Inclusion | challenge at the highest level

While there have been many examples of people pulling together during the Covid-19 crisis, some of the more depressing statistics emerging from the crisis have highlighted our inequalities. People from ethnic minorities, the elderly and the already sick are far more likely to die if they contract the disease. There are clear reasons for some of these vulnerabilities, but some are less obvious and have focused attention on deeper problems in our society. Add to this the shocking events that triggered Black Lives Matter protests worldwide, and there is a clear imperative for organisations to re-examine their approaches to diversity and inclusion.

The reminder of widespread and deeply rooted inequality has triggered renewed debate about what we mean by inclusion and what an inclusive society really is. Internal auditors must be part of this discussion. Research shows not only that bias has a negative effect on individual happiness and wellbeing, but that it also has an impact on those who witness it. This outward ripple of negative emotions means that bias affects engagement and productivity across the workforce, regardless of its original target.

Internal audit has a holistic view across the entire organisation and strong collaborative relationships with a wide variety of stakeholders. This gives it a clear mandate to examine how organisations approach diversity and inclusion in every area of business, especially when it comes to audits around culture and behavioural risk.

Auditors should be asking questions at every level about whether there have been staff surveys about diversity and inclusion and what their findings were, what the policies say and whether speak-up or whistleblowing hotlines have reported any concerns around diversity. They should also look closely at the organisation’s mission statement and ask about its purpose and how diversity and inclusion fit into its longer term goals.

It’s important to think about the business’s customers and suppliers. Does the organisation audit its suppliers’ diversity and inclusion policies? What kinds of risks is it exposed to if it does not?

Look also at your products and staff benefits – if, for instance, you provide healthcare packages for customers or staff, look carefully at the underlying assumptions. If they talk of a “family deal” how is “family” defined? These are easy things to miss, but could backfire badly if you exclude people, or staff are poorly trained and misunderstand definitions. Algorithms and artificial intelligence systems can also entrench bias deeply in decision-making systems without anyone being aware of the problem – until it hits the headlines.

Audit has fought hard for a place at the top table. But once you have a voice at board level, you need to use it constructively and to add value – you need to say things worth listening to and you need to be listened to. If, for example, your chief executive is keen to tweet about your organisation’s support for the Black Lives Matter cause, make them aware of any shortcomings in the organisation’s policies or procedures before they draw unwelcome attention to these.

Auditors should be challenging at the highest level. How diverse is the board and the audit committee? If it is not diverse, what is it doing about it? It’s important not to overpromise and under-deliver. If organisations try to improve their brand reputation with a glib statement about their support for diversity, they will get found out. If audit identifies areas that need improving and the company talks about what they are doing to improve their performance in these areas (and actually does it) this is a far more powerful message about their genuine commitment to change.

It’s also useful to examine what your organisation actually means by the terms “diversity” and “inclusion”. How do people in the business understand them – and how do they perceive the business and its performance in these areas. One definition I have heard is that “diversity is being asked to the party – and inclusion is being asked to dance”.

As with culture, diversity is an issue that auditors can consider in tandem with almost every audit they conduct. It’s vital that people throughout the organisation feel they can express honest views in ways that aid understanding and appreciation, but that also offer constructive feedback and highlight potential problems – before they become important.

The IPPF implies that internal audit has a role in assessing culture because culture is central to the effectiveness of an organisation – and what is diversity and inclusion if not part of corporate culture? However, we can go further than this. If you are auditing infrastructure, talent, how you treat your customers, the business’s role in the community, its brand, data analytics or leadership, all can and should have a diversity angle for each engagement. Each of these can also provide quantitative and qualitative insights that can be analysed and which might provide some surprising findings.

The pandemic and the Black Lives Matter protests have raised serious and important issues. Internal audit should use the ensuing debate to help organisations improve – for their own good as well as for that of society in general. 

This article was first published in September 2020.