Flexible work options are common in the internal audit profession, but the COVID-19 pandemic has ushered in a new time when more and more auditors are working from home. Some audit departments were ready and adapted easily, while others scrambled to install appropriate infrastructure, security, and processes to support remote work. As the threat of the pandemic begins to ebb, some teams will return to traditional work environments while others may consider permanent changes to their office-centric arrangements.
This unique episode in business has demonstrated the viability of flexible, distributed work arrangements, as well as their pitfalls. Allowing internal audit teams to work from home can have significant benefits, but any distributed work strategy must carefully consider all potential security, managerial, and behavioral issues.
BEYOND THE OFFICE
Today’s office environment was born during the Industrial Revolution when workers needed access to paper documents and to be close to other employees to execute most processes. This traditional office spawned management techniques in which employees reported to work at a designated time, had controlled environments, and could be seen conducting their work.
The digital revolution has overturned the need for a central workplace by creating new opportunities for data to be accessible virtually anywhere. For example, internal auditors now can conduct routine reviews without being in the same location as the audit client. Many audit team leaders have embraced such efficiencies, including remote work, but others have been reluctant to let go of an office-centric culture. This reluctance may be due to audit leadership’s management philosophy, but it also may reflect an organizational philosophy over which audit has little control.
While remote work and other flexible arrangements have novel challenges and can have negative results, audit leaders should take an objective view of the trade-offs involved with them. A well-executed telecommuting strategy can yield tremendous benefits for internal auditors.
Enhanced Employee Morale and Retention Employees often cite “lack of respect for their time” as a leading contributor to work dissatisfaction and a primary reason for leaving a job. They desire, and increasingly expect, a flexible work environment. Job flexibility directly improves employee morale and reduces turnover because employees receive tangible benefits such as:
Trust. Allowing employees this type of flexibility sends the message they are trusted to manage their time.
Respect. Flexible work arrangements demonstrate respect for the various pressures and demands employees face from all facets of their lives. This is key for employee retention.
Reduced commutes. Long commutes to and from work can be a primary contributor to unhappiness with one’s job. Eliminating commutes, even for a few days a week, can reduce frustration, give team members a greater sense of control, and provide them extra time on those days when their only commute is to another room in their home.
Belonging. Although it may seem counterintuitive, when employees have flexibility, they tend to be more loyal to the organization. Providing a work-from-home option decreases employee turnover by 50%, according to a Stanford University study published in The Quarterly Journal of Economics.
Increased Productivity Employees who are more satisfied with their jobs tend to be more productive. The Stanford study finds that employees who work at home experience a 13% boost in productivity versus those who work in a traditional office. Employees who telecommute work the equivalent of 1.4 more days per month than do their office-based counterparts, according to a 2020 study by online employment company Airtasker.
Cost Savings When executed as part of a larger infrastructure strategy, allowing team members to work from home can result in significant savings. The increase in employee retention and improved performance can directly influence the bottom line. For many audit groups, though, the greatest savings can be from dramatically reducing the office space required. Even in hybrid operations where team members work at home and at the office, a carefully executed strategy that staggers office-based days can create tremendous savings.
To realize the full benefits of flexible work arrangements, internal audit functions need a carefully executed strategy. This strategy should be built upon four pillars: 1) infrastructure and security, 2) expectations management, 3) communication requirements, and 4) management adaptation.
Pillar 1: Infrastructure and Security
The need to adjust work structures arose quickly with the pandemic. Audit teams were sent home to work and, in many cases, discovered team members had inadequate computers, slow internet connections, and lacked the means to maintain data and access security.
To have an effective long-term strategy, the internal audit function must anticipate these needs and be willing to make the necessary investment. Leaders cannot view such expenses as additive, and instead should see them as substitutions for other investments that would come in the long run.
Ideally, the audit team should prepare a budget that identifies additional expenses for a remote work strategy. This budget should start with a full inventory of all software, hardware, and infrastructure required. For example, audit teams may need to invest in cloud-based software rather than machine dependent software, virtual private network lines for audit team members to protect the data in transmission, encryption software for data storage, reliable high-speed internet service, standardized laptop computers, and mobile phones.
These expenses can appear daunting, but management should be aggressive in identifying cost savings to offset them. Internal audit could easily reduce the hardware and software licenses required in the office. Reducing the amount of office space could provide the greatest cost savings.
Pillar 2: Expectations Management
With a change in workplace structure comes a related change in expectations. For example, an audit manager may expect a team member to be available during certain hours, yet the team member may have different views of the specific hours in which work is to be done. Also, there could be expectations about response time to team members or clients, availability for meetings, and possibly even dress codes for virtual meetings.
Audit teams face a unique challenge because they often have large projects involving multiple team members where each step depends on the completion of a task by someone else. This problem is especially exacerbated when work-from-home arrangements can result in some audit team members working from different time zones.
Too often, the greatest friction arises because there are different expectations that have simply not been articulated. Accordingly, audit teams must develop formal policies that delineate expectations. These policies should be developed collaboratively so team members fully understand the reasoning and necessity for such policies. Because the policies may not anticipate all issues that may arise, managers must revisit and revise them regularly.
Pillar 3: Communications Requirements
Managers should articulate their expectations for team member communication, but they should be accountable for enhanced communication, themselves. Remote work cultures generate a much greater need for communication, because team members no longer have the interpersonal cues available in an office environment.
For example, team members may have difficulty getting information from clients, face roadblocks on projects, get pulled into other projects, or even face personal struggles. Such difficulties need to be communicated to managers so they can adapt accordingly. However, while such communication might come naturally during meetings in an office setting, in remote settings, managers and team members must initiate the necessary communication proactively.
Managers should be deliberate about communicating frequently and, at times, they should even place check-in calls that don’t have a specific work agenda. These connections are critical; otherwise, employees can feel disconnected and not part of a cohesive team. Managers cannot communicate enough.
Pillar 4: Management Adaptation
Changing management’s attitude is the most important and most difficult part of implementing a work-from-home strategy. Audit leaders often cite concerns about a “looser” work environment that would remove elements of accountability and result in reduced productivity, higher costs, poorer client service, and lower quality. They imagine scenarios where team members are easily distracted by their home environment and don’t prioritize work.
At the center of this discomfort is a feeling of loss of control and a major break from traditional methods when remote work becomes the norm. One reason for this feeling is many managers are accustomed to measuring input rather than output. If they can see a team member, then they assume that individual is working.
Simply stated, internal audit managers must adapt and start measuring results. For example, rather than measuring time in the office or hours billed to a job, managers could assess audit project effectiveness by measuring project throughput, trends in audit hours, hour variance from budget, or significance of analysis. Even in office environments, moving to a results-based focus that extends trust to team members can be effective and result in a better workplace culture.
REALIZING THE BENEFITS
The pandemic has provided an evolutionary break from the traditional office-centric paradigm. The work environment was already drifting toward more flexible arrangements that included remote work, but the pandemic hastened this trend and provided a realistic peek inside the new reality. The evidence is clear that flexible work environments enhance productivity, boost employee morale, and reduce expenses.
However, such benefits cannot be realized unless there is a careful approach that delineates expectations and provides clear parameters for audit leaders and their staffs. Each strategy could vary based on the size and nature of the audit department and organization, but any remote work strategy should include the four pillars to provide clarity to the team and generate optimal results.