SUPPORT CENTER

Q&A 4th QTR 2005

Date: 11/28/05

Question: In your experience, what is the most difficult part of implementing RBIA? Is it convincing the audit committee to agree or is it approaching the very highest levels of the management team? Is it better to implement it in total or just phase it in slowly?

Answer: Neither. Assuming your company is run by people who have some degree of ethics and integrity and a vested interest in doing the right thing and doing things right, we have not experienced trouble at the audit committee nor at executive levels. RBIA is based around the concept of helping executives be successful in accomplishing their business objectives. This is the core goal of board members and senior executive management.

The most difficult part has always been overcoming the resistance to change within the internal audit department. Despite the massive amount of outsourcing, and the pressure in business for all overhead cost departments to justify the value they produce for the costs they consume, there is still a lot of people in internal audit who believe that, for some strange reason, that they are immune from such pressures. While we have never come across anyone who cannot do RBIA type audits, there are many who do not want the individual accountability associated with RBIA.

No department can ever add any value with people who refuse to held accountable. You are over the major implementation hurdle once such auditors are moved out of the department.

Our experience is that the slow phase in approach does not work. It allows too much time for the resistors to change to did in and sabotage your efforts. It takes longer to demonstrate increased value and productivity which is further detrimental to your efforts. If you convert the whole internal audit department on a specific date, you will no doubt have hassles and problems but they will surface very quickly. This enables you to address them quickly. All departments that have selected a specific date for their full conversion to RBIA have been able to demonstrate increased value and productivity very quickly.

DATE: 11/3/05

QUESTION: We are a manufacturing company that is developing a new customer care process. We are following your team success techniques in structuring our teams. We have put a lot of effort into team success objectives and are fairly comfortable that they will meet the SMART test. We were surprised as to just how difficult this part was!

Our question relates to what is the second most common cause of teams failure. Some of us think it is the lack of control mechanisms to protect the team members. What do you think is the second most common reason that teams fail?

ANSWER: Accountability. The failure to hold team members accountable for delivering on the team success objectives by adjusting their reward (pay, bonus, etc.) is the next main reason why teams fail. If I (a team member) still get paid the same amount, regardless of the results that the team accomplishes, why should I take on the additional personal risk to make change in the organization. If I am not held accountable for results, I will simply wait until someone tells me what to do. If anything goes wrong, I am covered and cannot be personally blamed.

If I am held accountable (pay, bonus, promotion, etc.) for delivering on the team success objectives, I will automatically become a lot more serious about the other components that teams must have in place.

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Updated: December 1, 2005