Malcolm Baldrige Criteria – A Business Excellence Model

Audit and Accountability: Underutilized Pillars of Performance Excellence
Craig A. Anderson, September 2009

The pursuit of performance excellence is a team sport. As defined in the 2009-2010 Baldrige Criteria for Performance Excellence, performance excellence refers to an “integrated approach to organizational performance management” that results in (1) ever-improving value to customers and stakeholders, (2)
improvement of overall organizational effectiveness and capabilities, and (3) organizational and personal learning. Integration is further clarified as “the harmonization of plans, processes, information, resource decisions, actions, results, and analyses to support key organization-wide goals.” The Criteria emphasize that effective integration is achieved “when the individual components of a performance management system operate as a fully interconnected unit.”

The overarching concept is easy to grasp: bring people together to work as a team to achieve common goals. But as all of us know, the challenge is to move from concept to real world implementation. We need allies to make this happen. These allies are often right down the hall, in the internal audit department.

The audit and accountability function is an underutilized resource that is well-positioned to support the pursuit of performance excellence. Auditors are trained to think constructively and analytically, and tend to bring a cross-cutting view of the organization to their work. Auditors are also comfortable with the idea of using data as the basis for their findings, conclusions, and recommendations for improvement.

Organizations aiming for performance excellence must aggressively and consistently seek out areas of competitive advantage. An audit and accountability function that not only performs its traditional oversight role but also vigorously supports performance excellence offers a unique and powerful advantage. In effect, you have an integrated team of professionals that understands your organization identifying key opportunities for improvement and developing appropriate findings and recommendations.

How to get there? We suggest a four step approach to engage your internal auditors in the pursuit of performance excellence.

Step 1: Establish a dialogue
Performance excellence makes sense on many levels, but it cannot be grasped without awareness. The first step is to open a dialogue with key audit and accountability managers and staff. Introduce the principles of performance excellence and allow ample unforced time for skeptical analysis. Performance excellence will “sell itself” as long as smart people are allowed freedom to challenge and question the information. Position the dialogue as a process. And, ultimately, even if (sadly) performance excellence goes nowhere in your organization, this dialogue will result in an improved internal audit process.

Step 2: Agree on a common vision
As understanding deepens, raise the stakes by defining a common vision for the role of the audit and accountability function in performance excellence. Identify stakeholders across the organization who are in position to help define this vision. Recognize the critical importance of not impairing auditor independence in any way throughout this process; fortunately, there are no prohibitions against auditors thinking more clearly and expansively, and developing meaningful recommendations that will help to integrate performance excellence across the organization.

Step 3: Provide coaching and support
As the vision is articulated and deployed, seek out opportunities to provide coaching and support directly to audit teams. Tread lightly—you are on their turf here, but with the support of audit management, coach audit teams on how they can leverage their unique skills and abilities to move the organization along the
path of performance excellence. Our experience is that auditors do not inherently want to operate in a “gotcha” mode, but that too often this is the expectation created by the organization. Replace “gotcha” with “win-win” and you will sharpen your competitive edge.

Step 4: Recognize and celebrate success
Like we said earlier, performance excellence is a team sport. Find opportunities to recognize and reward your audit and accountability function for playing a larger role in support of performance excellence. Highlight examples of audit findings and recommendations that demonstrate an understanding of integrated performance excellence. Respect the importance of the traditional audit and accountability function, but also make it clear that the competitive landscape demands that the bar be raised wherever possible and audit is no exception. Fresh thinking and new engagement with this valuable resource can have a huge positive impact on your competitive position.