Power within: why self-knowledge is essential to good leadership

Internal auditors often find themselves in conflict even before they enter a boardroom or audit committee. Audit leaders therefore require courage, innovation and resilience. They must also be excellent communicators, good at building relationships across the business and with the board and audit committee, as well as caring for their staff and ensuring their own wellbeing is not put at risk. And they have to get the job done.

In this new world of remote working and virtual teams, internal auditors must understand how to influence stakeholders, build strong and open internal cultures, and present clear and sufficient oversight over the risk agenda. They need the sensitivity to probe complex or emotional topics and navigate difficult conversations with people who are in different rooms or even countries.

An oft-quoted key responsibility is “to speak truth to power”. Many internal auditors struggle with this. Too often, those with power and influence are not open to conversations about particular risks or uncomfortable topics — until it’s too late.

In the case of internal audit, speaking truth to power means more than taking a stand. It means addressing issues that management and the board would rather avoid. To do this well, internal auditors must be able to back up their tough talk. Raising a concern about executive compensation or delving into legal or human resources issues requires competencies and expertise as well as courage.

Stephen Moreton, head of partnerships and a facilitator at PotentialSquared, worked on the leadership series with the Chartered IIA. He identifies the following key skills that chief audit executives (CAEs) need to develop to ensure their leadership style maximises their influence with their team, the business and external stakeholders.

Perception

The way we see ourselves is often different from how others perceive us. Once we understand how we are perceived, we can choose behaviours that are more likely to have the desired effect.

Style

Everyone has a personal leadership style. Understanding our preferences in terms of communication, situation and decision-making allows us to play to our strengths and be aware of our comfort zones. This enables us to prepare for different situations – to consider in advance how we might feel and respond so we can be more intuitive, empathetic and adaptable.

Strength

Research suggests that it is often more effective to focus on utilising your strengths than on improving any weaknesses. A sensible approach may be to consider both in a realistic way, but it is certainly true that understanding your personal strengths enables you to depend on them in important moments. For example, a patient leader may consciously use this at times of high stress to eliminate the “noise” and seek clarity.

Blind spots

A blind spot is often the opposite of a major strength. In the case of the patient leader above, their desire for clarity may prevent them from performing well in an emergency when an immediate decision is essential.

Authenticity

An authentic leader is in tune with themselves and, probably, others. To operate consistently and congruently with their values, a leader needs deep self-awareness and acceptance. These values must stay true, despite external pressure, other people’s perceptions or any potential negative consequences.

“We know from experience that audit leaders can sometimes find themselves in a lonely space and are challenged with remaining independent while taking their seat on the executive committee,” says Sharon Hardcastle, chief operating officer of PotentialSquared. “Internal audit leaders across different industries are all facing similar challenges and must be willing to try new and different approaches, while remaining true to themselves.” 

Leadership challenges

We asked participants at the events some key questions. This is a summary of the answers:

What would you most like to understand about your approach to leadership?

• Changing approaches to leadership with the introduction of remote working and virtual teams.

• Development skills to promote internal audit internally and externally within the organisation, specifically using digital delivery mechanisms.

• “Truth to Power” conversations.

• Building capacity, capability and resilience.

• Motivation, independence and objective.

What are the biggest challenges I face?

• Keeping internal audit relevant in an organisation where there are continual demands on executive time from other areas.

• Adapting approaches and working styles to a remote working environment – especially being able to give views on culture.

• Adapting to different business dynamics, in particular, increased digitalisation.

• Maintaining an effective internal audit service during periods of cost pressure caused by Covid-19 and recession. 

Leadership development consultancy PotentialSquared ran a series of workshops for audit leaders with the Chartered IIA in 2022-23.

This article was published in March 2023.