Role of Internal Auditing In Change Management
Change management in the corporate world is challenging. Many business mergers and acquisitions fail due to inadequate change management abilities. Change management does not solely belong to mergers only. Many organizations fail due to the lack of appropriate measures taken in the internal change process. The Internal Auditing department in Dubai, UAE can provide useful insights and support to the change managers. Mainly a change in business can happen internally or due to external factors.
It’s a common notion to think of internal auditing roles related to risk and compliance only. Auditors have great risk and internal control assessment skills. Change management is all about handling the complexities and risks associated with the process. The first thing, auditing function needs to realize they owe a company’s stakeholders the responsibility of playing an active role in change management.
So, how can internal auditors support the change management process?
Every business starts with a vision, setting up objectives, and procedures to achieve those objectives. Internal Auditors in Dubai, UAE are the ones who make sure, every business activity aligns with these business objectives. Change management must relate to achieving these objectives or set the business closer to the stated vision.
Define Change Management Explicitly:
Defining the change cause, process, and requirements remain the most challenging aspect of change management. Auditors in Dubai, UAE must play an active role in defining the change process explicitly. For example, a brick-and-mortar retail business adapting to the e-commerce platform would need to define the strategic shift. A merger of equals would require defining the new combined entity’s shared values and assets alike.
Internal Auditing department in Abu Dhabi, UAE can help change managers in exploring some key questions:
- Is the change driver an internal factor or an external force?
- What are the costs associated with the change process? e.g. forgoing human capital in case of a merger.
- Is the change process in line with the company’s strategic vision?
- Does the business have adequate resources and time to manage the change? For example, a brick-n-mortar retailer going e-commerce would require substantially reformed marketing resources
Change management can happen due to internal business factors too. Project change management is a common example of internal factors affecting change needs. The auditing team should help change managers in clearly identifying the change motives and processes.
Risk Assessment with Change Management:
Change is inevitable in business, but it brings risks. A Strategic shift like technological advancement, geographical expansion, radical marketing shift, and mergers or acquisitions; all types of changes bring risks. Often internal factors pose greater risks to the change process than external ones.
Internal auditing in Abu Dhabi, UAE can utilize their analytical skills to identify the potential risk involved in the change. Let’s say in a merger, business managers and staff, fearing a job loss would resist the change. Automation and technology speeds up the business process and increases productivity, but it reduces jobs. Without proper briefing and acknowledgment, the company shareholders may also not approve the change.
It remains critical to identify the potential risks arising with change. Internal auditors in Dubai, UAE can help identify risks and change impacts on:
- The company shareholders and their wealth
- Impact on other stakeholders like customers, staff, and community at large
- Legislative or regulatory implications. A securities and competitive commission may not allow a horizontal merger of industry leaders in the same territory.
- Identification of complexities and required skills
- The cost-benefit analysis, will the change bring value to the business?
Once the change process starts, the internal auditors’ role shifts to monitoring and assurance. Their prime focus should remain on regulatory and statutory compliance.
Help In Managing The Change Process:
The scope of work for internal auditors in Dubai, UAE during the actual change process remains restricted. However, they can play an active role in managing change resistance, such as from the business managers. For each change management, the business would need to comply with the legislation and regulated laws. Even with new product launches and technological shifts, the businesses need to consider governance and compliance. For example, legally securing the new product by registering patents.
Monitoring and Evaluation of the Change process:
Once the change managers perform the change process, internal auditors need to continuously monitor and evaluate the impacts. For change processes like merger or divestments, it remains difficult to undo any changes. However, in a project or internal change process; continuous monitoring plays a pivotal role to succeed.
Monitoring may include reviewing each change process task following the defined procedures. The best possible option would be to break the change process into short and achievable milestones. Internal auditors in Abu Dhabi, UAE can then collect valuable data and information after achieving each milestone. A consistent approach and continuous monitoring can save the business valuable time and money.
Review and Performance Appraisal:
Review and performance appraisals closely match the internal auditors’ role anyway. The change process should be appraised against the objectives set to initiate the change. Say, has a business achieved the new sales target with an e-commerce launch?
Change managers and involved staff should then be critically evaluated against their performance. The performance appraisal should include any target variation analysis for future corrective measures.
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