TIAPS ALB_Module 2B. Managing People

2B. Managing People
2B Learning Outcomes
On completion of this section, students will be better able to:
• Describe components of talent management.
• Develop a talent management strategy.
• Utilize competency frameworks.
2B.1 Leadership
The following quote from Ralph Nader captures an essential truth about the role of
leadership that is often forgotten.
I start with the premise that the function of leadership is to produce more leaders, not
more followers.
A good leader is a nurturer of people who creates conditions in which their team members
can grow and develop as individuals and professionals. They assign tasks appropriate for
the level of expertise and ambition and minimize unfulfilling tasks where possible (typically
through better systems design and automation). They act as a champion for their team
members, offering encouragement, coaching, recognition, and reward.
Leadership in the context of internal auditing – and perhaps especially in the public sector –
has some distinctive challenges. The head must lead the function, its people, resources,
practices, and so on, as is the case for other functional leaders. However, the unit is uniquely
positioned as internal to the organization and yet operationally independent. The head of
internal audit should enjoy the same status as other senior executives to ensure sufficient
authority to perform the duties of the function. The work of internal audit must be aligned with
the priorities and risks of the organization requiring the head to be fully engaged with the
management team and governing body. At the same time, the internal audit unit must remain
independent. The head of the function must manage relationships with great care. Senior
management and the governing body (or audit committee) may place competing demands
on the internal audit function. Together with these challenges, it is often the case that
stakeholders do not fully understand the nature and role of internal auditing and so the head
must act as an advocate and champion. Maintaining the balance requires very fine skills.
2B.1.1 Styles of Leadership
There are many different styles of leadership and thousands of books and training programs
available to offer some new approach. When we consider leadership traits, we tend to think
of historical figures who showed themselves to be decisive, resilient, resourceful,
charismatic, and tenacious, great orators who often disregarded convention but were driven
by a strong sense of what is right. These can be useful traits in times of uncertainty, crisis,
division, and conflict but other qualities are also essential for a successful leader who knows
how to adapt to circumstances. Different leadership traits and styles are not mutually
exclusive and are often effective in varying combinations.
There is no definitive catalogue of leadership styles. Some are defined by the personal traits
(like courage, empathy, and fairness). Others are defined in terms of the impact the leader
has (transformational leadership, for example, where an individual with high energy, drive,
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and enthusiasm pushes for change and innovation). Many styles are distinguished by the
level of participation in the decision-making process, some of which are described below.
Leadership
Style
Autocratic,
authoritative, or
dictatorial
leadership.
Democratic or
participative
leadership.
Laissez-faire
leadership.
Delegative
leadership.
Transactional
(or managerial)
leadership.
Description
Leaders lead with limited
consultation.
Leaders engage stakeholders in
important decisions.
Literally meaning to allow to do,
whereby a leader allows team
members to operate with limited
supervision or intervention and to
make many of their own decisions.
Leaders delegate tasks, autonomy,
and authority to team members in a
planned and structured fashion.
Leadership relies on incentivization
in which team members accept
responsibilities on the basis of an
explicit “give and take” in the form
of rewards.
When Appropriate
When team members have limited
experience, conformity is important,
situation is high-pressured, and
decisions needs to be made
quickly.
When team members have more
experience, sharing information is
helpful, and time allows for wider
consultation.
When situations are stable and
team members are highly
competent, often supported by a
delegative style.
In most situations with a focus on
strengthening performance in the
long term and developing
individuals.
Where there are well-defined and
robust structures, routines, and
processes.
A leadership style may be unconsciously adopted due to personal characteristics, team
dynamics, and cultural norms. A more reflective approach is recommended for better results
and ensuring a leader has a range of styles to deploy according to circumstances.
2B.1.2 Delegation
Delegation is a very important skill. Section 2A.4 describes the importance of delegation for
managerial accountability and successful internal control. It is equally applicable to
managing the internal audit function.
Sometimes managers can be reluctant to delegate. This can occur when the manager:
• Believes delegating tasks may take longer to explain or result in poorer performance
than if the manager simply completes the tasks.
• Wishes to retain the more enjoyable and rewarding tasks.
• Wishes to hold onto power and be indispensable.
• Does not trust team members to complete the tasks to a satisfactory level.
However, the consequences of not delegating can be very damaging.
• Resources are poorly utilized.
• Team members are demotivated.
• Manager is unable to complete everything and so performance suffers.
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• Manager has reduced time for leading, planning, directing, strategizing, monitoring,
and supervising and so these essential functions are performed less well.
• When the manager leaves it is hard to fill the knowledge gap left behind.
Delegation requires an appropriate level of supervision – it is not the same as simply a
laissez-faire approach – but managers should refrain from micro-management which occurs
when the manager’s involvement is in excess of need, creating inefficiencies, slowing
progress, and potentially weakening the outcome.
The Harvard Business School offers the following tips for effective delegation:
• Know what to delegate. This relates to the competencies and level of authority
needed to complete the tasks. Delegation must be appropriate to seniority,
competency, risks, goals, and resources.
• Play to your employees’ strengths and goals. Every team member should have clear
goals that have been agreed and are supported. Their personal and professional
development are often enabled through delegation as a means of gaining experience
and developing new skills and expertise.
• Define the desired outcome. Delegation should be a careful and considered process.
When responsibilities are assigned there needs to be clear objectives (SMART –
specific, measurable, achievable, resourced, and within an agreed timeline).
• Provide the right resources and level of authority. As described in section 2A.4,
effective delegation must be supported with the autonomy, authority, and resources
to execute the assigned tasks. The right tools to do the job may include training, time,
input from others, IT support, and other resources.
• Establish a clear communication channel. Supervision, monitoring, review, feedback,
support, and, if necessary, intervention require timely and accurate updates on
progress, as long as this does not become micromanagement.
• Allow for failure. If there is no possibility of the team member getting it wrong and
making mistakes, then they do not genuinely have authority and autonomy.
Appropriate controls help to reduce the possibility and impact of bad luck, errors, or
abuse of authority, but they cannot be eliminated.
• Be patient. The manager may well be able to complete the assigned tasks more
effectively and efficiently – at least at first – but must be able to “let go” to enable
team members to develop and for performance to be optimized.
• Deliver (and ask for feedback). Feedback should be constructive, recognizing
achievement as well as providing coaching and guidance. Managers should also
seek feedback from their team members.
• Give credit where it’s due. A manager should resist taking the accolades for work
completed by their team members. Instead, managers should be advocates for their
team members. 18
2B.1.3 Leadership as Service
The management guru Jim Collins set out to identify what makes the difference between
leaders who achieve good results and those who achieve greatness. In his book Good To
Great: Why Some Companies Make the Leap…And Others Don’t, he concluded that it was
18
“How to Delegate Effectively: 9 Tips For Managers,” Lauren Landry, Harvard Business School, 2020.
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more about persistence than charisma. In fact, charismatic leaders can perform less well if
they persuade people through force of their personality alone. Less magnetic personalities
must convince others through the clarity of their vision and the power of their ideas and
arguments. Collins uses the analogy of a flywheel that has a lot of inertia. To make it spin
and turn faster requires dedicated, consistent, repeated effort.
Greatness requires disciplined people, disciplined thought, and disciplined actions. Collins
defines five levels of leadership.
Figure: Leadership (as defined by Jim Collins, Good To Great: Why Some Companies Make
the Leap…And Others Don’t) 19
In the last few decades in the evolution of leadership models, there has been increasing
recognition for the importance of emotional intelligence. This means taking account of how
others feel and may respond to given situations. In recent years, the concept of servant
leader has also been widely embraced. In this model of leadership there is a central focus on
well-being. The notion is that the desire to lead should start with a desire to serve. Care for
the growth of others as autonomous, contented, healthy individuals is the driving motivation
for leadership. A major contemporary proponent of the servant leader is Brené Brown, author
of Dare To Lead: Brave Work, Tough Conversations, Whole Hearts (2018), who has
reinforced the importance of a positive, nurturing environment.
19
For reference see https://www.leaneast.com/good-to-great.
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2B.1: Reflection
What characteristics do you most value in your leaders?
What is the leadership style of the manager to whom you report?
What is your leadership style?
Is your leadership style effective? What indicators help you evaluate the effectiveness of
your leadership style?
How could you improve your leadership style?
What can internal audit do to help other managers develop their effectiveness as
managers and leaders?
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2B.2 Talent Management Strategies
“Audit team transformation” is described by The IIA as
the concept of inspiring and motivating the right people to perform the right functions to
support the vision of where the organization is going. It is being the department within
the organization that high-performing fellow employees aspire to join because of its
brand reputation. It is about transforming internal audit into a forward-looking agent of
change for the benefit of all. 20
To goal of such a transformation – which encompasses all elements of talent management –
is to deploy the talent of the internal audit function to the full. This is achieved by:
• Understanding team members’ goals and fostering personal growth and
development.
• Throwing in a little fun.
• Celebrating achievements such as meeting deadlines and successful
implementations of recommendations.
• Appraising failures as learning tools and acknowledging the courage to try something
new.
• Encouraging team members to engage with peers and technical experts in the
industry, such as those driving change and innovation. 21
The first step is to develop a talent management strategy (as part of, or aligned with, the
internal audit strategic plan). This is to ensure there is sufficient focus on safeguarding this
most valuable asset.
Figure: Talent Management Strategy
20
Global Knowledge Brief: Audit Team Transformation, The IIA, 2019.
21
Global Knowledge Brief: Audit Team Transformation, The IIA, 2019.
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• Attract and recruit. The internal audit function may appoint team members on a
temporary or permanent, part- or full-time basis, and from within the entity or
externally. There are benefits from recruiting experienced managers into the audit
function as long as appropriate safeguards are put in place to ensure objectivity.
(Module 1 Audit and Assurance covers the importance of safeguarding
independence and objectivity.) Auditors may be in-house or outsourced (secured via
an agency for specific engagements). Sometimes, especially in local government,
shared services are established through which multiple entities receive internal
auditing. Among government departments or ministries, services are sometimes
centralized. (For consideration of the relative benefits of resourcing models, refer to
Global Knowledge Brief: Audit Team Transformation, The IIA, 2019.)
• Onboard. New team members need to be onboarded (or inducted) to ensure they
quickly become familiar with: the sector; the organization and its purpose, culture,
goals, priorities, structure, and risks; the internal audit department and its strategy,
audit plan, policies, and resources; and the requirements of the appointed role. This
is likely to take many months and require focused support, becoming less intense as
the individual acclimatizes. Managers should develop resources to support the
onboarding processes and provide new team members with clear goals for the first
few weeks and months.
• Nurture and develop. Managers should work with their team members to identify
personal and professional development needs and wishes and to establish a plan to
achieve them. Training can be formal or informal, and completed on-the-job (while
working) or off-the-job (away from performing normal duties). Managers can provide
continuous coaching and mentoring.
• Deploy, direct, and supervise. These managerial tasks aim for the best efficiency and
effectiveness as you would for other resources with the additional responsibility for
employee well-being. Deployment should be linked to nurturing and developing
individuals. Methods such as job rotation (cyclical changes to roles and
responsibilities), work shadowing (opportunities to observe others performing their
roles), and secondments (temporary reassignment to a different position) are all
beneficial to professional advancement as well as resource utilization when executed
well.
• Appraise. Performance evaluation requires a combination of agreeing and recording
goals, monitoring and providing regular feedback and support, intervening and
correcting course if necessary, and finally measuring success against original targets
as well as situational factors that may have contributed to under- or overperformance.
Managers must also address issues of under-performance and
misconduct. It is important to follow formal processes very carefully and take advice
from the HR function.
• Recognize and reward. Fair and transparent tangible (e.g., awards, bonus, pay rise,
and promotion) and intangible (e.g., privileges, status, and job satisfaction) benefits
are an important part of reward, recognition, and motivation.
• Promote. Promoting an individual to a position of greater complexity, responsibility,
and/or reward is not just about recognition for good performance but also a means of
making the most effective use of available resources. Not everyone wants
advancement in this way and are content in their present position. Teams need
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competent and satisfied individuals at all levels and not everyone can be promoted
given the pyramidal hierarchical structures of most organizations. However, even to
remain in the same position individuals need to be nurtured, stimulated, and
developed.
• Exit and succession planning. Inevitably individuals will leave the internal audit team
for other internal or external positions, to retire, or for other personal reasons.
Occasionally, positions are disestablished as part of restructuring or individuals are
asked to leave for reasons of poor performance or misconduct. In all cases, a
manager should anticipate such departures which sometimes occur unexpectedly
and at short notice. Ideally there should be others in the team who can move into the
position vacated even if only temporarily until a permanent replacement can be
found. This is especially important for business-critical positions. This requires
planning in advance of any departure.
2B.2: Reflection
Is your internal audit unit recognized as being a team of high-performing individuals?
Do other high-performing individuals in the organization actively seek to join the
internal audit unit?
Does the internal audit function have a formal talent management strategy?
What aspects of the talent management strategy for the internal audit unit can be
improved?
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2B.3 Motivation
A manager is responsible for inspiring team members to perform and strive for continuous
improvement. The well-known motivational models briefly described below provide useful
insights for managers. Each model can be criticized for not representing the whole picture
but they all illustrate important dimensions of motivation.
2B.3.1 Maslow’s Pyramid
Maslow’s hierarchy of needs recognizes that individuals are motivated to satisfy
progressively higher levels of need and are unable to focus on higher goals if lower-level
needs have not been met.
Figure: Maslow’s Hierarchy of Needs
Physiological needs – water, food, warmth, shelter – are the most basic and what we will
focus on if absent. You cannot motivate someone with promises of financial rewards or job
satisfaction if they are hungry and do not know where their next meal is coming from. The
next level relates to safety, security, stability, and absence of fear and danger. The levels
above relate to our need to belong to a group and then to be recognized. Finally, once these
needs have been broadly met, we will focus on self-actualization and being the best version
of ourselves we can be.
The lesson for any manager is threefold:
• Basic needs must be addressed, including a comfortable and safe working
environment free from physical or emotional hazards.
• Individuals are motivated to achieve more and so may lose motivation is work is
repetitive.
• While people differ, personal satisfaction, fulfilment, recognition, and self-esteem
often serve as the highest goals.
These apply regardless of the level of the position. There is always scope for improvement
and personal growth.
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2B.3.2 McGregor’s Theory X, Theory Y
McGregor distinguished between two broadly different approaches by managers to attempt
to motivate employees.
• Theory X managers assume people are basically lazy and do not like working or
taking on additional responsibilities unless there is something to gain personally and
so they need to be closely supervised and coerced into completing tasks. This
requires an autocratic or transactional style of leadership.
• Theory Y managers assume people are inherently conscientious and hard-working. If
left alone they will self-direct, being motivated to fulfil their responsibilities. Individuals
will naturally seek responsibility and rise to the occasion. This requires a more
inclusive or laissez-faire style of leadership with appropriate delegation.
In practice, managers may need to adopt some of the assumptions of both Theory X and
Theory Y to suit the situation – a “carrot-and-stick approach.” However, Theory Y
assumptions support a more enlightened, caring perspective of individuals and an
appropriate focus on their well-being and development.
2B.3.3 Vroom’s Expectancy Theory
Vroom’s model asserts that individuals focus on the outcome and plan their actions based on
their desire for the most favorable personal results. Vroom translated this idea into an
equation:
Motivation = valence x expectancy x instrumentality
• Valence is the level of appeal of the outcome (the reward) to an individual. The
higher the appeal, the greater the motivation. Valence is subjective and varies among
individuals. It is based on perceived value.
• Expectancy is the perceived likelihood that completing the task is achievable. If it
seems impossible or too hard given the effort needed, then motivation will be low.
• Instrumentality relates to the expected reward from completing the task.
The higher the values for each of these variables, the higher the level of motivation.
Managers must try to maximize these variables, recognizing the importance of perception
and the variability of desired rewards. The relative perceived value of praise, financial bonus,
promotion, a pay rise, increased status, additional vacation, and other tangible and
intangible benefits must be understood.
2B.3.4 Hertzberg’s Two-Factor Model
Hertzberg identified two groups of conditions associated with motivation.
• Hygiene factors are those conditions that need to be present. Their absence will
demotivate workers, but when they are present, increasing them does not increase
motivation. This includes a safe and pleasant working environment, the necessary
tools to complete the assigned tasks, policies and procedures, job security, adequate
supervision, and convivial relationships. These are similar to the lower order needs in
Maslow’s pyramid and Theory X assumptions.
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• Motivational factors contribute to increasing motivation. Hertzberg identified six of
these: achievement, recognition, advancement, work itself, possibilities of personal
growth, and responsibility. These are similar to the higher order needs in Maslow’s
pyramid and Theory Y assumptions.
Managers should be able to distinguish between these two types of factors in optimizing
motivation.
2B.3: Reflection
What factors are most important for your motivation? Which of these could be described
as “hygiene factors”?
How do you attempt to maximize the motivation of your team members?
What practical steps could you take to increase the motivation of your team members?
Consider the top level of Maslow’s hierarchy of needs. What does increasing selfactualization
look like for you? What are the long-term motivational factors that drive your
behavior?
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2B.4 Competency Frameworks
IIA Internal Audit Competency Framework: Professional Development
General Awareness: Recognize the knowledge, skills, and competencies needed to fulfill the
responsibilities of the internal audit activity and the need for continuing professional
development.
Applied Knowledge: Demonstrate internal audit competency through continuing professional
development.
Expert: Assess the competencies required to fulfill the responsibilities of the internal audit
activity; promote professional development. 22
Auditors are expected to maintain their own competency, but managers need to guide them
and ensure there are sufficient skills and expertise available to deliver the audit plan. The
Code of Ethics includes the principle of competency:
Internal auditors apply the knowledge, skills, and experience needed in the performance
of internal audit services.
Internal auditors:
4.1 Shall engage only in those services for which they have the necessary knowledge,
skills, and experience.
4.2 Shall perform internal audit services in accordance with the International Standards
for the Professional Practice of Internal Auditing.
4.3 Shall continually improve their proficiency and the effectiveness and quality of their
services. 23
In accordance with Standard 1210 – Proficiency:
1210.A1 The chief audit executive must obtain competent advice and assistance if the
internal auditors lack the knowledge, skills, or other competencies needed to perform all
or part of the engagement.
1210.C1 The chief audit executive must decline the consulting engagement or obtain
competent advice and assistance if the internal auditors lack the knowledge, skills, or
other competencies needed to perform all or part of the engagement. 24
Competency can be understood as a combination of knowledge, skills, and understanding
(or attitudes and mindset). If someone is competent, they have sufficient expertise to
complete tasks consistently to a desired level of quality. Generally, as competency increases
individuals are better able to perform with lower levels of supervision and direction and with
higher levels of consistency and quality.
Competency frameworks attempt to define the requirements of a given role or profession.
Generic competencies are common to many positions and include expertise related to
22
Internal Audit Competency Framework, The IIA, 2022.
23
International Professional Practices Framework, The IIA, 2016.
24
International Professional Practices Framework, The IIA, 2016.
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communication, numeracy, IT, relationships, integrity, and professional behavior. Core
competencies are focused on an area of expertise or profession at a general level while
technical competencies are specific to roles and tasks. Such frameworks have multiple uses
for managers.
• Drafting job descriptions.
• Defining criteria for promotion.
• Conducting a training needs analysis.
• Setting targets for professional development.
• Evaluating performance and conducting appraisals.
A distinction is often made between soft skills and technical skills (or competencies).
• “Soft skills” is used to refer to refer to those that involve direct and indirect interaction
with other people, including communication, building and managing relationships,
resolving conflicts, political nous, and emotional intelligence. Soft skills can also
include the dimension of competencies that involves attitudes, behaviors, mindsets,
values, and emotions. In many ways, soft skills can be harder to develop than
technical skills because dealing with others requires the ability to anticipate and be
sensitive to their attitudes, behaviors, mindsets, values, and emotions. However, soft
skills are undoubtedly essential for internal auditors and audit managers.
• Technical skills relate to the specific requirements of internal auditing, including
engagement planning, root cause analysis, report writing, and adherence to
professional standards.
Creating a competency framework for a profession inevitably results in a generalized model
with some arbitrariness in the requirements defined. Professional practices and
requirements vary considerably around the world and it is impossible to capture that in a
single framework. Therefore, it is necessary for managers to add the specific national,
organizational, and departmental requirements to any framework adopted.
The IIA Competency Framework organizes competencies in four groups:
• Professionalism: competencies required to demonstrate the authority, credibility, and
ethical conduct essential for a valuable internal audit activity.
• Performance: competencies required to plan and perform internal audit engagements
in conformance with the Standards.
• Environment: competencies required to identify and address the risks specific to the
industry and environment in which the organization operates.
• Leadership and communication: competencies required to provide strategic direction,
communicate effectively, maintain relationships, and manage internal audit personnel
and processes. 25
To obtain skills and expertise needed for delivering engagements not currently available from
the existing team, managers have a choice: develop or procure, as described in section
2B.2. The table shows how the elements of competencies may be acquired, demonstrated,
and assessed.
25
Internal Audit Competency Framework, The IIA, 2022.
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Competency
component
Knowledge
Skill
Attitude
Acquisition Demonstration Assessment
Observing, listening,
questioning, reading,
reflecting
Copying others, practice,
experience, following
instructions, repeating
Diverse experiences,
reflecting
Answering
questions, reporting,
communicating
Performing tasks
Behavior
Verbal and written tests
Observed performance
in real or simulated
situations
Observed behavior in
real or simulated
situations
2B.4: Reflection
What are the competencies needed for outstanding internal auditors?
Which of these competencies are the hardest to develop?
Can you train someone to have the necessary mindset and values to be an outstanding
internal auditor?
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