Internal auditors must be ready to support their organizations by helping to measure the cultural impacts of a distributed workforce.
The Pandemic's Impact on Organizational Culture
Blogs Richard F. Chambers, CIA, QIAL, CGAP, CCSA, CRMA Dec 07, 2020
In my last blog post, I addressed the need for internal auditors to recognize pandemic-related talent disruption as an emerging risk, which many predict will soon be pervasive. While that post focused on how internal auditors should approach talent disruption in their 2021 risk assessments and plans, it also is important to consider its potential longer-term impact on organizational culture.
I have consistently championed the need for internal auditors to include culture in their scope of work and urged them to expand their skill sets to understand and assess culture as a risk. Indeed, I dedicated a chapter to it in my most recent book, The Speed of Risk: Lessons Learned on the Audit Trail, 2nd Edition. The opening of that chapter provides valuable perspective on why culture should be considered in every engagement we execute.
"When I launched my internal audit career, the idea of auditing the 'softer' side of an organization's culture was anathema to the profession. Back in the day, it was believed internal audit should focus on hard controls, such as codes of conduct or human resources policies. Evaluating concepts as intangible as trust, ethics, competence, and leadership styles was something for psychologists and pop-culture gurus to worry about. In retrospect, a lot of heartache and failure across a multitude of organizations might have been prevented had internal audit taken on the full spectrum of culture 40 years ago. As it is, the concept is only now gaining broader acceptance among internal auditors and their stakeholders. All I can say to that is, it's about time!
"Some longtime practitioners might say that auditing corporate culture is nothing new. After all, we have been talking about tone at the top for decades. But that doesn't quite capture the significant value that a thorough and ongoing assessment of culture can do for preserving an organization's ethical well-being. Just as important, understanding and monitoring culture can protect an organization from misguided or even toxic influences that might serve short-term goals but threaten the organization's long-term success and even survival."
The chapter provides a basic but profound definition of culture as simply, "How we do things around here." As I described in that chapter: "This short phrase packs a big punch as much for what it says as what it doesn't say. One of the most important lessons about culture is to understand that it's defined by the actual day-to-day operations, interactions, and influences within an organization, not what a mission statement, CEO speech, or employee policy manual says it is. Culture is not what is said; it's what is done."
COVID-19 has dramatically changed the "day-to-day operations, interactions, and influences" at most organizations, which means it is likely altering their cultures. Already, research is reflecting changes in views and attitudes among employees, and much of it has pointed to potentially positive impacts. For example, researchers at the MIT Sloan School of Management found that ratings on corporate culture rose in the first six months of the pandemic, jumping to their highest levels between March and April, as measured by employee-written reviews on the online job search app, Glassdoor.
The research, which analyzed 1.4 million reviews of more than 500 of the world's leading companies, gave high marks to corporate leaders for honest communications and transparency. What's more, researchers found employees were twice as likely to discuss the quality of communication by top leaders in positive terms. Employees also praised the level of integrity their leaders and organizations displayed in addressing the pandemic, including fair treatment of employees that embodied corporate values. Yet, this speaks more to the crisis response and less to how the changes created by the pandemic are influencing longer-term changes to organizational culture.
Chicago Proactive Response, a group of companies mobilizing to design tech solutions that support the fight against COVID-19, recently gathered a group of 50 executives to discuss how they have adjusted their internal cultures to support workplace changes. They addressed five key areas:
Communication. Increased communications was the common message from these executives who are looking for ways to keep employees up to date while promoting transparency.
Collaboration. Major innovation factories such as Google, Apple, and Pixar designed their headquarters to encourage casual interaction among its varied departments to promote "serendipitous collaboration." But a distributed workforce makes collaborative and spontaneous interaction challenging.
Mental health. The pandemic has blurred the lines between work and home with the conference-room table often serving as the dining-room table, as well. This "always-on" existence can add to personal- and work-related stress. Organizations are responding in a variety of ways to help employees adapt to this evolving reality, including boosting support benefits, promoting mental-health breaks during the workday, and encouraging employees to openly discuss coping challenges.
Meanwhile, other research reflects changes to what is considered professional behavior, from appropriate work attire to video-conference interactions with co-workers' children and pets. The advent of family happy hours, "Pajama Mondays," and "Slob Chic" pandemic fashion is rewriting work rules.
Equity between at-home and at-office workforces. As employers consider reopening their offices, they must be keen to managing on-site and distributed workforces equally. Whether it is access to information, clear and easy communications, or even getting a manager's attention, the homebound could struggle to maintain their roles and responsibilities from a distance. Employers must acknowledge this difference and ensure all employees are treated equally.
Location, location, location. The talent pipeline is no longer limited by region. A distributed workforce literally expands the labor pool nationally if not globally, depending on the industry. This is quickly redefining the traditional employment contract. Salary and benefits considerations could be disrupted significantly. How is collaboration and camaraderie impacted when employees doing the same work are paid differently depending on the cost of living in their location? How is culture changed when co-workers are living in different time zones or countries?
This brief examination of a post-COVID work environment only scratches the surface on the complexity of the challenges organizations will face as we emerge from the pandemic. Internal auditors must be ready to support their organizations, not just by providing assurance and advisory services on talent disruption risks, but also by expanding and innovating their own skills to measure the cultural impacts of a distributed workforce.
As always, I look forward to your comments.