Diversity is now a key issue for many internal audit teams, keen to attract people with a wide variety of skills and knowledge of many different parts of the business – and, indeed, other organisations and sectors. This breadth is seen as essential if they are to offer their organisations the insight, expertise and support they need to thrive and survive. Alison McFadyen, group head of internal audit at Standard Chartered Bank, is not only passionate about the need for, and benefits of, diversity, but her own career sets an example of the kind of diverse knowledge, interests and experience that are now so valuable.
From the start of her career, it seems, she was lucky to have a range of talents that kept her options wide open, while also adding some confusion to her ambitions – ten-year plans were clearly not for her. “When I left school I couldn’t make up my mind about what degree I should do – did I want to be a musician, go into the City or be a professional golfer?” she recalls. When no immediate inspiration struck, she decided to take a job while she thought about it.
Her first job was as “the lowest of the low” at NatWest – printing cheque book pages laboriously one at a time. She laughs that now she has to explain what cheque books were to new recruits. Somewhat surprisingly, she found she quite enjoyed this environment and proceeded to work her way up in NatWest’s clearing bank business.
She never returned to full-time studying, although “somewhere along the way” she has acquired an MBA. However, she is not the kind of person to plod patiently up the ladder from the lowest rung. Her interests in other opportunities never went away and her career, while constantly returning to various forms of banking, has been punctuated by unexpected and interesting diversions and breaks. She considers some of these to have been “lucky”, although, of course, people tend to create this kind of “luck” themselves.
McFadyen left NatWest to travel around Australia for a year and, when she returned, she joined an investment bank in a junior operations role. Ten years later she was its head of operations.
At this point she decided to buy a restaurant. The bank, meanwhile, wanted a new banking system. She agreed to implement the system on condition that she was then made redundant. “I’m not sure they fully believed me, but I got it in writing and I gained some excellent project management experience,” she says. She took her redundancy and left, but after a break decided not to become a restaurateur and instead picked up some project management jobs for an insurance company. This led to full-time work for IBM, which, in turn, led to experience running projects in a private bank.
Consultancy however did not appeal to her. “I didn’t like leaving clients as soon as I got to know them and having to start over somewhere else, so decided to move back into banking and a chance came up at Standard Chartered,” she says.
She joined in 1999, just as Standard Chartered was negotiating to buy Grindlays Bank, which had a private bank, so her experience in private banking was immediately useful. “I was asked to implement the integration of the private bank and I ended up becoming chief operating officer and then chief executive of our Jersey operation for five years,” she explains.
McFadyen’s first foray into audit came after this and she also spent time in New York working on a financial crime remediation programme, which, she says, taught her a lot about US regulation. She returned to the UK to take up her present role.
“This is the first job I’ve done where everything I did previously is relevant,” she says. “All the little hooks of knowledge that I’ve picked up over the years in different places are now coming in useful.”
While she never had a career plan, McFadyen’s sideways moves meant that she picked up an immensely broad range of banking knowledge and worked with a wide range of different people across all areas of the industry. However, despite this, she admits that her understanding of the role of internal audit changed significantly once she saw its work from “the other side”.
“My perception of auditors when I joined audit was that they were the bank inspectors who had checklists that needed to be filled,” she says. “What I found when I arrived was a group of experts who were highly skilled and very good at working together in teams – there’s a discipline to the way auditors work that I really like.”
Her own misperceptions gave her an insight into ways that the audit team could work towards communicating their role better across the bank and could use their strengths at working in internal audit teams to improve the way they communicated with auditees. One key initiative was to work collaboratively to create a list of “15 habits of a human auditor” that encouraged everyone in internal audit to think about their impact on auditees and the best way to approach different people and different situations.
“This prompted lots of things – some of them apparently small, such as speaking directly to people instead of emailing – that have changed the dynamic of how we work with our customers,” she explains.
Diversity is key to many of these improvements. The internal auditors need to reflect and work alongside ongoing projects to improve diversity across the whole bank and McFadyen is a passionate advocate of the benefits to all parts of the business. “We are looking at everything from gender-neutral job descriptions, to drawing up diverse recruitment shortlists and ensuring that we have diverse panels of interviewers,” she says. “We are particularly looking at increasing the number of people we employ from under-represented nationalities, such as African and Chinese nationals, and helping people we already employ to progress with mentoring and by offering more stretching assignments – and giving them the support they need to succeed at these.”
For example, McFadyen says that the women in the internal audit team have decided that when one of their number takes up the chance to lead an audit, the others will create a support group to help them do the job well.
“We are also getting better at measuring what nationalities we employ and whether they are representative of our customers, as well as looking at whether the senior management is representative of our staff,” she adds. “And, importantly, we are gathering all the data we need to assess this objectively.”
Wider changes in the banking sector and the business environment in general are also making it essential that audit teams attract people who understand the way the business is evolving and who bring in skills that are becoming increasingly important. Technology, in particular, is proving a game-changer.
“We have to become more digital, do more sampling, with bigger samples, and use the latest analytics capabilities – and this means we also have to understand the inherent risks of digital,” McFadyen says. “We need to build analytic and data-mining skills in-house because this knowledge is vital to our future. It will become critical to the way internal audit works, and to the first and second lines of defence.”
Whereas a few years ago she believed that technology was evolving too rapidly and creating too many risks for in-house internal audit teams to keep up, now she thinks it is so important that building cutting-edge internal expertise is essential. External experts can still be brought in for particular projects, she says, but the bank needs to build up its own expertise in everything from cyber crime to assessing banking technology. “It’s too important to be something you dip into,” she says.
But, while she is keen to build up technical specialisms, she is just as concerned to improve the audit team’s soft skills. “Internal auditors have to articulate concerns smartly, intelligently and in a way that will be listened to,” she insists. “This issue cuts both ways – you need a supportive board that will listen to, and act on, your warnings – but I think we should concentrate first on improving the way we communicate. Sometimes we have to step back and look at our fellow auditors and say ‘Would I listen to them?’”.
This brings her back again to the topic of hiring people with diverse skills and backgrounds. “We need quants and we need quants who can talk to other quants, but we also need people who are good at separating the wood from the trees – people who can see the big picture and are good at communicating it,” she says. “People who are good at giving messages need to know that the messages they are giving are based on robust data and accurate information, otherwise they still won’t be listened to. This is why we need a full range – people with deep technical expertise, strategists, people with local knowledge and those who are excellent communicators.”
“After that,” she adds, “you have to help them all to work well together and create a team that is greater than the sum of its parts. This may not be easy, but the last thing you want is a homogeneous group of auditors.”
But speaking truth to power, however essential, can be lonely, she says, so support both inside the internal audit team and from senior management is essential. “My job would be impossible without the support and confidence of the CEO and audit committee.”
So where does McFadyen see her career going next? Does she still hanker after a restaurant, a place in an orchestra or a life on the golf links? “This is the best job ever – I really can’t think that anyone will offer me a better job in banking,” she muses. So, true to form, her long-term plans lie elsewhere. “I think I’d like one day to be a non-executive for an arts organisation – a theatre or an opera house – and maybe work for an LGBT charity that promotes people’s rights in countries where LGBT people are not accepted.”
And what advice would she give to auditors just starting out on their careers? “Don’t be in too much of a hurry to go upwards,” she advises. “Try to get breadth of experience, invest in knowledge and concentrate on building up a variety of skills and roles – if you get into internal audit young, it can be a great place to develop a wide range of experience and the broadest possible outlook.”
This article was first published in Audit & Risk July/August 2018.