Are you in the 77%?

For the last few weeks we've been talking about audits—how to approach them, and how they can go wrong. But a couple of years ago, TÜV SÜD America published a white paper about a study they had conducted of over 500 companies, on how those companies used their internal audit program. (You can find the paper here.) What they found was that a whopping 77% of companies used their internal audits merely to satisfy the requirements of ISO 9001, so they could hold onto their certificates. Of course certification is important, but those numbers suggest that far too many companies are missing out on the concrete benefits that internal audits can provide.

Many of these benefits are things we have discussed already: most significantly, that if something is wrong you want to find out before your customers do. But the paper also brings out some themes we haven't emphasized yet.

• Audits can help you assess how well an organization is aligned around its targets. I've seen cases where each department's goals and metrics flow seamlessly from the level above them, and all cascade down smoothly from the corporate goals defined by top management. I've also conducted audits where I asked senior people in responsible positions how their goals aligned with the corporate targets and gotten back nothing but a blank stare.
• In much the same way, audits can give you a reality check on how well communication is working between teams, or between levels in the organization. We've all seen times where Department A describes how they hand off their work to Department B, and then Department B describes the exact same hand-off so differently that it's hard to believe they mean the same thing. Similarly, if top management tells you that the company is in the middle of a bold transition to a radically new way of working, it's not unreasonable to expect that people on the floor might have heard about it. They might not be able to quote the initiative verbatim*, but if they've never heard of it at all the company might want to follow up and find out why not.
• And audits can find and highlight best practices. This is an under-appreciated feature of the audit program, but an important one. If someone off in a corner has figured out a better way to do his job, he might never have thought to tell anybody. But if the new method works better and makes life easier, everyone benefits from learning it. I worked for some years in a department where internal auditors were explicitly required to find something good to say about each department we audited, and to look hard to find best practices. It was good coaching and I'm still grateful for it.

All of this is to say that audits are a critical support to internal communication. Communication is difficult: even in small groups it can go awry, and in large organizations it can start to resemble the party game "Telephone." Peter Drucker highlights this awkward fact in his book The Effective Executive: 

When General Eisenhower was elected president, his predecessor, Harry S. Truman, said: "Poor Ike; when he was a general, he gave an order and it was carried out. Now he is going to sit in that big office and he'll give an order and not a damn thing is going to happen." 

The reason why "not a damn thing is going to happen" is, however, not that generals have more authority than presidents. It is that military organizations learned long ago that futility is the lot of most orders and organized the feedback to check on the execution of the order .... All military services have long ago learned that the officer who has given an order goes out and sees for himself whether it has been carried out. At the least he sends one of his own aides—he never relies on what he is told by the subordinate to whom the order was given. Not that he distrusts the subordinate; he has learned from experience to distrust communications.**

In most organizations it would be impractical to ask top management to go check on the implementation of every policy and procedure year after year. The solution is to implement internal audits.

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* Compare, for example, my remarks on the "well-known auditor trick" of asking employees to explain the Quality Policy.     

** Peter Drucker, The Effective Executive (New York: Harper Collins, 1967, 2006) p. 141.