1. The Integral AuditorBuilding Capability Using the Integral Framework

2. DONT YOU LOVE BEING ANINTERNAL AUDITOR?As Internal Auditors we are very fortunate. We are in a unique and privilegedposition at or near the apex of the placeswe work with regular access to Directorsand Senior Executives.Our role offers us the opportunity to significantly influence the vitality, wellbeing and the success profile of our organisations and the people we work with. 3. DONT YOU LOVE BEING ANINTERNAL AUDITOR? We bring many strengths to our role Professionalism Objectivity Business acumen etc Like all professions, we also face our challenges. Being audited for many people can be perceived as an uncomfortable experience. Who of us really likes beingreviewed/assessed/audited? 4. DONT YOU LOVE BEING ANINTERNAL AUDITOR?1. How do we not take this personally?2. How do we create trusted and mutually beneficialrelationships with our customers?3. How do we build our personal and collective non-technical capability to cultivate, maintain and leveragerelationships that are so fundamental to our success? 5. WHAT WE WILL SHARE TODAYTopic 1Growing complexity 2Recent research into Internal Audit 3Hard truth for auditors 5Development research 6Do we have an issue? 7Foundational growth 8What was my path? 9Clarifying the way ahead 10 Vertical development 11 Vertical development in an Integral context 12 Internal Auditor development maturity 13 Trusted advisor curriculum 14 Risk and perspective 15 In conclusion 6. A CONTEXT OF GROWINGCOMPLEXITYOur world faces rapid almost daily change caused by: Increasing global interconnectedness The burgeoning information economy New technologies that disrupt existing work practices Different values and expectations of new employees entering theworkplace Increased globalisation with a need to lead across cultures Stakeholders demanding more from Internal Audit 7. GROWING COMPLEXITY PERPETUAL WHITEWATER A 2012 IBM study of over 1,500 CEOs identified their number one concern about the global business environment as Perpetual Whitewater, characterised by: Volatility: change happens rapidly and on alarge scale Uncertainty: the future cannot be predictedwith any precision Complexity: challenges are complicated bymany factors and there are few single causesor solutions Ambiguity: there is little clarity on whatevents mean and what effect they may have 8. GROWING COMPLEXITY In the Perputual Whitewater environment we operate within, the Centre for Creative Leadership* in their 2011 whitepaper on the Future Trends in Leadership Development, define the most valuable skills, abilities and attributes leaders will need into the future are: Adaptability Self-Awareness Boundary Spanning Collaboration, and Network/Systems thinking How do these contrast against typical Internal Audit skills, abilities and attributes? (*Whitepaper: Future Trends In Leadership Development, 2011). 9. GROWING COMPLEXITYIn our increasingly complex and ambiguous world, how do we as individuals and the profession more broadly, build the capability necessary to be perceived by our stakeholders as Trusted Advisors? 10. RECENT RESEARCH INTOINTERNAL AUDIT Within the context of growing complexity and ambiguity, lets examine a few of the regular studies published regarding aboutthe state of the Internal Audit profession, trends, developmentsetc. 11. RECENT RESEARCH INTOINTERNAL AUDIT Internal Audit is:Internal Audit is largely a relationship and communication businessRequires high levels of Emotionaland Social Intelligence to be successfulThe IIARF recommends a strategic, ongoing focus for developingbehavioural capabilities as the foundation for the application ofInternal Audit techniquesIIA Research Foundation - 2011 Report 12. RECENT RESEARCH INTOINTERNAL AUDIT Leading CAEs stated that the skills necessary for success are effective communication, the ability to build strong relationships and a capacity to engage internal and external partners The non-technical softer enabling attributes of success were ranked near thebottom in terms of investment focus In a complex, volatile and changingenvironment the softer attributes of Audit performance are increasingly criticalto the success of Internal Audit functions 13. RECENT RESEARCH INTOINTERNAL AUDITThe role of Internal Audit is evolving, stakeholder expectations are increasing thisrequires competencies that exceed traditional technical Auditskills Notwithstanding our increasingly complex environment, less thanhalf of the Audit functionssurveyed had plans to invest inPeople / Leadership capability development 14. RECENT RESEARCH INTOINTERNAL AUDITCAEs must be much more than just exceptional technical operatives if they want to be truepartners with the AuditCommittee and respected advisors to senior executives CAEs must shore up theirleadership, communication and commercial skills 15. RECENT RESEARCH INTOINTERNAL AUDITThe effective internal auditor of the future possesses a broad range of non-technical attributes in addition todeep technical expertiseSoft skills are the new hard skillsInternal Auditors should apply asmuch effort and precision to theacquisition and development of non- technical attributes that they currently apply to the enhancement of theirtraditional audit expertise Published February 2013 16. THE HARD TRUTH FOR AUDITORSSOFT SKILLS A KEY TO SUCCESSThe research from the IIARF, Ernst Young, PwC, Protiviti and IBM is consistent and very clear - whiletechnical skills are a must, the emerging landscape of global complexity and change amplifies the need for Internal Auditors to strategically upgrade their InnerOperating System. 17. THE HARD TRUTH FOR AUDITORSSOFT SKILLS A KEY TO SUCCESS The development required is not about adding anotherApp to your technical toolkit. It requires investing in yourself at a foundationallevel to expand beyond traditional analytical rationalthinking. 18. INTEGRATING THE TECHNICALWITH THE CREATIVE 19. DEVELOPMENT RESEARCHCreative andRelationship AttributesTask and ReactiveAttributes - often perceived as where Internal Audit lives 20. DEVELOPMENT RESEARCH There is a high correlation between personal development maturity, creative leadership behaviours and downstream leadership effectiveness, particularly in dealing with ambiguity & complexity and resultant organisational performance. 21. DO WE HAVE AN ISSUE?1. Increasingly complex, ambiguous,So, do we have an issue? connected, fast moving world2. A recognition from the IIA and others about the increasing importance, and INTERNAL AUDIT? critical nature of leadership and relational capabilities for success3. An ambition for the profession to be perceived as a Trusted Advisor, rather than corporate cop4. A clear link between leadership effectiveness and personal capability maturity5. An underinvestment by the profession in leadership and people capability development 22. FOUNDATIONAL GROWTH It means developing system thinking,understanding conflicts and paradox, deepening people skills throughexperiential learning, expandingEQ/SQ, self awareness, empathy, relationship capacity to better engage with and serve your customers andpeers. 23. FOUNDATIONAL GROWTH 24. WHAT WAS MY PATH?1. Appointed to CAE role at Australia Post in 19992. In 1999 completed first immersive 5 day experiential self awareness program3. Since been intimately involved in more than 30 in-depth personal development programs,The clear lesson was that theparticularly for menmore I worked on who I4. Mens Group leader for almost 15 yearsthought I was, the more my5. Transformative experiential Native Americanperspective expanded and the Vision Quest process 10 days outbackmore effective I became in including 4 day solothe workplace in terms ofadaptability, influence,6. 1,300 hours in one to one or group workrelevance and value, both to7. Certified in many development paradigmsteam mates and stakeholders. 25. CLARIFYING THE WAY AHEAD? So, in my view we need something tohelp us clarify the complex way ahead. We need to enable a build of personal capability if we are to move withstrength to becoming Trusted Advisors.Being technically proficient will not be, and can never be enough. 26. WHAT IS REQUIRED? VERTICAL DEVELOPMENTTraditional technical (Horizontal) developmentMore Technical Skills is like pouring water into an empty glass, withthe glass filling up with more content: e.g. new knowledge, technical audit skills.Vertical Development aims to expand the glassitself. To enable people to transform theircurrent way of making sense of the world, towards a broader perspective.An expanded glass is reflected in more evolved stages of adult identity development. For the right development to take place we must undertake both horizontal and verticaldevelopment 27. VERTICAL DEVELOPMENT FORAUDITORS Vertical developmentdescribes growth in maturity of perspective,and has been shown to be the best predictor of leadership effectiveness 28. VERTICAL DEVELOPMENT FORAUDITORS 29. VERTICAL DEVELOPMENT IN ANINTEGRAL CONTEXTThe Integral Framework makes clearthat every event or situation may be understood within the context of interior and exterior dimensions in both the individual and the collective Regardless of the scope and depth ofthe organisational situation, by applying the Integral Framework, we are able to analyse and assess eventhe most complex issues in a balanced and comprehensive manner.This holistic process is what makesthis approach so powerful andleading-edge 30. VERTICAL DEVELOPMENT IN ANINTEGRAL CONTEXT Helps makes sense ofcomplexity byincorporating ALL perspectivesImportant in leadingand influencing people and in implementing changeFor any issue, all 4 perspectives are relevant at all times 31. VERTICAL DEVELOPMENT IN AN INTEGRAL CONTEXTIntegral Theory provides a framework that can be used to understand the individual and theenvironment in which he or she functions, and can be used to rationalise existing leadership andmanagement practice.Addressing the four quadrants helps us to:1. Become more aware of thoughts, emotions, feelings, self-limiting beliefs, assumptions and how they influence client relationships (upper left quadrant);2. Review individual behaviours and observable performance (upper right quadrant)3. Considering the collective interior, unconscious assumptions and the way things are done, the culture (lower left quadrant)4. Clarify the objective aspects, organisational systems, rules, conscious ways of operating (lower right quadrant) 32. VERTICAL DEVELOPMENT IN ANINTEGRAL CONTEXT VerticalDevelopment in an Integral Context 33. INTERNAL AUDITORDEVELOPMENT MATURITYExtensive adultUpper Left Quadrant development researchshows that adults grow andevolve through several very(5) Trusted Advisordistinct stages of personal (4) and professionalCollaboratordevelopment, and ways of(3) seeing/interpreting the Achieverworld. (2)ExpertThese stages correlate (1) almost identically toCompliant leadership capability and performance. 34. INTERNAL AUDITORDEVELOPMENT MATURITY AuditorDescription / Primary Focus / Characteristics Integral Development Quadrant StageOrientation (1) CompliantRules and regulations, black and white, tangible, tick the box,simplistic, transactional (2) Expert Expertise, process quality, procedures and best-practice,efficiency, improvement, value preservation, identifies self withrole (3) Achiever Strategic focus, Delivery of KPIs, results, effectiveness andefficiency, goals, acknowledgement (4) Collaborator People oriented, collaborative, value creation and preservation (5) TrustedHolistic, relational, whole system view, organisational Advisorperspective, comfortable in ambiguity and complexity, soughtout, seat at the table, value creation. 35. THE INTEGRAL AUDITOR TRUSTED ADVISOR CURRICULUM Compliant ExpertAchiever CollaboratorTrusted Advisor CapabilityLEVEL 1LEVEL 2LEVEL 3 Self Awareness &Overcoming Immunity to Self LeadershipValues Based Leadership Authenticity ChangeCommunication and Negotiation & Courageous Dialogue and CollaborationAuthentic Dialogue Influencing Conversations Dealing with UncertaintyTaking an IntegralAdapting to a changingSystems Thinking and AmbiguityPerspective workplace & world Solution Oriented Mindset - Knower/Learner & Growing Through Goals Partnering for Value Curiosity and Innovation Victim/Responsibility Building EffectiveInfluencing Across Relational Leadership Developing PeopleRelationshipsBoundaries 36. THE INTEGRAL AUDITOR- TRUSTED ADVISOR The capability build curriculum is designed to lead Auditors through allIntegral Quadrants in a staged approach toward leadership maturity. This is conducted through a tailored combination of workshop, individual and on the job learning experiences and activities.It is informed within the context ofprevailing organisation and Internal Audit group culture and existing/ planned horizontal development. 37. RISK AND PERSPECTIVEAs part of the journey, from an Auditmethodology perspective, Integral Theory canused as the framework for ensuring youconsider the context and internal and externalperspectives, collective and individual, toensure you develop an holistic a view ofcauses of organisational issues so that youare not just reporting symptoms in Auditreports. Integral leads the Auditor toward a greater level of insight, and promotes better more informed conversations with stakeholders. By undertaking Integrally based vertical capability development, in conjunction with appropriate technical skill delivery, optimally positions the Internal Auditor for exceptional service delivery and for a trajectory to Trusted Advisor status. 38. IN CONCLUSION In our increasingly complexand ambiguous world,Internal Auditors must buildThe key challenge for Internal Auditors the right balance ofhorizontal and verticalfuture is to expand in a into the capacity to be perceived bybalanced way technical skills areour stakeholders as Trusted important but VERTICAL development is Advisors(increasingly) critical to your success 39. IN CONCLUSION So the question for each of you: 40. david@davidmallard.com