This year, I am admonishing internal auditors to focus on the future, as the profession responds to rapidly changing stakeholder expectations. Disruptive technology and an increasingly dynamic risk landscape are driving the profession toward transformation, and we must take bold steps to ensure we successfully pivot to new demands.
Recruiting and retaining staff is one of the toughest challenges we face in achieving this transformation.
The IIA's 2018 North American Pulse of Internal Audit and the 2018 Global Risk Report each cite survey data that reflect the growing struggle for talent. Seventy-two percent of chief audit executives (CAEs) report they have talent gaps to fill to carry out their audit plans, according to the Pulse. When asked to rate the skills or expertise that are proving most difficult to recruit, more than 75 percent of respondents list five that are "somewhat" to "extremely difficult" to find:
- Data mining and analytics.
- Innovative thinking.
- Cybersecurity and privacy.
- Industry specific knowledge.
- Business acumen.
Other skills that are proving elusive include expertise in risk management assurance, persuasion and collaboration, governance and culture, and fraud investigation/auditing.
Meanwhile, the upcoming Global Risk Report identifies talent management as the top risk faced by CAEs, based on responses from The IIA's global affiliates.
The data reflect that CAEs are struggling to find people with certain skill sets and that the struggle is keeping them up at night. But does that mean there is a talent gap? That, I believe, depends on one's perspective. While there is clear evidence of existing challenges, it doesn't mean those skill sets are not available in the marketplace. They are in high demand, so the real challenge is identifying and attracting those experts to internal auditing.
That makes it imperative for us to take a steady, analytical approach to addressing our needs. Creating a well-reasoned talent-management strategy improves our chances of success. The stakes are too high to have talent management by crisis.
To engage in this war for talent, we first must understand the risks our organizations face and our stakeholders' needs and expectations. Admittedly, this can be a moving target. Risks have never been more volatile, and stakeholder demands fluctuate frequently, especially as disruptive technology creates new and unexpected business challenges. We must, therefore, deploy methodologies to continuously assess risks, and develop and nurture strong relationships with our stakeholders built on open and honest communication.
The next step is to assess our existing competencies. As new risks emerge and stakeholder demands grow and change, we must have a clear-eyed understanding of our capabilities. This assessment will help identify where talent gaps exist, so that we can quickly move to close them. A strong relationship with stakeholders will serve us well here. Getting buy-in from executive management and the audit committee on a talent-management strategy will make the challenge much more manageable.
Waging the war for talent requires not only identifying and attracting the right people for the job, but also having the resources to invest in them. Talent development through continual training will help retain the best talent and also plant the seeds to succession, creating a pipeline of qualified personnel to assume higher-level positions within the function.
Cosourcing should be part of our strategy. It offers a tool to expand and improve our ability to audit specialized risks or those that require specialized expertise. We cannot look away from risks simply because we do not have the expertise to address them.
I should offer a caveat here about the skill sets the profession should be recruiting: It is de rigueur to talk about adding data analysts or process-improvement specialists to internal audit staffs, but it is imperative to have a firm grasp on the unique risk profile for your organization and the industry in which it operates. For example, the risks faced by financial organizations can be worlds apart from the risks faced by chemical manufacturers.
Finally, our strategy must include a commitment to continually motivate and reward talent. This is a tried-and-true strategy. Consistent salary increases and the opportunity for career mobility are great motivators. That holds true for the newest generation, as well.
Millennials have been saddled with a reputation of hopping from one job to the next. But that may be undeserved. Data from the U.S. Department of Labor suggest millennials are not much different from their predecessors (Generation X) when it comes to job tenure. What motivates them is what has motivated multiple generations of talent — pay and promotion.
I've outlined broad steps to take on the talent challenge as we move forward. It is up to each CAE to apply these steps to his or her particular organization, with a keen eye toward the specialized skills that will be needed to meet stakeholder demands. The sooner a management strategy is in place, the sooner you can begin creating the agile and innovative internal audit function the future demands.
As always, I look forward to your comments.