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The Taste of Internal Audit
International ConferenceYerevan, ArmeniaMay 15-16, 2014
Day 2
Morning Coffee/Tea
09:00 – 09:30
Emerging Trends in Internal AuditingAngela WitzanyCIA, CRMA, IIA Global Executive Committee/Board of Directors Member, Vice Chairman –Finance/Treasurer, Chairwoman IIA Austria
1
OUTLINE
• Global Trends & Emerging issues
• IIA Global - What´s going on
• Fit & Proper – IIA Certifications
• ECIIA - European Trends / Activities
2
InternalAuditorOnline.org Blogs
Is Internal Audit Losing Value? Not So Fast, My Friend!
5 Risks That Should Be On the Internal Audit Radar – Now!
Changing Times, Changing Priorities: Are We Passing the Test?
Five Things the Audit Committee Won't Tell Internal Audit
Being the Corporate Conscience: Where are the Boundaries?
3
INTERNATIONALE TRENDS
Why It's Important to Have a Seat at the Table
VIDEO
Source: The IIA AuditChannel.tv
4
IIA GLOBAL 2014
180.000 MEMBERS
46.724 EUROPE35.533 ASIA / PACIFIC
190 COUNTRIES
108 INSTITUTES
41 EUROPE18 ASIA / PACIFIC
160 CHAPTERS
5
IIA GLOBAL 2014
180.000 MEMBERS
46.724 EUROPE35.533 ASIA / PACIFIC
190 COUNTRIES
108 INSTITUTES
41 EUROPE18 ASIA / PACIFIC
160 CHAPTERS
6
GLOBAL TRENDS & EMERGING ISSUES
Challenging times with increasing Stakeholder (Board / Executive Management / Regulators) expectations identifying gaps to meet their expectations
Do we have the adequate skill sets / knowledge / know how to fill in these gaps?
Globally stable / slightly increasing IA resources IA activities / focus is changing / moving fast New and more diverse competences are required &
career pathways are enhancing 3LoD Model – lines of defense are blurring New survey “The Pulse of the Profession” 2014
Source: Richard Chambers GC 2014
7
THREE LINES OF DEFENSE MODELL
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GLOBAL TRENDS
2014 Internal Audit Plans – changing priorities
from financial reporting controls / audits to risk focused, RM processes > beyond accounting / financial reporting
KPIs (Internal Auditor Online / Magazine April 2014) – performance measures
9
VALUE PROPOSITION IAFOR STAKEHOLDERS
INTERNAL AUDITING =ASSURANCE, INSIGHT,AND OBJECTIVITY
Governing bodies and senior management rely onInternal Auditing for objective assurance and insighton the effectiveness and efficiency of governance,risk management, and internal control processes.
10
Feedback / Results Global Council Dubai 2014
Global Council – Essential / important role within the Governance System of The IIA
Global results impact global projects / initiatives and committees activities
Feedback 2013 – Update 2014
Therefore active participation is key to the evolving role of our profession!!
Dubai 2014 – record with more than 80 Institutes represented!
11
Feedback Global Council Dubai 2014
1) IIA Global Strategic Plan - current 5 strategic goalsProfessionalism + Membership / Value Proposition
Advocacy + Governance + Financial
Feedback
Stakeholder expectations (external) are increasing / moving fast - emerging trends
Competition with other organizations
Enhance communication between IIA HQ / NIs
Differing expectations between IAs : Stakeholders
Advancing the brand / awareness of the IIA Standards, certifications and the value added by IA!
12
Results Global Council Dubai 2014
2) Reassessing the IPPF
Difficult to measure the awareness of the IIA Standards
Overall more adopted within more affluent Institutes / Financial Services Industry / Public Sector
QA Standard is the one at least adopted
Diverse / diverging opinions & views globally on IIA Standards
too basic / fundamental / minimum requirements
fit exactly
Maturity model IIA Standards required and those which are recommended and aspirational
13
Results Global Council Dubai 2014
3) Project Umbrella – expanding IIA ServicesMarket Research January 2014IA role is expanding / extending to the 2nd line of
defense Know how gaps / inadequate knowledgeOnline survey on expectations globally Leading practices and evaluation tools (84%)Standards & Guidance (78%)Benchmarking data (69%)
Objective: Develop concepts & plans globally if and how The IIA can extend its services and products to RM and RM assurance!
14
Results Global Council Dubai 2014
4) Advocacy Strategy – Promoting the IA professionand The IIA Brand
Local conferences / roundtables with Stakeholders / events / individual & personal contacts are the most effective ones success and achievements depend on the maturity level of the IA profession locally / NI / Country
Messages? Value proposition of IA / 3 LoD / Good Corporate Governance / strong ERM / IIA Definition & Standards & Code of Ethics
Success / Impacts not easy to measure!
15
Feedback Global Council Dubai 2014
5) Membership Value Proposition
Sharing of experience how to increase number of new members - to maintain / membership renewals – diversify members locally
Similar local strategies were noted (like offering discounts for members)
Increasing services for CAEs
16
IIA CERTIFICATION
IIA Certification
CIA – 118.485
CRMA – 13.348
CCSA – 6.043
CFSA – 5.897
CGAP – reengineering project
IA Leadership Program: „Qualification“
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IIA CERTIFICATION
IA Leadership Program: „Qualification“
Leadership qualification for CAEs
Target audience
a) Aspiration for future CAEs
b) Career CAEs
c) New CAEs
Requirements
a) CIA + 5 Y of professional experience as IA
b) 15 Y leadership experience , 3 Y as CAE
c) 15 Y leadership experience, current CAE
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IIA CERTIFICATION
IA Leadership Program: „Qualification“ Assessment
3 written exams (3 to 4 hours each)
Panel – presentation & questions
90 minutes panel interview
Panel – experienced CAEs already passed the new leadership program
Online tests / face to face or via Webex
English language
Timeline
Announcement in July 2014
First exam August 2014
First presentation / interviews December 2014
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FIT & PROPERCERTIFICATION
Importance of professional training & development for Internal Auditors
(Source: Enquête 2014)
Various sources for training and development are used:
Educational trainings and seminars of NIs are dominating no changes recognized during the last 3 surveys (2008 – 2011 – 2014)
Inhouse trainings and seminars - IA tools & techniques as well as general education on diverse topics
20
IIA GLOBAL WHAT´S GOING ON 2014
IPPF Relook Task Force
Umbrella Project
Certification Suite & Leadership Qualification
IIA International Conference 2014 / London 6 – 9 July“Time to Make the Connection”
Global Strategic Plan 2015 – 2019 / August TF
CGAP Reengineering Project / Task Force / market research study started in April and already closed
CBOK / Common Body of Knowledge 2015
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IIA GLOBAL WHAT´S GOING ON
CBOK 20152 Global surveysPractitioners / Internal Auditors Launching 2, February 2015
Stakeholders Approx. 20 NIsProtiviti as the strategic partnerSurvey and interviews with AC / Board
membersLaunching fall 2015
We would kindly ask you to support the CBOK STUDY 2015 to reach a new record!!!!
22
IPPF RELOOK TASK FORCEBackground
Evaluation of the whole framework not the content but the structure valid for the next 8 to 10 years
Reasons
Evolution of the Internal Audit Profession future aspect
Enhancing expectations from Stakeholder impacts and implications
“Pressure” from outside the profession to The IIA RAISE THE BAR!
Possible impacts
Definition - update under discussion
Principle based
Industry related guidance
23
IPPF RELOOK TASK FORCE
CURRENT FRAMEWORK
24
PROPOSED FRAMEWORK
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ECIIA EUROPEAN ACTIVITIES
Advocacy: Key to Internal Audit's FutureVIDEO
Source: The IIA AuditChannel.tv
26
ECIIAEuropean Confederation of Institutes of Internal Auditing
VISION
ENHANCING GOVERNANCE THROUGH INTERNAL AUDIT!
MISSION
PROMOTING THE INTERNAL AUDIT PROFESSION AT THE EUROPEAN LEVEL
PROGRESS TROUGH SHARING!
27
ECIIA from 1980 until today - History of ECIIA
1980 formal cooperation – IIA Portugal / Germany / France / UK & Irland / Norway / Benelux
1981 foundation
TODAY
37 National Institutes / Countries
> 40.000 Internal Auditors
28
ECIIA from 1980 until today - History of ECIIA
1980 formal cooperation – IIA Portugal / Germany / France / UK & Irland / Norway / Benelux
1981 foundation
TODAY
37 National Institutes / Countries
> 40.000 Internal Auditors
29
ECIIA Activities / Priorities
1) ADVOCACY
Promoting our profession towards European Institutions and Stakeholders
Issuing feedback on consultation papers / reaction to professional topics under discussion on an European level
Influencing European initiatives and projects
Cooperation with selected Stakeholders / Institutions
2) COMMUNICATION
European Governance Magazine – twice a year / Website and distribution to relevant Stakeholders / Institutions
Launch of new website in fall 2013
30
European Commission
ECB
Public Affairs Committee
Business Europe
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ECIIA ADVOCACY
Objective: INFLUENCING the following Institutions
Promote good corporate governance and appropriate recognition of Internal Audit in European regulations and Corporate Governance codes
1. European Parliament
2. European Commission
3. EBA – European Banking Authority
4. European Central Bank
5. EIOPA – European Insurance and Occupational Pensions Authority
6. ESMA – European Security and Markets Association
32
ECIIA ADVOCACY
Objective: COOPERATION with the following Institutions
Build relationships with key Institutions interested in Corporate Governance
at European level and organize common events, make common publications…..
7. Ferma – Federation of European Risk Management Association
8. EcoDa – European Confederation of Directors`Associations
9. EUROSAI
10. European Issuers
11. Business Europe
12. FEE – Federation des Experts Comptables Europeens
33
ECIIA PUBLICATIONS
Making the most of the IA function (ecoDa
2012)
Corporate Governance Insights (2012)
Guidance on the 8th EU Company Law Directive (FERMA)
The Future of Corporate Governance
The Role of IA under Solvency II (2013)
Improving Cooperation between Internal & External Audit
34
ECIIA / EU Background 2014
EU Level – News
2014 – election year
Priorities on Financial Reporting und Auditing
Corporate Governance
Enhancing Transparency
Strengthen involvement of Stakeholders
Financial Reporting / Auditing - “Audit Reform”
New Directive on “Non-financial reporting”
Green Paper actions plan no impact on Internal Audit
EBA – European Single Resolution Mechanism for banks / Recovery Plan
EIOPA - Solva II / Implementation guidelines
35
ECIIA Activities 2014
ECIIA & FERMA – further cooperation in issuing common publications
Update of the “Guidance on the 8th EU Company Law Directive -monitoring the effectivness of internal control, internal audit and risk management systems – Guidance for Board and Audit Committees” (2010)
Working group already implemented, consisting of Volunteers / NIs ECIIA and FERMA
Publication by 10 / 2014
Audience / target group: Board / Audit Committee/ listed companies / small to medium sized companies
ECIIA & EIOPA – new publication from the working group starting with April 2014
ECIIA & ECB – new publication of the (newly formed) Euro Banking Working Group - post implementation review of the Basel Committee guidance on IA
36
ECIIA Activities 2014
Consultation paper on the guideline “Non financial reporting” for large companies new task force implemented in May
Finalization of the EUROSAI survey results & publication
Feedback – already sent to NIs – on the FEE discussion paper “The future of audit and assurance”
Various presentations of the current ECIIA President / Vice President (PA C.)
New MoU with EUROSAI will be signed in June
Update contact list – EP / EC – after election
Improving communication with NIs
PROMOTING THE INTERNAL AUDIT PROFESSION AT THE EUROPEAN LEVEL
37
Enquête 2014
Highlights of the Enquête 2014 results:
Extended scope of activities / responsibilities
Blurring of the three lines of defense (RM) IA is taking over RM activities ICS?
Short term IA planning (1 Y)
Annual evaluation of the Audit Universe -by trend
38
Enquête 2014
Audits on Corporate Governance compliance focus on potential conflict of interests
Responsibilities for fraud investigations differ between industries
Professional competence and knowledge for Internal Auditors is enhancing and key to the profession
Shorten the time period between on site audit / report writing and issuing the final IA report
39
Enquête 2014
Standardized and formalized escalation procedures during follow up audits areincreasing
Three-Lines-of-Defense-Modell is very well recognized within organizations
Results on QM:
2014 – about 61% of the surveyed organizations are having in place a systematic QM process
2004 – about 35%
40
Enquête 2014
KEY PERFORMANCE INDICATORS:
Customer satisfaction - Board / AC / Executive Management
Knowledge & competences of IA
Fulfillment of the IA Plan
Customer satisfaction – auditees
Certificate / attestation of external reviewers
Quality Management (according to IIA Standards)
41
Enquête 2014
Topics / Issues relevant for our profession today and within the next 5 years:
Continuous-Auditing and
Cloud-Computing
Future Outlook
„Audits on ethics and code of conducts “ and
„Data Mining“.
Source: Enquête 2014
42
SUMMARYChallenging future for the Internal Audit
Profession?
Increasing effectiveness & efficiency of IA activities –enhancing & evolving expectations of our Stakeholders!
TAKE THE OPPORTUNITY & CHANCETO SHAPE THE FUTURE OF OUR PROFESSION !
43
QUESTIONS?
44
QUESTIONS?
45
Angela WITZANY
46
47
THANK YOU FOR YOUR ATTENTION!
0
Challenges of Internal Audit
Sona Ishkhanyan, MBA, CIABoard Member of IIA-Armenia, Regional Audit Coordinator at ProCredit Holding(Armenia, Ukraine, Georgia)
1
Overview
Short historical overview
What are the main challenges of IA today?
What can we do to overcome these challenges?
Final points
2
Evolution of IA
Started emerging 1940s
Lawrence Sawyer described IA as “eyes and ears of management”
Initially there were simple scope and reporting relationship
With post WW II economic boom the expectations and scope of IA changed
3
Evolution of IA
IA definition adopted by IIA in 1999:
Internal auditing is an independent, objective assurance andconsulting activity designed to add value and improve anorganization’s operations. It helps an organization accomplishits objectives by bringing a systematic, disciplined approach toevaluate and improve the effectiveness of risk management,control, and governance processes.
4
Evolution of IA
Role of IA significantly increased
In 2002 (Sarbanes-Oxley Act) IA exposureand value was enhanced (although mainfocus was shifted to compliance issues)
In 2010 the IIA once again beganadvocating for the broader role of IA toalign it with IPPF philosophy.
5
IA challenges
General /enterprise level challenges
Lower / department level challenges
6
Enterprise level challenges
Alignment with stakeholder’s expectation Positioning and recognition of IA within the
entity Relationship with “C” suite Independence and objectivity of IA Scope of IA (compliance only, or something
more?) AC’s support for IA
7
Enterprise level challenges – what can be done?
Communicate the cost of audit observations and the greater cost of not responding to them.
Explain the regulatory effect of the nonconforming process.
Communicate savings (in time and money).
Ensure management knows that internal audit helps lowering business risks and helps improving systems and processes to find and reduce waste AND SAVE MONEY
8
Department level challenges
How to do things in IA?
◦ How much to audit (objectives and scope)?
◦ How much time IA needs?
◦ How much resources IA needs?
◦ How much to communicate and how to have balanced report?
◦ How to deal with difficult auditees
9
Department level challenges – what can be done?
Agree the scope of audit initially with management and even with AC members (when possible)
Focus on risk related and important areas vs. trying to cover everything
Prepare the audit plan and schedule the audit considering availability of process owners, ongoing or planned changes of the process, available IA resources, etc.
Be well prepared for audit.
Have adequate resources: qualified personnel with necessary skill set (knowledge, expertise, communication skills, etc.)
10
Department level challenges – what can be done?
Delivering balanced IA reports
Identifying relevant findings
Setting relevant corrective actions
Following up on corrective actions after audit is completed
What to do when management
11
Department level challenges – what can be done?
Delivering balanced IA reports
Identifying relevant findings
Setting relevant corrective actions
Following up on corrective actions after audit is completed
What to do when management “pushes back”?
12
Department level challenges – what can be done?
Include not only issues but also positive assertions in the audit report
Identified findings need to be closely analyzed and evaluated before presenting to management
Provide reasonable, clear, precise, measurable recommendations and corrective actions
13
Department level challenges – what can be done?
Increase management‘s awareness on potential issues that can raise from old, not resolved findings
Try to set up monitoring system from management on implementation of open issues (i.e. Follow-up committee)
Try to understand management point and level of risk appetite. At the end management is the one who takes the decision – not the IA.
14
Final Points
Nothing happens overnight
It takes time and a lot of efforts
IIA has huge role in changing the perception and positioning of IA at shareholder level
IIA has also big role in organizing training and continuous education possibilities for IA staff
15
Thank You!!!
Networking Break
10:50 - 11:10
Practical aspects of the 3 lines of defense model
Laszlo KOVESDIMBA, Board member of IIA Hungary, Director of Internal Audit AUCHAN Hungary
Taste of Internal Audit International Conference,
Contents
• Introduction of Auchan Group
• The 3LoD
• Company specific practical aspects
1
Taste of Internal Audit International Conference,
Auchan Holding
2
AUSSPAR
AUCHAN GROUP
HYPERS SUPERS
IMMOCHAN ONEY BANK
E-COMMERCE
AGAPES CATERING
SPECIALISED STORES
DIY SPORT
CLOTH HOUSE HOLD
CAR REPAIR
Petrol stations
Taste of Internal Audit International Conference, 3
AUSSPAR
DIY SPORT CLOTHING HOUSE HOLD
CAR REPAIR NORAUTO
GROUP
Taste of Internal Audit International Conference,
In the focus : whole Auchan Group
Taste of Internal Audit International Conference,
5
Szeged
Kecskemét
Székesfehérvár
Debrecen
Budapest
Szolnok
Hypermarkets in HUNGARY
Miskolc
Taste of Internal Audit International Conference,
3LoD
6
Taste of Internal Audit International Conference,
1st defense line
Self-assessment system
• Computer aided tool
• Questionnaire defined by Internal Audit
• Frequency and topic defined by local management
• Results can be analysed specialists (Security Dir, Check-out Dir, Logistics experts)
• Internal Audit – Supports the tool (administrator)
– Facilitates execution with inspection know-how
– Attends meeting where global results presented
7
Taste of Internal Audit International Conference,
2nd defense line
• Financial Control
• Security
• Petrol station
• Quality
• Fresh-product traditional professions
• Supply chain experts
• Buying Office Controlling
• Payroll consultant
8
Taste of Internal Audit International Conference,
Risk Assessment
9
• Key business risks analyses
• Matrix of Group, country and site (hypermarket) level risks
• Risk-appetite of top-management: Cost/ benefit ratio
• Feed-back on trend of changes from 2nd line partners
Taste of Internal Audit International Conference,
3rd defense line
10
• A strong and decentralized Internal Audit team
– in each country
– in each activity
• A proactive team acting as a business partner
• Increase consultancy activity – where value should be added
• An active player in fighting against fraud
• Audit assignments
– based on a real risk assessment
– in sync with each company priorities
• Continuous support provided by Corporate Audit and local specialists
Taste of Internal Audit International Conference,
Risk based auditing
11
Internal audit reports
Benchmarking
Authorities Insurance report
Self-Assessments (1st line)
Supervisory Board Audit Committee
External auditors
Setting scope, period and location
of audit missions
Other control bodies (2nd line)
Taste of Internal Audit International Conference,
Reporting
Standard addition in our report template: A "residual risk graph" in audit summary reports to better evaluate issues
Allocation of IA resources 2008 Budapest Probability
Low
Risk
+
High
Risk
+
-
-
Risk #1
Risk #2 Risk #3
Risk #4
Taste of Internal Audit International Conference,
Reporting All Auchan IA teams rate the level of internal controls by including an "audit opinion" on their reports.
Definition of audit opinions used in Auchan:
Excellent : Internal controls are comprehensive, well documented and are efficiently applied.
Good : Basic controls are in place. Their efficiency is satisfactory and permanent.
Unsatisfactory : Several basic controls are missing or incomplete. Financial or operational risks are significant. Prompt corrective actions are required.
Unacceptable : Internal controls are weak or inexistent. Financial or operational risks are very high. Immediate corrective action is of the utmost importance.
Allocation of IA resources 2008 Budapest
Taste of Internal Audit International Conference,
Who receives the IA reports?
• Executive summary report: – the country top management – in Corporate HQ: CEO, CFO, Cost Controller,
Chairman of Country "Supervisory Board", and the Corporate Director concerned by the audit scope
– KPMG lead partner (for financial- and IT-related reports)
• Detailed report:
(including audit findings, associated risks, recommen-dation, action plan and follow-up of last mission) – concerned operational management – country top-management – KPMG lead partner (for financial- and IT-related reports)
Allocation of IA resources 2008 Budapest
Taste of Internal Audit International Conference,
IA shall be a teacher, not policeman
15
Taste of Internal Audit International Conference,
Defense lines must work together !
16
Taste of Internal Audit International Conference,
If you have any question, you can contact me:
17
László Kövesdi
Mobile: +36 30 606 3017
0
Communication Skills for (Internal) AuditorsRobert CornelisseDe Nederlandsche BankRI, RE, CISA, EMIA, Director at European Institute for Audit Professionals
1
Practical issues
• Introduction
• Not all sheets will be discussed explicitly– Also for background information
2
Compentence Framework
3
IIA Competence Framework
Skills Taxonomy
Cognitive Behavioral
Technical
Analytical
Appreciative
Personal
Interpersonal
Organizational
4
Skills explained
• Technical– Following defined routines with some mastery
• Analytic– Problem identification or task definition and the structuring of prototype
solutions or performances
• Appreciative– Making complex and creative judgements, often in situations of ambiquity
• Personal– Handling oneself in situations of challange, stress, conflict, time pressure and
change
• Interpersonal– Securing outcomes through interpersonal interactions
• Organizational– Securing outcomes through the use of organizational networks
5
Internal Audit
6
IIA Definition of Internal Auditing
• Internal auditing is an independent, objective assurance and consulting
activity designed to add value and improve an organization’s operations.
It helps an organization accomplish its objectives by bringing a
systematic, disciplined approach to evaluate and improve the
effectiveness of risk management, control, and governance processes.
Source: The Institute of Internal Auditors Professional Practices Framework
7
Image of auditors in organizations
?
8
Roles of Internal Audit
Source: GEB Business Solutions
Partner
Relationships
Policeman
Compliance Assurance ....... and Consulting
9
Financial / Compliance / Operational / IT AuditsFinancial Compliance Operational / IT
Objective Attest to the fairness of financial statements
Determine the adherence to policies, procedures, laws, and regulations
Evaluate and improve
the effectiveness, efficiency, and economy of operations
Information primarily for
Stockholders Regulators Management
Direction of Audit
Looking Back Looking Back Looking at the present and to the future
Audits based on
Financial reporting objectives such as IFRS
Corporate standards of business conduct;
internal policies; specific laws and regulations
Mission, vision, and
objectives of the
organization and it’s
management
Examples of audits
Annual audits performed by public
accountants - may be supported by specific internal audits
Contract audits; standards of business conduct reviews; audits by banking and other regulators
All other audits such as those of departments,
processes, information systems and other functions
10
Audits compared
Mono-aspect
audits
(e.g.
Financial /
Compliance)
Operational / IT
audit
Organizational
study
Phrasing of the question
Model of reference
Datacollection
Phrasing of the question
Model of reference
Datacollection
Given Not given
11
Approaches for Communication
12
‘Natural order’
Organisation
Relation
Auditor
Act in the interest of
Act in the interest of
13
The challenge…
‘Internal client’
Which preferred style has this person?
Auditor
Skills:• Listen• Observe• Analyse• Judge• Associate
Who influences the outcome?
Which auditrole is requested by this
person?
ContentProcedureInteraction
Emotion
Which style do I have?
Who contacts can I involve
Which auditrole do I prefer?
14
Johari Window
• Communication model that can be used to improve understanding between individuals– Developed by Joseph Luft and Harry Ingham
– ‘Johari’ comes from Joseph Luft and Harry Ingham)
• Two key ideas behind the tool that individuals– can build trust between themselves by disclosing information about
themselves
– can learn about themselves and come to terms with personal issues with the help of feedback from others
15
The four windows…
• 1 Public self– Things we know about ourselves and others know about us
• 2 Hidden self– Things we know about ourselves that others do not know
• 3 Blind self– Things others know about us that we do not know
• 4 Unknown self– Things neither we nor others know about us
16
Known
By Self
Unknown
By Self
Known
By Others
Unknown
By Others
Ask
Tell
Open/Free
Area
Shared
Discovery
Blind
Area
Others'
Observation
Hidden
Area
Unknown
AreaSelf-
discovery
1 2
3 4
Self-disclosure/Exposure
Feedback
Solicitation
17
Introduction Communication
18
5 types of information flows in an organization
Incoming
informationInternal
communication
Clients / auditees
Peers
Policymakers
19
Downward communication
• Relatively easy to manage
• Ensure staff know what their job is
• Keep staff informed about changes
• Communicate orally, then follow up in writing
20
Downward communication
• Staff information needs– Job responsibilities
• What is my job?– Performance feedback
• How am I doing?– Individual needs
• Does anyone care?– Work unit objectives, results
• How is my unit doing?– Vision, mission, values
• Where are we headed?– Empowerment
• How can I help?
21
Downward communication
• Mechanisms– Job descriptions
– Training
– Instructions
– Memos, meetings, emails
22
Upward communication
• Hard to manage
• Boss must be willing to listen– Especially to bad news
• Boss must take time to listen
• Staff must be willing to share– Especially bad news
23
Upward communication
• Mechanisms– Short, written weekly notes summarizing activities and problems
• Boss must provide feedback– Regular staff meetings to discuss activities
– Staff copy relevant emails to boss
– Visit staff’s workplaces
– Keep your door open
24
Horizontal communication
• Necessary to ensure coordination, avoid “islands” or “information silos”
• Encourage/require staff to communicate among units
25
Diagonal communication
• Can be formal– E.g. teams
• Can be informal
• Build cross-departmental teams
• Encourage friendliness and informality
• Encourage informal interaction
26
Conversational styles
• Each individual has their own distinct style of communication
• There are seven different major conversational styles– Dominant
– Interruptive
– Manipulative
– Polite
– Creative
– Sarcastic
– Passive
27
‘Noise’
• Factors that negatively influence the effectiveness of the communication and the interpretation of the conversation
• There are four common sources of ‘noise’– Personality
– Lack of skills
– External factors
– Receivers past experience
28
Personality
• The senders past experience provides a frame of reference for sending the message such as beliefs, attitudes, and personality.
• These factors may vary from person to person and can distort the message
29
Lack of skills
• The sender lacks sufficient skills in encoding– Can not put their thoughts into words
30
External factors
• The communication can have noise, such as other people making a lot of noise, a bad telephone connection, as well as speech impediments (stuttering), or distracting mannerisms
31
Receivers past experiences
• The receiver’s past experiences form a frame of reference for receiving and interpreting the message which can affect the decoding process
32
Good and bad listeners
Poor Listeners• Tunes out dry material
• Tunes out poorly delivered communications
• Enters into argument
• Listens for facts
• Takes many notes
• Fakes attention
• Distracted easily
• Resists difficult material
• Reacts to emotional words
Good Listeners• Asks what can I get from this?
• Ignores delivery problems and withholds evaluation
• Doesn’t judge immediately
• Listens for themes
• Takes few notes
• Body language shows involvement
• Fights distraction
• Uses heavy material to exercise mind
• Interprets emotional words
33
Barriers in Communication
34
Identifying barriers
• Communication is about overcoming barriers
35
Barriers to communication
• Job definitions
• Procedures
• Institutional barriers
• Hierarchical barriers
• Interpersonal barriers
• Language
36
Barriers to communication
• Job definitions– Whose job is it?
– What is my job?
37
Barriers to communication
• Procedures– What should I do with this?
– What is the correct work flow?
– Who should I give this to?
38
Barriers to communication
• Institutional barriers– I don’t have to give you information
– I am not allowed to give you information
– I don’t understand you
39
Barriers to communication
• Hierarchical barriers– My boss doesn’t listen to me
– My staff don’t talk to me
– Your boss won’t let me talk to his staff
– Need to delegate responsibility and authority
40
Barriers to communication
• Interpersonal barriers– Personality differences
– Cultural barriers
– Educational level
– Technical language
41
Barriers to communication
• Language– English/فارسی
– Technical terms
– Time needed for translation
– Accuracy of translation
42
Other common barriers to communication
Apparent cause Practical Example
Physiological Message in an internal report not received due to blindness.
Psychological Message from external stakeholder ignored due to ‘groupthink’
Cultural Message from organisation misinterpreted by members of a
particular group
Political Message from internal stakeholder not sent because individual
is marginalised
Economic Message not available to a public sector organisation due to
lack of resources
Technological Message not delivered due to technical failure
Physical Message cannot be heard and visual aids cannot be seen by
some members of the audience
43
Physiological Barriers
• Physiological barriers to communication are those that result from the performance characteristics and limitations of the human body and the human mind.
44
Human memory processesa three-stage model
45
Reading process
Long term memory
Package understood
People are useful to a team when they
possess the Belbin’s basic assumption is
that people in teams fulfil several roles,
that nobody is strong in all roles and that
the roles that one fulfils are partially
determined by one’s personality and
partially by the situation. In a team it is
important that the members are
complementary to each other. The area in
which one is weak can be complemented
by another member and vice versa. In
addition, Belbin states that some
frustrations that arise within teams
strengths or the characteristics that are
required and are not a duplication of those
that are
bufferS
ho
rt t
erm
mem
ory
(S
TM
)
text
Not ready to handle
Ready to handle
Package deleted
46
Human memory
• The sensory memory acts as a kind of temporary collection-point for incoming stimuli of all kinds; this limit is often identified as 6–7 separate pieces of information
47
Channelling information
48
External channels
• External– Media
• Memo
• Newspaper
• TV / radio
49
Internal channels
• Goal– Establish mutual contact
• Types– Visual
• Eye• Literacy level remark
– Prose– Document– Quantitative
– Auditive• Ear
– Kinesthetic• Skin, muscles
– (Gustatory and olfactory)• Nose and taste
50
Recognize the internal channel (words)
Visual Auditive Kinesthesic
Watch Say Touch
Focus Sound Robust
Imagination Deaf Rough
See Discuss Embrace
Color Speechless Hot
Observe Listen Slippery
Notice Harmony Move
Insight Music Cold
Perspective Noisy Hold
Vague Remark Weak
51
Recognition … (breathing)
• Visual– upper-chest breathing
• Auditive– diaphragm breathing
• Kinestetic– ventricular breathing
52
Recognition … (voice and tone)
• Visual– Rapid
– High-pitched voice
• Auditive– Melodious
– Ritmic
• Kinestetic– Lower
– Softer
53
Recognition … (eye movement)
• Visual– Up, unfocused
• Auditive– Straight ahead, to the left or down
• Kinestetic– Down or down to the right
54
Interpretation of observations
• Observations are always subjective
– Raising / Social background
– Culture
– Education
– Training
– Specialisation
55
Essence of communication
A B
information
withhold informationlate transmission
reduce accessibilitypresentation
information
withhold informationlate transmission
reduce accessibilitypresentation
selection and interpretation
selective inputselective observation
selective memory
selection and interpretation
selective inputselective observation
selective memory
sender
coding
receiver
decoding
existing knowledge experiencestandards
preconceptionsview of situation
ideasfeelings
relationship with A
existing knowledge experiencestandards
preconceptionsview of situation
ideasfeelings
relationship with B receiver
decoding
sender
coding
channels
seeinghearing
touchingsmellingtasting
+
channel noise
56
Danger ...
• We see things which are not there
• We don’t things which are there
57
Importance of non-verbal communication
7%
38%55%
Words
Linguistic
Body language
58
Non-verbal communication
• Proxemics– Interpersonal space
– Culture depending
• Chronemics– Timing of questions and pauses
• Kinetics– Body motion
• (Para-)linguistic– Non-vocal
• Expressions, head and eye movements
– Vocal• Rhythm, tone
59
Channelling informationWell-known
• Neurolinguistic programming– Auditive
– Visual
– Kinesthetic
– Gustative
– Olfactory
60
Transactional Analysis (TA)
61
Transactional Analysis
• A psychoanalytic theory of psychology developed by psychiatrist Eric Berne in the late 1950’s
• Very useful for – Analysing interactions with others
– Improving communication with others
62
Transactional Analysis
• A way of understanding behavior
• Studies decision and communications
• Ego (PAC - Parent/Adult/Child)
• Experiences “tape”
• Words, voice and gestures.
63
Transactional Analysis
• A method of understanding behavior in interpersonal dynamics
• A model for explaining why and how– People think like they do
– People act like they do
– People interact/communicate with others
• Provides helpful models for leadership styles
• Used with organizational development
• Used to help managers/auditors operate effectively within other cultures
64
Transactional Analysis can help you
• Respond to a person and situation more appropriately
• Build rapport
• Understand someone else’s needs
• Deal more effectively with difficult people
• Be assertive
• Understand how you behave and why
65
Ego Portraits
• People have favorite, preferred ego state, depicted by larger circle in a diagram
Parent Adult Child
P
A
C
P
A
C
P
A
C
66
The three ego states
• Parent– Critical parent – Behavior with evaluative responses that are critical,
judgmental, opinionated, demanding, disapproving, etc.
– Sympathetic parent – behavior with reassuring responses that are protecting, consoling, permitting, caring, etc.
• Child– Natural child – Behavior with probing responses that show curiosity,
intimacy, fantasy, etc.
– Adapted child – Behavior with confronting responses that express rebelliousness, pouting, anger, anxiety, fear, etc.
• Adult– Behavior with thinking, rational, calculating, factual, unemotional, etc.
67
Human Interaction Analysis
• A transaction = any interaction or communication between 2 people
• People send and receive messages out of and into their different ego states
• How people say something (what others hear?) just as important as what is said
• Types of communication, interactions– Complementary
– Crossed
– Ulterior
68
IntonationsIt’s the Way You Say It!
Placement of the emphasis
• Why don’t I take you to dinner tonight?
• Why don’t I take you to dinner tonight?
• Why don’t I take you to dinner tonight?
• Why don’t I take you to dinner tonight?
• Why don’t I take you to dinner tonight?
• Why don’t I take you to dinnertonight?
• Why don’t I take you to dinner tonight?
What it means
• I was going to take someone else.
• Instead of the guy you were going with.
• I’m trying to find a reason why I shouldn’t take you.
• Do you have a problem with me?
• Instead of going on your own.
• Instead of lunch tomorrow.
• Not tomorrow night.
69
Types of Transactions
• Complementary– Occurs when the sender of the message gets the intended response
from the receiver
– Result in more effective communication with fewer hurt feelings and arguments
• Crossed– Occurs when the sender of a message does not get the expected
response from the receiver.
– Result in surprise, disappointment, and hurt feelings for the sender of the message
• Ulterior or Hidden– Occurs when the words seem to be coming from one ego state, but in
reality the words or behaviors are coming from another
70
Transactional analysis
• Problem transaction– Critical Parent < > Critical Parent
– Critical Parent < > Rebellious Child
– Critical Parent < > Adaptive Child
• Dangerous transaction– Nurturing Parent < > Adaptive Child
– Adult < > Free Child
• Opportunity– Adult < > Adult
– Free Child < > Free Child
71
Dealing with Difficult Customers
• Keep ‘adult’ ego state in control of yourself
• Don’t get defensive, argumentative, emotional
• Don’t take it personally
• Move cautiously, stay cool, remember complementary transactions and strokes
• Do not need to take continued abuse
• If handled well (e.g. didn’t embarrass customer, allowed them to take something out on you), can turn out to be positive later
72
And finally …
73
Memory retention and its effects
5% lecture
30% demonstration
50% discussion group
75% practice by doing
90% teaching others
10% reading
20% audio visual
74
Residual messagesWe only remember…
• 50% of the information we listen to immediately after we hear it
• 35% after 8 hours
• 25% of this information after 2 ½ months
Closing Remarks
Ara ChalabyanMBA, FCCA, CRMA, President of IIA-Armenia, CAE of CBA
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