval, and resource allocation for the execution of strategic priorities and continuous improvement. The purpose of an audit function is to assess the system’s compliance to requirements and to identify opportunities for improvement. The specific change management and audit function processes may differ somewhat from organization to organization, but each follows a general structure, as shown in figure 2.
Figure 2: Change management: Comparison of basic change management and auditing processes |
|||
Change management process | Plan-do-check-act (PDCA) cycle | Auditing process | PDCA cycle |
Preparation, assessment, and strategy development | P | Audit preparation and planning | P |
Detailed planning and change management implementation | P and D | Audit performance | D |
Data gathering, corrective action, and recognition | C and A | Audit reporting | C |
Audit follow-up and closure | A |
The change management process is closely related to the audit process. In fact, it could be argued that change management is an extension of the audit process. Change comes when opportunities are identified and leadership provides support and resources to take advantage of those opportunities. The effective change management and process improvement provided through audits provides significant benefits, such as:
- More profit and increased market share
- Increased shareholder value
- Greater focus on what the customer values
- Improved customer loyalty
- Improved quality, delivery, and cost (efficiency)
- A better performing and higher motivated work force
Effective change implementation is contingent on the organization’s ability to view and use the audit function as a catalyst for change. An auditor is a viable candidate to manage that change for the organization’s leadership. For example, a procurement organization within the Department of Defense has made a habit of using auditors as change agents. It made “change agent” a permanent position and filled it from its dedicated audit function. Over the past three years, that change agent was successful in getting approval and resources for several major change projects that resulted in a cost savings of $450,000. The organization’s leadership has selected several other auditors to manage critical change projects. Many of these auditors are pursuing project management and/or Six Sigma Green, Yellow, and Black Belt certifications. Still not convinced? Ask yourself:
- Who in the organization already has knowledge, understanding, and experience of the organization’s core processes?
- Who routinely assesses process performance using data generated by the people and equipment performing the work?
- Who understands the relationships needed throughout the organization’s supply chain?
- Who monitors corrective and preventive actions in an effort to assess the effectiveness of implementing change as part of his or her primary duties?
- Who maintains the competencies and skill sets to deal with the organization’s work force?
- Who understands the strengths and weaknesses of the organization better than most in reference to change initiatives?
- Who can facilitate answers to the four questions asked earlier in this article?
The auditor!
About the author
John E. Gray is an organizational strategic planner, audit program manager, certified quality auditor, certified plexus/coach trainer, and lean facilitator with the U.S. Air Force Acquisition Management & Integration Center. He has more than 15 years’ experience in auditing service suppliers for the Air Combat Command.
Tags: change management.