A company’s culture is crucial to its employee retention, satisfaction, and effectiveness in teamwork. It’s therefore vital for organizations to ensure a healthy culture and working environment if they want to sustain long-term success. Internal auditors help their organizations ensure a thriving workplace by performing an organizational culture audit. Learn more about what it is, how it’s done, and why it’s so important.
Summary
An organizational culture audit is an evaluation performed by internal auditors to assess the alignment of an organization's values, beliefs, behaviors, and practices with its strategic objectives—providing clear, data-driven insights to identify misalignments, mitigate risks, and drive systemic cultural transformation for improved outcomes like productivity and retention.
What is an organizational culture audit?
A culture audit evaluates an organization’s values, beliefs, behaviors, and practices as one indicator towards the overall health of the organization. It gives company leadership insight into the current workplace culture, helps identify problematic areas in the working environment, and helps strategize an actionable plan for improvement.
Internal auditors perform the culture audit, reviewing the workplace environment, values, and behaviors to see how well they align with the organization's mission and strategic objectives. It highlights what is working, where there is room for improvement, and how closely the day-to-day reality aligns with the company's goals.
What is the purpose of a culture audit?
Effective organizational culture audits clearly identify and analyze any misalignment between the values of an organization and the actual behaviors. They also provide clear, actionable insights into how a company’s culture impacts outcomes like productivity, retention, employee satisfaction, and innovation.
Specific benefits include:
- Early detection of problems: Identifies workplace issues like misaligned values or communication gaps, allowing for proactive solutions
- Better engagement and retention: Enhances employee motivation, commitment, and loyalty
- Improved performance: Boosts productivity, collaboration, and overall organizational success
- Better decision-making: Data-driven insights refine policies, processes, and practices
- Alignment with organizational goals: Ensures that the workplace culture supports the company's mission, vision, and strategic goals
- Leadership development: Highlights areas where leadership behaviors and management practices can improve
- Risk mitigation: Exposes gaps in culture, engagement, and communication styles that help avoid behaviors leading to operational problems
A culture audit provides a diagnosis for the organization, dissecting not only the company’s proposed values and goals, but also the deep structure of its daily team operations. This comprehensive overview allows leadership to address behavior and drive systemic cultural transformation. It’s not just beneficial for morale, it’s crucial for the bottom line, as companies with strong workplace cultures can achieve up to four times higher revenue growth than those with weaker ones.
Essential characteristics of culture audits
To get a balanced overview of the organization’s workplace, internal auditors conducting a culture audit typically investigate both subjective values and the actual, observable conduct by employees and contractors. The audit often revolves around addressing the potential for behavioral risk from employees, vendors, and other stakeholders that can impact operations and reputation.
Areas of focus include:
- Employees and teams: This involves gauging how employees feel—whether they are motivated, satisfied, and connected to the company’s mission. Auditors assess employee attitudes and team dynamics to uncover behaviors that either support or detract from the desired culture.
- Processes and practices: This evaluates whether organizational processes and policies reflect the culture the company is striving to create. Key areas include leadership styles, communication practices, recognition and rewards, and how policies affect the workplace.
- Workplace environment: This considers both the psychological and physical environment. Factors range from office design to how employees are emotionally supported.
How to plan and perform an organizational culture audit
An effective culture audit follows a specific process from planning through execution and reporting.
Planning the engagement
First, the internal auditor (or team of auditors) works with the organization to define and understand its set goals and values. The auditor must also gather abundant information about the company’s workplace and culture, including documents like value statements, strategic business plans, organization charts, employee surveys, codes of conduct, training materials, etc.
Conducting risk assessments
The auditor has the responsibility of unbiased risk assessment, identifying any areas that may make the organization susceptible to cultural-related incidents. Risks may exist at any organizational level, making the risk assessment step vital to the effectiveness of the final culture audit.
Performing the engagement
Internal auditors use data from past audits and the information gathered during the planning process to develop an action plan for the engagement. This could take various forms, such as integrated, targeted, or top-down methods. Each of these strategies allow the auditor to identify relevant risk factors and map the audit results according to those areas.
Reporting a culture audit
Reporting a culture audit can be nebulous since organizational culture can be more conceptual than tangible. That said, reporting is necessary and extremely important to the success of the engagement.
While results must be communicated with the board and company leadership, internal auditors may report multiple ways. They could, for example, hold a meeting with the board to discuss audit results, in addition to a written report. This approach gives the auditor the ability to conserve the sensitive nature of some cultural issues, while still being open and communicative with company leadership.
Advance in internal auditing
Performing an organizational culture audit is just the beginning of internal audit services. Learn more about success as an internal auditor by understanding the gold standard in internal audit credentials: Certified Internal Auditor.
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