Culture remains a hot topic for the UK insurance world with Regulator calls for organisations to fix weak cultures that contribute to corporate misconduct. However, this area is not new to the internal audit profession. We are well used to auditing soft controls and ‘tone at the top’, and the associated Conduct Risk focus remains an important topic in the insurance industry, particularly where authority is delegated to a third party. Additionally, there is increased Regulator scrutiny in this area and the expectations for Internal Audit teams are widening, whether it is via continuous monitoring as part of an Agile internal audit approach, or embedded within each and every internal audit program as a governance topic, or as a distinct and separate internal audit topic.
Culture, however, is hard to define, hard to identify, and hard to assess. Unanswered questions may be do you know what your corporate culture looks and feels like to employees and clients? or do you know whether your workplace culture is helping you to achieve business goals or is it a barrier to the achievement of objectives? Business leaders may only have a vague notion of their workplace culture because it is a complex and largely invisible notion, unscratched below the surface. Unlike underwriting and claims, the risks and associated controls are not easy to quantify. However, corporate culture is a key contributor to the health and success of any business. In a poor workplace culture, employee morale is likely to be low, staff turnover high and sickness rates may have become outliers.
Some of the variables that might form part of an internal audit program and focus for culture assurance are:
- Leadership style
- Company’s vision, values and mission
- Employee values and behaviours
- Workplace procedures and policies
- Communication styles
- Workplace environment
- Reward and recognition programs
- Design and results of a cultural survey. An example of a cultural survey can be seen here: Example Cultural Survey Template
A cultural survey, developed and undertaken by management, will help a business to assess where is at and whether workplace culture is supporting the overall business goals.
It will also help to determine the effectiveness of the working environment, employee engagement and internal communications. Risks can then be identified and an appropriate level of new control established, and or a re-set instigated, where culture is identified as a problem.
When business is caught up in day-to-day work, workplace culture often becomes almost invisible. However, a cultural internal audit allows a business to take that step back and really delve into what is a key indicator of cultural health.