Independence is a term may in #internalaudit like to push the boundaries on, but when we do we can come off as arrogant or self-righteous to others in the organization. In this week’s #jammingwithjason #internalaudit podcast I discuss the difference between independence and objectivity, why objectivity is more important than independence, and you are not really as independent as you may think.

As with all episodes, you will also walk away with some practical tips you can start using today.

This week’s episode is brought to you by the Chief Audit Executive (CAE) Forum.

If you are a CAE that wants to join a community of like-minded CAEs where you can have frank discussions about the challenges and opportunities of being a Chief Audit Executive (CAE), while getting practical advice to increase your executive presence, influence and value as a trusted advisor to your organization, check out what they have to offer and book your no-obligation call to see if it’s right for you: https://jasonmefford.mykajabi.com/caeforum

Did you also know the CAE Forum comes with a $100,000 guarantee, so its a no-risk investment in you and your team to elevate the status of internal audit in your organization.

Jamming with Jason is the #1 #internalauditpodcast in the world has interviews and discussions (jam sessions) relevant to Chief Audit Executives and professionals in #internalaudit, risk management, and compliance.

Transcript

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Jason Mefford: Welcome to another episode of jamming with Jason. Hey, welcome back. My friends, today I wanted to talk a little bit more about independence.

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Jason Mefford: So this is one of our jam sessions where it’s really like it’s just me and you talking about a particular topic.

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Jason Mefford: And the reason that I’m you’ve heard me talk about independence before, but we’re going to talk about it again because I just see so many people

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Jason Mefford: You know, focusing on trying to push for this independence and it’s actually hurting you. And so we’re going to go through and talk a little bit about that today. And I’m going to give you some tips on

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Jason Mefford: How I think you need to kind of change your mindset and do things a little different.

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Jason Mefford: Now before we get into our topic today I wanted to let you know that today’s episode is being brought to you by method associates.

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Jason Mefford: And the chief audit executive forum. So if you’re a chief audit executive, you know, you’ve probably experienced some of these things.

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Jason Mefford: You feel like you’re a trusted advisor, but the executives in your organization don’t really treat you that way you know you’re struggling to get resources and budget.

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Jason Mefford: You know, there’s a lot of stress and pressure from it and you’re not really INVITED TO THE BIG KID table.

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Jason Mefford: In your usually excluded from some different executive meetings. Now I know this because I actually experienced a lot of these same things in my own career.

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Jason Mefford: And so, you know, usually chief executives are looking for some help. Well, the chief audit executive forum actually helps you with some of these things.

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Jason Mefford: By providing support throughout the year. There’s 10 to 12 group video calls each year.

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Jason Mefford: You get thought leadership and best practices from others in the group. And it really is an exclusive community.

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Jason Mefford: It’s not a networking group, but it’s actually an online and offline community where you connect and develop lifelong friendships.

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Jason Mefford: You know where you’re actually able to talk authentically with other chief executives, see what they’re doing bounce ideas off of them.

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Jason Mefford: And really get kind of the learning and everything that you need to be able to take you to that level where you are actually viewed as a trusted advisor.

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Jason Mefford: So if you are a chief audit executive, make sure to click on the link below and go out and sign up for your free No Obligation call to be able to

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Jason Mefford: Talk about whether the chief audit executive forum is right for you. You know, I know, for me personally when I was a chief audit executive

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Jason Mefford: This was the type of executive program. I was looking for that I could not find so I’m really excited that the chief audit executive forum is here.

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Jason Mefford: In that through this community really, we can take internal audit to the next level in our organizations and really as a profession.

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Jason Mefford: So again, make sure, click on the link below if you are a chief audit executive go out, take a look at the information and then click on the button on on the website to schedule your call.

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Jason Mefford: Alright, so let’s get back to talking about independence. Now a little bit about myself. One of my favorite movies is The Princess Bride.

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Jason Mefford: So if you’ve ever seen that movie. It’s, it’s one of those kind of cult classics, where there’s a lot of a very quotable lines and people who love this movie, you know, we’ll sit around and just kind of quip off some of these different quotes

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Jason Mefford: And there was a there was a couple of characters in this vicini and indigo that I want. I want to kind of talk about to bring this into it because

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Jason Mefford: You know this character vicini throughout the movie he kept saying inconceivable and conceivable every time something what happened. He would say inconceivable.

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Jason Mefford: And finally, at one point in the in the movie and there in this scene vicini you know says inconceivable again.

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Jason Mefford: And the indigo character turns to him and he says, I do not think that word means what you think it means because you know the Cindy was using this word in a lot of different ways and

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Jason Mefford: A lot of times it was actually inappropriate how he was using it. So the reason that I bring this up is because you know independence.

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Jason Mefford: I do not think that word means what you think it means and why do I say that because I hear all the time when I’m talking to people they will use the word independence.

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Jason Mefford: In the incorrect way. A lot of times when people are talking about independence, they’re actually meaning objectivity.

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Jason Mefford: So I wanted to just before we get into today’s discussion, just step back and talk again about the difference between independence and objectivity.

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Jason Mefford: Now in internal audit. We talked a lot about this because right in the definition of internal auditing. It says we are an independent and objective.

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Jason Mefford: Assurance and consulting function. So it uses both of those terms. Now the easiest way to remember the difference between these two is to substitute those words for other words

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Jason Mefford: When you think independence, think of the word freedom when you think objectivity, think of the word on biased. Okay, so that’ll help you kind of keep keep track on this.

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Jason Mefford: So independence means you are free to put on your audit plan what you think needs to go on there.

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Jason Mefford: You’re free to audit the areas of the of the organization that you believe need to be audited, you’re free to test it in the way that you need to and report on the results in that way.

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Jason Mefford: Because you are independent from management. That’s where this you know reporting relationship to the board comes in. And so that’s really kind of what is meant by independence.

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Jason Mefford: Objectivity means you are unbiased and that you because of that the results of your work and the way in which you report that is unbiased, meaning

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Jason Mefford: You don’t have any conflicts. You’re just saying, or telling and giving the facts that you found

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Jason Mefford: Now in order to provide assurance, we must be objective, but you do not have to have independence in order to provide assurance. You just have to be

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Jason Mefford: Objective now again in our profession. A lot of people, you know, really push for this independence, because they want that direct reporting relationship to the board.

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Jason Mefford: And I get it, I understand, and in certain situations, maybe five or 10% of the time.

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Jason Mefford: It’s important for internal audit to go directly to the board if management is not doing what the board is expecting them to do.

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Jason Mefford: Or if management is misrepresenting to the board. What is actually happening. That’s one of the benefits of our function is to be able to say, well, that’s not quite

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Jason Mefford: What’s going on that’s not quite what we see and be able to have that direct communication. Now again, as I said, that happens very, very infrequently.

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Jason Mefford: In fact, it’s maybe only five or 10% of the time, but as a profession. We’re just pushing so hard for independence that sometimes it ends up actually hurting us

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Jason Mefford: And here’s why. When you push excuse me for independence so hard. Often we come off seeming arrogant and self righteous to other people in the organization.

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Jason Mefford: And here’s the reality. You are not as independent as you think you are. Okay, next time that you get a paycheck that you get paid look down and see who paid

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Jason Mefford: Your salary. It was the company. So because of that, you are not completely independent of the company, you’re not like an external auditor, who is outside of the organization.

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Jason Mefford: We are a part of the organization. And we just have to, you know, realize that admitted come to terms with it. It’s okay.

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Jason Mefford: Because you can still provide good assurance work if you are objective. Okay. Now, how does it come to seem like we are arrogant or self righteous

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Jason Mefford: This is how it often works, we count. We go out, we do our own risk assessment we decide what’s going to be in the audit plan.

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Jason Mefford: We might take some feedback from other people. But we pretend like we know better. Okay. And that’s the way it comes off to a lot of people

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Jason Mefford: Is we say, well, you really don’t understand the risks in this organization. So I’m going to go out at this area instead. Now when you say things like that to people.

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Jason Mefford: Again, most of the time it’s probably not even true, okay, because I would I would put to you that a manager who is responsible for a particular part of your organization.

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Jason Mefford: If they’re a good manager, they understand the risks in their area very well or they would not be a good manager.

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Jason Mefford: They may not use the same language. You do. They may not, you know,

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Jason Mefford: Think the same way that we do, but believe me they understand the risks because the only way for them to achieve their objectives is to overcome those risks.

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Jason Mefford: So first thing that we’ve got to stop doing is making it seem like we are arrogant or self righteous when we’re pushing for independence. Okay.

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Jason Mefford: Now, how does that end up showing up. Well, it shows up in a couple of different ways. And I’m just going to give you a couple of scenarios.

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Jason Mefford: You know facts may have been changed slightly to protect the innocent or guilty but I work a lot with Chief on an executive, so I’m talking with them a lot.

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Jason Mefford: And in one conversation. You know, it was discussing about, you know, developing the audit plan. And what do I do about our Enterprise Risk Management assessment because

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Jason Mefford: You know what they do is really kind of at a higher strategic level and it doesn’t really meet my needs. That was what I what I was told.

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Jason Mefford: And so I said, well, what do you mean it doesn’t meet your needs. And this person said, well, I need to be auditing these lower level operational risks.

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Jason Mefford: And they’re more concerned about the strategic risks. Okay, now when I said that, ding, ding, ding, the light bulb should have been going off in your head.

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Jason Mefford: Because, first off, what do you mean, we think that the lower level operational risks are more important than the strategic risks.

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Jason Mefford: That’s a misalignment if you go to your CEO or other C level executives, which ones are they most concerned with the strategic level, not the low level operational risks. Right.

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Jason Mefford: So my question back was do you really believe those lower level operational risks truly represent the highest risks to your organization.

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Jason Mefford: And of course the answer is no. So then the next question is, if you don’t believe they’re the highest risks. Why is that what’s on your audit plan.

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Jason Mefford: Well, that’s always kind of what we’ve done. That’s kind of what we’ve been expected to do right

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Jason Mefford: And so again, at that point, if we, if we take that sort of a position, then what we end up doing is we look like, or we appear to others, like we know better.

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Jason Mefford: Okay, we would be much better served if we would actually take that feedback and focus more on those strategic risks. That’s where we should be spending our time.

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Jason Mefford: Now again I realize there’s other things that we have expectations to do, but we should be focusing more and more of our attention on the strategic level risks.

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Jason Mefford: Another conversation that I had kind of started off, similar to this, you know. But again, it kind of got back to this. Well, but I need to

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Jason Mefford: You know, say what’s on my audit plan. It has to be what I say, I can’t really take the feedback from the executives and just kind of do what they want me to do.

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Jason Mefford: And my question back was, why not, if those executives feel like these are the most important things where they would like you to spend your time why

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Jason Mefford: Can you not do that. And the concern was independence. If I do what they’re asking me to do, then I’m not independent.

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Jason Mefford: And okay that is just totally wrong. First off, and it also sets up that arrogant and self righteous kind of feeling of I know better than you do.

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Jason Mefford: And I can’t, you know, accept or do or you take your feedback because I have to decide, independent of everything that you’re doing.

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Jason Mefford: Now, do you realize how ludicrous that actually sounds because really what it means is if you have that mindset and you are focused so much on independence.

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Jason Mefford: You’re going through the motions of doing a risk assessment for something that probably doesn’t really matter to the to the total organization, you know, at the high strategic key level objective standpoint.

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Jason Mefford: And instead you’re focusing on, you’re getting feedback from people, but then you’re ignoring it.

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Jason Mefford: Well, if you ask somebody for their input and then you ignore them and you ignore their feedback. How do you think they’re going to perceive you.

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Jason Mefford: They’re going to perceive you as being arrogant and self righteous and why did I just waste my time talking to that person.

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Jason Mefford: So again, if we are doing these lower level things we go off, we do a great audit. We think it’s wonderful. We come back and give them the audit report and the executives go, yeah, big deal.

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Jason Mefford: Then we get all offended. Okay. But we shouldn’t be on its offended, we should realize we’re actually the cause of that problem.

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Jason Mefford: If instead if we had focused more on actually listening to their feedback taking those suggestions and including more of that in our audit plan that’s what they want.

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Jason Mefford: But again, if you’re focused on this independence and we know better your audit plan is going to be out of alignment with what management is concerned with

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Jason Mefford: And again, as I said at the top of the podcast. This is hurting. A lot of you because what ends up happening is the more of that work you do.

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Jason Mefford: That the executives don’t really value they start to wonder why we even have internal audit.

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Jason Mefford: And what I will tell you is standing up and saying, well, we have to because you know there’s these standards and every company needs to have internal audit and here’s the value of internal auditing.

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Jason Mefford: That’s not going to go very far when those when those executives have to make decisions about where to invest their money. And so this is why we’re seeing

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Jason Mefford: You know, certain internal audit shops downsized outsourced. You know, people losing their jobs because we’re not providing the value that’s expected by management.

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Jason Mefford: Now as long as the the expectations of management are the same as the board, we should be doing that.

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Jason Mefford: If there’s a significant disconnect between what the board wants you to do and what management wants to do.

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Jason Mefford: Then we need to have a three way discussion between management, the board and us and actually figure out what the hell it is that we’re supposed to be doing.

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Jason Mefford: Okay, that’s the discussion we should have that’s you know what a chief audit executive should do stepping into that executive presence.

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Jason Mefford: And actually having those difficult conversations when they need to happen instead of trying to hide behind this word that we call independence and saying, No, no, no, no, no. I know better than you do. I’m going to do it my way. It’s not going to go over well in the long term. So,

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Jason Mefford: Hopefully that’s helpful. My friends, so let me let me kind of wrap up by by kind of giving you some suggestions for how to improve or start making some changes to this.

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Jason Mefford: And again, I’m telling you this because I just see over and over again people getting themselves in trouble hurting themselves individually in their career.

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Jason Mefford: And really hurting the profession by focusing and pushing so much for this independence that we appear to be arrogant and self righteous

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Jason Mefford: So here’s some things to think about focus more on objectivity than independence.

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Jason Mefford: Okay, we need to be objective in the work that we do. We need to be objective in the conclusions that we give, we don’t have to be independent.

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Jason Mefford: And in fact, you’re much less independent than you think you are. Anyway, and it’s okay if your objective, you can still provide good assurance. So that’s the first one.

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Jason Mefford: Second one is, get rid of this. I’m better than you, and I know better than you kind of attitude. Okay, just get rid of it. Because like I said before,

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Jason Mefford: In our profession we feel like we understand some things better than others. And sometimes we do depending on the domain.

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Jason Mefford: But we need to be much more humble and much more open to feedback and and and input from other people in the organization or else we’re going to continue to have this this view of being arrogant and self righteous

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Jason Mefford: Third one, we need to ask for more feedback. So, you know, instead, next time that you’re doing a risk assessment or you’re starting starting a project.

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Jason Mefford: Actually taking the time to really sit down and authentically ask for feedback from management in that area. Now they already know some of the things that are going wrong and they would probably like your help.

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Jason Mefford: But if you come in with this arrogant kind of an attitude of, we’re here to audit you and we’re going to find these sayings, you know, that’s not going to go over very well, they’re going to withhold things from you.

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Jason Mefford: If instead if you’re much more collaborative and the way that you’re doing it, you know, hey, what are some areas that are, you know, giving you grief.

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Jason Mefford: You know, what are some things you’d like to see changed. Would you like some help with that. That kind of an attitude is going to go much, much further.

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Jason Mefford: And when you get that feedback. The fourth one is we actually need to start doing work in some of those areas.

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Jason Mefford: Move up the risk ladder. If you will stop worrying about so many of the low level operational risks that honestly a second or first line of defense group is probably already looking at

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Jason Mefford: And raise our sights up more to the strategic issues that management is concerned about and management is trying to fix.

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Jason Mefford: The more we do that, the more value, people are actually going to see in what we do. Okay.

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Jason Mefford: By what we do and how we act that is going to give you the credibility and the trust and respect of other people, way, way more than trying to say I’m independent I’m certified. I’m a member of blah, blah, blah. So you must listen to me.

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Jason Mefford: What you do and how you do it is much more important. So again, my friends. That’s why I wanted to talk to you again today about independence.

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Jason Mefford: You know, make sure go out there, focus more on objectivity than independence and realize it’s okay to give up some independence.

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Jason Mefford: Get rid of this. I’m better than you kind of attitude that appears to others to be arrogant and self righteous

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Jason Mefford: Ask for more feedback and then actually take that feedback and move up the chain so that we’re dealing more with the strategic, risk, risk issues in our organization.

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Jason Mefford: So with that, my friends, I’m signing off this week and I’ll catch you on a future episode of jamming with Jason. Have a great week.

In this week’s #jammingwithjason episode I speak with Frank Coleman about lessons he learned from being a CAE. We discuss various topics including: having think skin, getting a horizontal spread of experience, not losing your cool, and two sides to every story. We also discuss the HR side of being a CAE and how to surround yourself with a great team and dealing with change.

So much wisdom from Frank in this episode.

Frank Coleman is the CAE of Farmers and Merchants Bank in southern California. He has successfully done a turn-around of internal audit in his organization (including rebranding), and built teams as well as relationships across multiple organizational levels and stakeholder groups.

Take a listen to the episode to learn Frank’s career path and advise on becoming a CAE.

#internalaudit #chiefauditexecutive #internalauditpodcast

Transcript

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Jason Mefford: Welcome everybody to another episode of jamming with Jason hey we’re doing one of my favorite episodes again where we’re we’re learning lessons from a chief audit executive

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Jason Mefford: And today I have Frank Coleman with me and he is the chief audit executive of farmers and merchants bank here in California. And so welcome my friend to the podcast.

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Frank Coleman: Thank you. Glad to be a part of this. Thanks for asking me

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Jason Mefford: Now i think it’s it’s kind of funny, too, because, you know, even though we’re we’re remotely doing this, you’re, you’re literally two miles down the road for me.

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Jason Mefford: Which is kind of funny. We’re in the same I chapter anyway. We’ve known each

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Frank Coleman: Other

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Jason Mefford: But it’s, it’s nice to have you on. So maybe

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Jason Mefford: You know, just give people kind of like a one minute overview of kind of how you progressed in your career to now being a chief audit executive, I think you’ve been there at the bank now about eight years doing this.

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Jason Mefford: A year ahead of audit. Before that, I believe, too. Right. So just kind of let people know what kind of got you to this point in your career.

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Frank Coleman: Sure, absolutely. Man, again, thanks for letting me share this with everybody. And actually, I have a deep background in public accounting. I am a CPA certified in North Carolina.

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Frank Coleman: And I spent 13 years of KPMG doing financial statement on it’s primarily financial institutions. And then also, one way for three years, came back and did another four years in a

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Frank Coleman: General management consulting group. Okay, where we focused on financial services and strategic planning profitability projects, things of that nature.

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Frank Coleman: Really did a lot for me from the standpoint, I was probably half the time helping to execute projects as well as other half. I was outselling I was, you know, cold calling and doing things like that. So we need thick skin because you get totally

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Frank Coleman: And so that’s one of those sort of maturity moments that really can help you find that little bit more about yourself and other people. And so then I ended up with Laconia

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Frank Coleman: Internal audit and there

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Frank Coleman: I’ll call it their commercial banking arena and a lot of lending a lot of credit risk management functions.

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Frank Coleman: commercial banking corporate banking, things of that nature. And as we all know, obviously Wachovia imploded. I was there when it happened.

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Frank Coleman: Was able to survive the acquisition by Wells Fargo. And so between while Caribbean wells. I spent eight years there when I left wells. I was on their wholesale banking group and I covered

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Frank Coleman: Multitude of, again, very similar. What could he do, he’s a lot of the same functions, but also while but a year into it. I added in wholesale banking the accounting and finance function.

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Frank Coleman: And what’s really interesting gave me in additional view, not only to

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Frank Coleman: You know, typical bank functions corporate commercial government banking, things of that nature.

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Frank Coleman: But it gave me the accounting and finance groups, the group controllers, the head of finance for wholesale banking. So what what’s been happening over time is a really nice horizontal spread of experience.

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Frank Coleman: That played very well into the role on that today. Now obviously had to moving from Wells Fargo out here, you know, eight years ago, obviously I go from a mega bank to a bank that we’re

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Frank Coleman: Just under 8 billion in assets and we’re primarily in Orange County and LA County, but it was also quite the challenge to come in here and as you know you interview for a job. You’re not going to learn everything during the interview.

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Jason Mefford: That I’ve got the not gonna tell you everything in the interview.

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Will take the job.

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Frank Coleman: And literally my first day was day one of a three week target exam by the regulator’s with the primary target internal audit and I just walked in the door.

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Frank Coleman: Well, there were some things that preceded my joining the bank that warranted. The attention model by the regulators. I won’t go into it here.

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Frank Coleman: But it didn’t take me very long to realize that this, this is a total gut job I tell a lot of people blew it up started all over again, there’s no owner’s manual user’s guide or anything like that. This is all about using your experience, your trials and tribulations.

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Frank Coleman: As well as you’re thrust into a lot of HR matters I inherited a lot of people that had no business being an internal want nothing against them as people.

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Frank Coleman: The fit was not there and I needed to move them all, which I did that wholesale I pretty well clean house.

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Frank Coleman: And had to start all over. So it’s not just the methodology, you’re concerned with and getting that up and running, but it had to be completely overhauled.

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Frank Coleman: It’s the people part of it. Who’s going to help me go down this path. And so that’s what I had to do and you know in even that’s it’s not perfection. You know, there were

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Frank Coleman: Will call them hiring mistakes along the way. Hey, we’re only human. We’re not perfect, but you have to mush all this together to, you know,

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Frank Coleman: To make this happen and this time I’m on the executive committee so I’m answering to, you know, the other

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Frank Coleman: You know, executives in the bank. I’ve got the audit committee and then when I’m in front of the board. I’ve got them. Then I got the regulators. They were frequently looking at me.

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Frank Coleman: Frank House progress going, how are you doing here, I get an MRI, I get an hour and like because it takes time. You know, this is, this is not a snap your finger. Boom. I’m done kind of thing.

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Frank Coleman: I would say about the three year mark. I was really beginning to feel pretty comfortable with what we had going and we were, we had worked very hard at our stature.

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Frank Coleman: And, you know, and I also realized that for this particular being there was a real education needed just part of the culture that I walked into

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Frank Coleman: The awareness and understanding and appreciation of risk and controls, it became very apparent early on in, like, Okay, I’ve got a almost like a third prong going here in education.

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Frank Coleman: And because I have to help people understand what it is we’re doing an internal audit, but I think with my background in my experience it. Allow me to demonstrate

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Frank Coleman: Fairly quickly that I know what I’m talking about. And so that in where we are today. We were in excellent place in the bank today. Now I’m in. I’m in here, eight years now. And so, a lot has happened, but

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Frank Coleman: I remember stepping in the first day and my predecessor became had become the risk manager and he wasn’t very helpful.

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Frank Coleman: Just hey, it is what it is. And so, you know, I’m having to ask a ton of questions. And that’s one of the things when you roll into something like this.

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Frank Coleman: You got to be willing to ask the questions and realize you don’t have all the answers right off the bat fact you’re better off not trying to act like you’re the know it all. And you need to learn. Listen, absorb

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Frank Coleman: Every, every organization has its own culture. Well this one is, you know, got its own culture. I had to learn that too. And how do I, you know, sort of,

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Frank Coleman: Take what I need to do in moving into that culture, but also get that culture to start changing so

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Frank Coleman: A lot, you know, that’s the kind of a long winded answer to what you originally asked for, but just kind of give people an idea of just, you know,

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Frank Coleman: Part of what’s involved when you step into something like this because it’s not your normal

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Frank Coleman: Oh, you’re the next season, he’s retiring. You know, it’s a it’s a nice standing practice, it’s it’s humming along

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Frank Coleman: That’s one aspect of being a CEO, then you get like what I’ve walked into and there are others CA. He’s out there that have done the same thing that

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Frank Coleman: There’s a lot of work and you know you. There’s a lot of sometimes taking heat and label, you know, pushing back and wow what man. Oh, it was never like this and like we’re not talking about prior on it that’s out the window that’s gone ahead to and you also realize that you also gotta

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Frank Coleman: You can’t lose your cool. You gotta be. You really have to keep your cool and be very professional about what you’re sharing with everybody because believe me as, as we’ve gone through these audits.

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Frank Coleman: There and say the first three or four years we had a lot of less than satisfactory audits and you don’t always make a lot of friends that way.

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Frank Coleman: So, but you know it, but it was a really good education for everybody.

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Frank Coleman: But they also realize that you know I’m pragmatic and very reasonable about things and I’m going to listen and that was one of the big things I learned coming into this john. Not that I was not

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Frank Coleman: I was. I’ve always been a good listener. But boy, you really, I really had to do it here just to understand

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Frank Coleman: The other side of the story, there’s always two sides to every story yeah on it’s got its story, the business partner has its story and then I have to step back and put the two together and say, Okay, here’s where we are.

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Jason Mefford: Well, yeah. And I think it’s

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Jason Mefford: It’s always good because you just gave like a whole bunch of really good information for people. So sometimes I like to just kind of do a little timeout and summarize a few of the, the key points.

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Jason Mefford: And then, and then I wanted to kind of take a couple of these things that you said maybe go a little bit deeper on that.

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Jason Mefford: Because I think, you know, again, just your experiences, similar to a lot of other chief out of executives right

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Jason Mefford: You may have public accounting experience you had to step into that, you know, CPA, but you’ve

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Jason Mefford: You’ve done more than

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Jason Mefford: Just audit.

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Jason Mefford: So this is another thing because I

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Jason Mefford: Think, sometimes people worry that, you know, if I if I come into audit late or if I start audit and I go somewhere else. I’ll never be able to come back. And so, you know, again, people that’s off the table right

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Frank Coleman: In fact,

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Jason Mefford: The best CA’s usually have. I love that term a horizontal spread of experience you’ve you you know what it’s like to be in the other chair, and that makes you a way better auditor as well. Right.

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Jason Mefford: In I love you know about having to have thick skin. Because ultimately, you know, you may not realize until you get into it.

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Jason Mefford: Yes, you gotta have thick.

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Jason Mefford: Skin as an executive and so if you’re, you know, easily charged easily offended. Those are probably some skills that you’re going to need to work on before you get to that point.

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Frank Coleman: I would agree with that and, you know, in a little more about this bank. It is a we’re privately held

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Frank Coleman: And we have fourth generation brothers running the bank. So it’s a family bank and that gets down that cultural path.

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Frank Coleman: And what I’ve learned with both the brothers and they’re two very different personalities. But what I’ve learned with them is

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Frank Coleman: Again, getting back to that comment I made about being, you know, pragmatic being reasonable just being. Matter of fact, with them.

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Frank Coleman: I’m not, I’m not gonna sit here and jump on the desk and Pam on this on the desk and say it’s got to be this way.

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Frank Coleman: It’s really more. Matter of fact, like, Okay, here’s here’s really where we need to be at the end of the day now. But then I got to turn around and listen to them, you know, they’re going to come back at me.

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Frank Coleman: I’m totally cool with that and and now we’ve got some other executives to in particular that have come from outside the organization they joined the bank at graduate

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Frank Coleman: And then we have another executive has been with the paint something to five years, these are you know CFO highly respected.

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Frank Coleman: And so, you know, I’ve got all that going on too. So you’ve got a mix of people who

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Frank Coleman: This is all they know and we have a lot of very tenured people here. This is all they’ve ever known as this bank and this is how we do banking.

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Frank Coleman: But then now we brought on a decent number of people, including myself, who have seen banking and other places in typically in many other places.

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Frank Coleman: Happened to do it with, you know, the two mega banks, but also my audit days at KPMG I did a ton of community banks in thrifts back when they were still around.

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Frank Coleman: So I’ve been able to take all of that. And that, to me, that is the answer that horizontal view. I’ve been referring to

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Frank Coleman: Because that was a comment that see a CEO made to me probably about a year, year and a half after I got here and things were beginning to really casual and take root

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Frank Coleman: He made the comment, you know, we’re just talking and he said, that’s what we liked about your background, you were you had that landscape view that horizontal view, instead of being siloed.

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Frank Coleman: And it’s not. But then in not a knock if you’re in the big mega banks, where now you can transfer within on it.

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Frank Coleman: But you’re going to need to do that if you’re aspiring to be a CEO, you’re going to need to broaden your horizons, you’re going to need to spread yourself. And if you stay locked in a silo.

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Frank Coleman: Okay, realize what that’s going to do to you. And in terms of your mobility. If you want to move into being a CA. You got to realize

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Frank Coleman: That it’s going to take more than just state sticking in that Silo, you are going to have to do some movement.

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Frank Coleman: Either within that internal Otter organization or you may switch banks and go into another internal audit career. So that’s been my experience. And for me, it’s played out very well to have this really landscape view that I’ve enjoyed. Yeah.

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Jason Mefford: Well, and I like I like the the imagery that you use to, you know, the fact that there’s really no owner’s manual to this.

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Jason Mefford: Because I want to kind of talk about this because I think sometimes people

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Jason Mefford: Think there’s one right way to do everything and you must do it this way and I get so many people that are like, just tell me exactly what to do and it’s like

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Jason Mefford: You know that that’s the wrong question. Folks, right, you got it. You got to answer a whole bunch of other questions because, you know, again, like you said you were with KPMG for quite a while.

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Jason Mefford: You know, saw lots of things there went to walk O V and Wells, both of those places have different cultures.

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Jason Mefford: So you had to get used to the culture at both of those big mega banks, but then you get thrown into, you know, a smaller community bank.

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Jason Mefford: With a very steep tradition. I mean, farmers and merchants is an icon here in the Orange County LA area, you know, from this area.

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Jason Mefford: And but because of that, you know, like you said, You’ve got fourth generation privately owned family business.

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Jason Mefford: And, you know, working for a billionaire and a privately owned family business myself that brings in, you know, a whole bunch of dynamics, especially with the different generations. So

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Jason Mefford: You know, what are some things you know, and you’ve already almost kind of given the answer.

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Jason Mefford: To some of this. But you know when when you walk in, because this is true if you’re a chief audit executive or even, you know, any anybody else when you walk into a new job. You know, there’s kind of some things that that you need to do to figure out what really needs to be done without

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Jason Mefford: losing your cool without, you know, making enemies of everybody to begin with.

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Jason Mefford: So, so, so what are some of the things because I’ve seen a lot of young executives kind of come in and think they know everything and start telling everybody what to do.

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Jason Mefford: And think things are going to change, like in six months and inevitably they fail right they end up getting outsourced or they whatever the term happens to be in their company.

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Jason Mefford: So what are some things you know again as as people are coming into this and you really got kind of that baptism by fire. You know, I think you use

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Jason Mefford: Something about, you know, the buzz saw coming at you. You know when you walked in there because there were certain things that needed to change. How do you find that out, how do you kind of work on a plan and keep that longer term goal instead of doing silly things in the short term.

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Frank Coleman: Well, when I walked into this. And so what I had to do for those people who maybe someday or get thrown into a turnaround situation which

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Frank Coleman: You know, if you get that opportunity. I mean, it can be very rewarding and realize there’s a heck of a lot of work that has to go into it and a lot of stepping back and thinking about

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Frank Coleman: Okay, what needs to happen here. Okay, I got to leverage my public accounting days my eight years and mega bank, you know, internal audit.

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Frank Coleman: And like, okay, what needs to happen here. So yeah, this sounds kind of simple but, like, for instance, I asked for the audit committee charter. Well, that’s pretty standard while I’m reading it. I’m like, Okay, now we got to start all over. I rewrote the audit committee charter and then I hired

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Frank Coleman: Somebody from KPMG out here. She’s a senior manager and initially coming in the door.

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Frank Coleman: She was literally my right hand person, almost like a deputy of sorts. And so what she and I then had to do we scrapped the the audit standards ever hear me if you want to call it standards they really weren’t

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Frank Coleman: And we had to build our what is what we now call our internal audit charter and standards we built that from scratch.

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Frank Coleman: And you’re you’re going out to the internet, you’re, you’re pulling down once you can I did that for audit committee charter and then

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Frank Coleman: The report format that we inherited was was awful. I mean it was just not meaningful at all we had. We scrapped that and developed a brand new report format.

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Frank Coleman: And that was much more meaningful. You got to put good quality information in there, we, we had an executive summary we we put scope information in there. We call them reportable issues key issues and matters requiring attention and then

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Frank Coleman: We originally call them observations we call the process enhancements nail those that don’t you know we just stick them in there, they’ll, they’ll affect the report rating.

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Frank Coleman: And like, okay, what is that meaningful information. There are business partners.

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Frank Coleman: Need in world, but I also got to think about, okay, the audit committee, the regulators KPMG there are outside auditors. Guess what they’re asking for is our audit reports, you know, things of that nature. So you’re doing that, but then also

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Frank Coleman: You know, I had to learn a lot of people go to because they did not measure up and I did that, three weeks into the job. And in fact, that was an interesting thing I did there kind of surprised a lot of people what I did.

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Frank Coleman: I get here and second day had a team meeting I introduced myself because the bank is not sent my resume out to my team. So guys, here comes my resume.

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Frank Coleman: You need to know about me your new balls. And so when I wanted to come across as being open and things like that that right off the bat, I said.

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Frank Coleman: I want each of you to schedule. I think it was like an hour with me. I want to get to know you better. And I want you to get to know me better

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Frank Coleman: And so everybody go to my calendar next two or three days, but also did I went to the director of HR and said, Can you give me a summary of everybody on my team. I want to know who I’m inheriting and well let’s just say there were some interesting information passed along to me.

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Jason Mefford: From HR. Yeah.

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Frank Coleman: In this was an audit group. And we’ve all heard this that you’ve got people who are literally almost both both feet in the parking lot, meaning the bat render the exit.

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Frank Coleman: You know what, let’s not do that, let’s just throw them in on it.

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Frank Coleman: And we’ve all experienced that where you just fill it up with kind of the, you know, the leftover, so to speak, people who aren’t cutting you for whatever reason.

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Frank Coleman: Elsewhere in an organization that’s what I inherited here. Well, I changed all that and unloaded just about everybody on here at it.

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Frank Coleman: And so I gather this information from the HR director here, they talk to me. I talked to them and then three weeks in, and you can call it the the St. Valentine’s Day, man.

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Jason Mefford: Oh, no.

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Frank Coleman: What I did was I hold everybody. And we had a team meeting and I said, I’ve made my decisions about who I’m going to

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Frank Coleman: Stick with for now and then those that you know need to move on. And I explained how I went about it.

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Frank Coleman: And, you know, it seems we don’t always realize the amount of let’s just call it HR matters and activity. You have to get involved in. It’s not just doing the audit work.

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Frank Coleman: There’s a lot of HR and this kind of scenario, you have to deal with and but I also wanted to be sensitive. I didn’t want to be

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Frank Coleman: In like I’m taking everybody out back and shoot them or anything like that. But what I did was I said okay for you people that made the decision, you’re not going to stay in on it. I think it was about a two and a half month period of time to say here’s what I’m gonna let you do

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Frank Coleman: During the next two and a half months and I gave him a drop dead date.

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Frank Coleman: I’m going to allow you the opportunity to look internally look externally. I’ll even make time available for you to go interview, whether it’s internally or externally and I’ll even

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Frank Coleman: Feel free to shoot me a resume and I’ll review it and sit down with you or take it for you. I’ve done a lot of that in my career.

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Frank Coleman: But there’s one catch all of this. If at any time during this two and a half month window. I feel like

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Frank Coleman: You’re, you’re not holding up your end of the bargain. I will fire you immediately I made that very clear. You have to do that if you’re going to do something like that.

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Frank Coleman: And so, um, I did it in two phases. They were your part. And it actually worked really well. And in the meantime, then I’m starting to hire new people, new people that are good qualified people

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Frank Coleman: In that even that took time. I mean, there’s nothing perfect about the hiring process, but I was starting to grow and build

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Frank Coleman: All of this. So I’ve got this HR thing going on. But I’m also, I need to build out a methodology and audit structure.

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Frank Coleman: And including reporting and and then the audit committee reporting, I can still remember my first audit committee meeting and I just I just

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Frank Coleman: did not look at what my predecessor did with the audit committee. It was awful. And then I went with here’s what I think initially I think is meaningful to the audit committee.

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Frank Coleman: I walked in there three people in the audit committee and the looks on their faces as I’m sharing this information.

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Frank Coleman: About all that and things. Obviously, they were not told before

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Frank Coleman: That it was just like this there as got bigger and they’re like, oh boy. We have been we’ve been missing some information in the past spring. Thank you so much.

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Frank Coleman: And so almost immediately and building trust with the audit committee and then and then you have to do the same thing, you know, as I say, I got here in January may of 2012

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Frank Coleman: The board approved the creation of the executive committee and I got placed on the executive committee right off the bat, so

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Frank Coleman: Then I’m

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Frank Coleman: Producing

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Frank Coleman: And so I got another group. All right, here’s what audit is all about. In fact, today, um, I actually present I’m making an audit presentation quarterly to the executive committee.

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Frank Coleman: And so, but in between there’s obviously a lot of other stuff going on. I don’t hesitate to push things to executive committee board. Whatever it takes.

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Frank Coleman: I’m pushing things out. So, you know, that’s a lot of what was going on, initially in this turnaround situation. And then on top of that you got the regulators.

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Frank Coleman: And you know they’ve got their expectations and demands and you know I’m getting I’m getting the MRI A’s. The MRIs and things like that, but then

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Frank Coleman: Slowly but surely began to see things improving and they saw it too. And they were becoming more complimentary and you know they have a job to do.

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Frank Coleman: And I get that. I understand that. In fact, we’ve got a really good relationship with the regulators. It’s Federal Reserve state of California.

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Frank Coleman: And we were really good place with them right now. And same for KPMG because they rely on us, not just for credit review which I have but also other kind of general you know type things that we do for them.

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Frank Coleman: You know, we’re not socks. So we do addition test work here. We do a ton of additional control test work for KPMG

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Frank Coleman: Among other things, during the course of the on and we do some Kosovo entity level control work and stuff like that. So, you know, you really got to get to the basics and build that

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Frank Coleman: Infrastructure that structure from which to grow and it’s not only for your staff goes you know that they’ve got to work that structure, they got to work within though that structure.

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Frank Coleman: But then, I’ve got to start communicating that out to all the different stakeholders and helping them understand. Here’s what audit is going to look like going forward.

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Jason Mefford: Yeah, so really you, you had to go through that education program with all those different stakeholders, and I think that’s, that’s one of the important things to you know that you’re bringing up in a CA role you have more stakeholders that you have to deal with.

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Jason Mefford: Okay, so you’ve got your employees and I want to come back and talk about employees. Again, just a little bit, but

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Jason Mefford: You’ve got employees, you’ve got the other executives. The other functions in the company right so you know you’re on the executive committee that’s

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Jason Mefford: That’s some of your key stakeholders right there right you know in your instance it’s family owned and yes I know some of those people are on the board, but there’s almost like

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Jason Mefford: Dealing with the family and dealing with the rest of the board almost sometimes becomes two stakeholder groups, depending, depending on your depending on your organization, right, because

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Jason Mefford: You know, sometimes there’s other family members that may not be represented on the board, but have a

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Jason Mefford: An investment in the company. And so sometimes there’s that side of it. You have to deal with as well.

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Jason Mefford: You know, obviously the audit committee is part of the part of the board or a sub component of it. But then, you know, like again and your, your situation, you have regulators and when you walked in the relationship with them, maybe wasn’t the best that’s probably one of the

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Frank Coleman: Reason it wasn’t really we’re in a much better place today. Yeah.

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Jason Mefford: And in it and it takes time. Again, right, like you said,

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Jason Mefford: You know, year and a half, three years, five years it takes time. So you have to be

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Jason Mefford: You know, patient and realize that that’s what happens. You know, I use the analogy of like a little speed boat versus like a big cruise ship. Well, even, even at a smaller bank, you’re still on a pretty good sized cruise ship.

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Jason Mefford: You can’t just turn on a dime it it takes a while, but I wanted to get back because I because I thought, you know, the experience that you had in the way that you dealt with the employees when you first came in, is a great thing to go just a little bit deeper into because

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Jason Mefford: I think sometimes, you know, and again. So for people that are listening, though. Thank you want to be a chief audit executive, but you hate dealing with the people side of the business. Probably not the role for you.

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Jason Mefford: So either you actually get good at it or get used to it or just realize that maybe a manager director level is better for you because there’s this

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Jason Mefford: Like a velvet glove kind of an approach to it, right, is that sometimes as an executive, you have to, you have to take a hard stance.

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Jason Mefford: But you also need to be compassionate and a human about the whole situation as well. Right. And so I love how you, how you dealt with your team to begin with.

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Jason Mefford: I mean, you could have come in, you know, and just started firing people left and right, that would have had a very detrimental impact, you know, both internally and everything else. I mean, it’s like Frank, the

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Jason Mefford: hatchet man or whatever you start getting nicknames. Right.

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Frank Coleman: That was the. That was the nickname my head. You hit it.

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Jason Mefford: Was it was a hat.

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Jason Mefford: But, but when you look at it, you know, again, it’s, it’s about having clear expectations and and setting those boundaries because like you said you were fair to the people you said, Look, you’ve got two

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Jason Mefford: And a half months. It’s not like you’re, you know, not going to be able to pay your rent next month. You’ve got two and a half months. I’m here to help you.

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Jason Mefford: Either transition within the bank or somewhere else. But I expect certain things of you. And if you and if you’re not willing to do that, then you know you’re not keeping up your end of the bargain.

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Jason Mefford: That’s it. That’s a great kind of compassionate, but yet firm way that’s way more emotionally intelligent than just had shooting people

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Jason Mefford: Literally right right now. I’m guessing to again by doing that.

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Jason Mefford: People felt that it was fairer, if you will, right i mean the the people that you went through and i and i know this was my case. And a lot of times, the people that I had to fire let go, whatever you want to call it helped them transition

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Jason Mefford: A lot of times they were grateful afterwards, even though it was hard going through it right

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Jason Mefford: And this is where I think, you know, sometimes the people issues are some of the hardest things you have to deal with an as an executive, but they’re also the greatest things as well.

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Jason Mefford: Sometimes you have to counsel people out

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Jason Mefford: But the developing of your talent and having a great team around you is a fabulous feeling. I mean, that was, that was the biggest part of the job that I loved.

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Frank Coleman: Oh, and I totally agree with that and where we are today because I’ve got four audit teams. And then when I

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Frank Coleman: Get that feedback back from business partners even regulators and KPMG or the audit committee.

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Frank Coleman: And they’re like you all are doing a really good job that you know that that report there you all found some really good stuff there, and we

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Frank Coleman: Want to try and instill in people is, okay, believe me, there auditors out there that have sort of that mentality.

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Frank Coleman: Gotcha mentality that doesn’t serve a real useful purpose. And if you’re aspiring to move up in their audit organization, the gods mentalities, you know, that ain’t gonna work. So, um, you know, what you gotta do is you got to look at it from the standpoint of

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Frank Coleman: We’re helping people do their jobs better

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Frank Coleman: And what does that translate into if they’re doing their jobs better that that’s a win for everybody, you know, their business unit.

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Frank Coleman: You know, roll up and then if you start, you start getting that message and it’s it’s filtering out throughout the organization.

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Frank Coleman: It kind of catches on and people realize that one audience, not the, you know, they’re not the big bad wolf or anything like that, you know, believe me, even today, we’re still putting out all the results that you know not everybody likes

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Frank Coleman: But we report what we find we don’t make this stuff up. We simply report what we find in the end we have truly view audit is evaluated. If done correctly, that we’re just helping you to do your job better if along the way. Speaking of the people aspect of it. This has happened here.

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Frank Coleman: We work with people who it’s obvious that that that role there in. Okay, that’s not a good fit.

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Frank Coleman: You know that, you know, they need to be off doing something else, let’s let’s recognize that as a bank and let’s help them.

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Frank Coleman: And if that in even if that’s to the point of okay maybe that their futures not here with this bank.

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Frank Coleman: And then maybe they just simply need to leave the organization and go off and find something that’s more amenable

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Frank Coleman: To, you know, their interest level and and because I’ve always said you know take things about a job. Enjoy. Whatever it is you do and make sure it’s a good fit.

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Frank Coleman: And if you can’t get to one or both of those you you truly do need to move on because what will happen over time is that’ll show up in your work effort and you will unfortunately you will eventually pay a price for that and

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Frank Coleman: You need to avoid that.

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Jason Mefford: Yeah, it shows up in your work effort, but it usually also shows up in your personal life.

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Jason Mefford: Because people

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Jason Mefford: People start experiencing stress or health issues or other stuff if if it’s not a fit and they know it and they’re not doing anything about it as well.

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Jason Mefford: So, you know, because then the pressures of work, start to start to happen more and that just carries over and so you’re right you know if it’s not a good fit. And you’re not enjoying it tend to move on. Right. There’s lots of jobs that are out there.

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Jason Mefford: You just may not be in the right fit for you. It might be the right job. But maybe it’s not the right manager that you’re reporting to

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Jason Mefford: Right. Or it might not be the right culture of the company or something like that. Well, go and find what is going to be that that good fit for you.

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Jason Mefford: But, you know, especially took it as you were talking about kind of rebuilding your team, you know, getting people in there that really could kind of do things and act the way that you needed them to you have to get that team in place.

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Jason Mefford: And, you know, get the right people on the bus, get the right people in the right seats and I’m trying to remember. I remember Jim Collins talked about that, but I can’t remember. Who else did. I know I’ve heard that several times.

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Jason Mefford: And then you can start going right because it’s going to take you that three to five years. I mean, that’s all it was the same way for me.

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Jason Mefford: But surrounding yourself with good people. And I think this is one of the things you know to give you kudos on that seems like you know I know people on your team, they’re happy, you know, and it’s and it’s it’s

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Jason Mefford: You know, the idea of kind of like like Sir Richard Branson says, you know,

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Jason Mefford: Take care of your employees.

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Jason Mefford: Your employees will take care of your customers. If your customers are taking care of revenues and everything is going to be taken care of. So

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Jason Mefford: We can even think the same way here. If we take care of our audit team and we build a good culture and we have that you know the right things going on within our team.

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Jason Mefford: Then our team is going to take care of our customers. Okay, if they just happened to be internal to the company, you know, but they’re these different stakeholders and if they’re taking care of right then everybody’s feeling good. Right.

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Jason Mefford: So yeah, good on you for that.

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Frank Coleman: It will preach appreciate that even, even when you hire good people. Surround yourself with that way they’re still gonna be movements and they definitely happen even with some of the folks. I’ve still got today that I’m

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Frank Coleman: Okay, I get that phone call or I’m in a meeting and somebody says, Hey Frankie. Got a minute and you’re like, Okay, all right.

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Frank Coleman: And it becomes a conversation around maybe something just kind of rubbed them the wrong way, for whatever reason, during the course of the audit or conversation or something like that.

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Frank Coleman: And I’m like, Okay, I’m not going to push back on them. I’m listening and gathering information. And then I said, Okay, thank you for this.

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Frank Coleman: I’m going to go talk to, you know, whoever you know about this and if you know I’ve even had situations where

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Frank Coleman: You know, it’s been one of my managers and course I go directly to them. But also, you know, bring the manager and if it’s one of my staff.

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Frank Coleman: And I’ll go to the manager first and say, okay, had this conversation with such. And so, all right, I’ve got their side of the story. Now, what’s our side of the story.

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Frank Coleman: As we all know, there’s two sides to every story.

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Jason Mefford: That was I was going to actually bring that up but you did a good callback on that right

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Jason Mefford: Because, because there is always two sides to the story. And so if you make a snap decision. You know, if you tell an executive. Oh, I’ll take care of it, you know, kind of thing without getting your side of it. It’s like

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Jason Mefford: They may be totally wrong or both of us may be totally wrong and something in the

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Jason Mefford: huddle is the right fit. But you don’t know until you’ve investigated.

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Frank Coleman: Right. And you know if there is something there okay knowledge it, and yet once you get through everything acknowledge it, you need to. Okay, if that employee needs some

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Frank Coleman: Whether it’s some coaching some counseling, whatever the case may be. You gotta deal with it.

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Frank Coleman: And don’t just think because your audit you know everything’s hunky dory mean there’s still people at the end of the day, we all are. And we’re human

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Frank Coleman: And you know they’re bad days. And hopefully, there are a lot of really good days, which usually there are, but you may have had a moment where

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Frank Coleman: He got away from you a little bit, then I’ve had a few of those. And once I talked to the employee, they basically said that and that

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Frank Coleman: Yeah, that one kind of got away from me a little bit like okay well I’m glad we’re talking about it. Now let’s talk about the next time, something like that might happen.

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Frank Coleman: Yeah, this is a learning moment for you and how to better handle that, you know, the next time around. So, you know, you have to do that and you can’t just sweep it under the rug, or just kind of hope it goes away. It’s

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Jason Mefford: A few

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Frank Coleman: Reasons my stature has just taken a hit Creedence has just taken a hit. And there’s also, it starts going down a path of trust when people come to me with what they think is good information.

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Frank Coleman: They’re trusting me to do something about it. And I do have quite a reputation here at the bank that when something does come up. I do.

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Frank Coleman: I don’t let it fester. I don’t park them in the colon or anything like that. I get right on it.

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Frank Coleman: Because everybody benefits and and you know the end of the day, and that that’s just something I’ve done my entire career, but really has played out very well here and to have that kind of reputation that people like.

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Frank Coleman: If they bring something to my attention. They know Frank’s going to deal with it great that that’s part of being a CEO. Yeah.

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Jason Mefford: Well, because that’s, that’s really that executive mindset and presence that that you have to have, you know, as

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Jason Mefford: As an executive. And again, that’s why we call it chief audit executive regardless of what the title is.

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Jason Mefford: But you need to be, you know, acting as an executive and sometimes that means doing things that are hard that we don’t necessarily want to do, but it’s part of the job. And like you said, the quicker you actually, you know, address it and deal with

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Jason Mefford: In you know from from an from an integrity standpoint. That’s how you develop the trust over time. Right, and that’s why again people, you know, it takes years to do this.

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Jason Mefford: And and you just have to continue to be consistent and how we’re doing it and showing up and listen to both sides of the story.

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Jason Mefford: You know, realize. People are people. And we’re dealing with humans. And that means there are sometimes emotions involved and you know that’s why again.

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Jason Mefford: The further up you go in the organization. You got to start working on your soft skills and if you don’t want to do that or you you you know, for whatever reason, don’t like it then executive level, probably not for you.

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Frank Coleman: Yeah, and you don’t want to. You don’t want to make it to an executive level and then have quote HR issues. I’ll say take you down.

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Jason Mefford: That that I’ve seen that as

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Frank Coleman: A good place to be.

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Jason Mefford: Now, and I’ve seen I’ve seen that so many times, because a lot of times people end up getting promoted up because of the technical expertise. Yeah.

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Jason Mefford: And we forget to look at the soft skills side of it and then something, you know, blows up and it takes somebody’s career down. So that’s, that’s why I keep preaching to everybody, soft skills soft skills soft skills, you know, it’s like

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Jason Mefford: You’re, you’re not going to make it. If you don’t, if you don’t do that.

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Frank Coleman: So, but I think in speaking of the soft skills. Also, we can’t lose sight of the verbal and written skills to extremely important, but as I like to say

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Frank Coleman: Thinking well on your feet. And as part of that executive presence, you really got to be able to do that because there can be

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Frank Coleman: Just a spot moment that you get a question or a reaction. I don’t care if it’s in a board meeting on a committee meeting executive committee, we have bi monthly manager meetings and

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Frank Coleman: From time to time, maybe once a year. I’m invited to to speak and those questions come from the floor. Oh, I’ve got the chief auditor up here.

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Frank Coleman: I’m gonna see if I can make him squirm. A little bit.

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Jason Mefford: Was that Bullseye that we were talking about before we started recording

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Frank Coleman: Exactly. I mean, that’s just like okay yeah I were the bullseye, I gotta be able to handle that moment. Yeah, and you know in again as part of that, don’t you know fly off the handle or anything like that, or say oh well that’s that’s wrong. We don’t do it that way.

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Frank Coleman: Okay, if there, if you need to acknowledge certain things about it, acknowledge them and share what you can, at that moment, and if you can’t fully answer it. That’s okay and circle back with that individual later and say, let me give you some additional insights. Yeah.

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Jason Mefford: I think that’s an important

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Jason Mefford: Thing for people to remember, regardless of what level you are if someone asks you a question and you don’t know the answer. Don’t try to make up an answer.

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Jason Mefford: Have the courage to say, you know what, that’s a great question. I’m not really sure. I’m going to have to do a little bit of research and I’m going to get back to you on that.

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Jason Mefford: Right, that’s

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Jason Mefford: That is one, you know, key takeaway for you if you have the courage to actually do that. It’s going to save you so much headache.

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Frank Coleman: Down the road realize there’s nothing wrong with that. Nothing wrong with a

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Frank Coleman: Weakness, or I’ve got I’m technically week at the moment, or something like that. That’s not it at all.

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Frank Coleman: It’s just, you know, acknowledging that okay and I don’t have it right on the tip of my tongue at the moment, but I’m going to get back with you and then that’s the other side of it is you have to get back with that person. Yeah, and do it in a timely manner. Yep. Yep.

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Jason Mefford: Well, just like everything I we end up getting talking and time goes by and it’s like

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Jason Mefford: Okay, I guess we have to cut it off or else. People will be listening to this for two hours right but

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Jason Mefford: prank. Thank you. Thank you for coming on and talking because, again, I think it

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Jason Mefford: It really helps the profession for people to kind of see and learn from what others are doing

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Jason Mefford: And again, you know what we talked about today may not be perfect for everybody’s organization because there’s no correct owner’s manual but

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Jason Mefford: There’s, there’s different things again that we talked about that can help everybody in their career, you know, if you go back and think about and make a mental note, go back and listen again and take notes. If you want to

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Jason Mefford: But there’s some things that were shared today that will can help anybody in their career. So I really appreciate you helping get the word

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Frank Coleman: Out. He asked me to

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Frank Coleman: Participate because I’m a firm believer in giving back and we’re a big profession, and there’s a lot of focus on our profession. These days, and will continue to be that way. And if this is

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Frank Coleman: I’ll say one small way I can help. You know, other CEOs sort of get through something or think about something a little differently. Okay, that’s part of the give back, you know, from my perspective, so I’m more than happy to do this. I’m glad you invited me to this.

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Jason Mefford: Well, thanks. And again, yeah. We’ll, we’ll be talking again, I’m sure, who knows.

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Frank Coleman: Oh yeah, we

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Jason Mefford: Might have to have you back for another episode the future.

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Frank Coleman: I’m happy to do it.

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Jason Mefford: All right, well, hey, Frank. Thank you. And for all the listeners. Thanks for listening in and we’ll catch you on a future episode of jamming with Jason

Many of you are familiar with ERM, but do you know ESRM?

ESRM affects the broadest spectrum of organization, from government, corporations and NGOs, to schools and universities, to entertainment and leisure, casinos and hotels, from oil & gas giants to technology companies and multinationals. Pretty much everyone has to deal with this aspect of #riskmanagement.

In this #jammingwithjason #internalauditpodcast I’m joined by Toby Houchens who has a diverse technical and scientific background in risk management, security, intelligence, and threat assessment. With over 11 years as a US Army green beret, education in neuroscience, big data technology, and international relations. Toby possesses a unique blend of experience and education.

As a critic of siloed and traditional security approaches, still favored by some in law enforcement and security professionals today, Toby argues for a more comprehensive and holistic risk management view to drive security strategy and efforts. He is a co-author of the enterprise security risk management (ESRM) standards and guidelines, on behalf of ASIS, he is at the forefront of modern practice and thought leadership.

Toby is also an entrepreneur and is the CEO of the risk technology company Alpha Recon.

Alpha Recon is an easy to use risk intelligence and management technology platform for schools and workplaces. The central mission of Alpha Recon is to help clients see threats and risks proactively to better respond and manage them as they impact their important assets such as students, staff, clients, workplaces, and campuses. Alpha Recon makes an impossible job easier to accomplish with built in risk management tools, communications, crisis management, and more with intelligence forming the core of the value proposition.

Learn more at: https://www.alpharecon.com/

Transcript

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Jason Mefford: Welcome everybody to another episode of jammin with Jason. Hey, today I have my friend Toby how chins, who is the CEO of alpha recon

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Jason Mefford: And today we’re going to talk about a term. Some of you may not have heard about SRM and we’re going to get into that, but first I wanted to give Toby an opportunity to introduce himself.

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Jason Mefford: And then we’ll kind of jump into the topic and show you how this is relevant for people in internal audit risk and compliance. So, Toby. How you doing, man.

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Toby Houchens: Very good. Thanks for having me.

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Jason Mefford: Hey. You’re welcome. So, so maybe give just give people a little background on on you and your company alpha recon kind of what you guys do because, you know, we’ve known each other. I don’t know what, two, three years at least.

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Jason Mefford: Right be longer Kimmy. Remember now and you guys fill a really interesting spot that I think a lot of organizations, still don’t fully grasp.

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Jason Mefford: And it’s one of the reasons why a lot of times, risk management is not as mature and evolved and collaborative and organizations as it really should be because there’s certain people that are left out. Right.

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Toby Houchens: That’s right, yeah. Yeah, a little bit about my background. So I came out of the, the military. I was in special operations. The army side and also have a background in

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Toby Houchens: Molecular Biology neuroscience international relations National Security Affairs and so as part of my my role in over 11 years in the military. I dealt with a lot of intelligence topics wide variety of different

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Toby Houchens: Types of missions and operations, but mainly to do with security and risk assessment and a lot of different types of environments. And so if you mix all that in a pot you start to you start to get an idea of of trying to use technology.

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Toby Houchens: To to help with some of these complicated tasks. I’m also working on a a doctorate in big data analytics. Currently, and I’ve always had a very

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Toby Houchens: You know, strong affinity towards technology solutions for security and risk management I speak about these things routinely around the world trying to find, you know, more appropriate more practical more

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Toby Houchens: goal oriented solutions for security and risk management and alpha recon is just a risk technology company we focus on the risk intelligence, if you will, part of things, but we also have a lot of management tools have built in. So you basically can use it to monitor analyze

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Toby Houchens: YOU KNOW, RESPOND intelligently to some of these threats and impacts and then also be able to manage those things.

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Toby Houchens: And track your assets and and be able to run reports and communicate effectively and we do so in a wide variety of different environments.

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Toby Houchens: currently focusing on, you know, kind of some of the school risk management areas, but we also are very useful for security companies and enterprises across a wide variety of different industries.

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Toby Houchens: And I’m also a subject matter expert in what you mentioned yes RM, which is enterprise security risk management.

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Toby Houchens: Some people call it security risk management, Nick. They keep off the especially in Europe, but the idea is the same. And it really seems like common sense to me. But

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Toby Houchens: To a lot of people that are now starting to move forward with security risk management, but the idea of, you know, applying your, your, your security practices and operations.

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Toby Houchens: In a risk management setting and actually attaching those two organizational or corporate goals seems like common sense but

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Toby Houchens: But what you have is a as we’ll talk about here in a little bit, as you have still have the silo effect and so

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Toby Houchens: aces, which is the largest security education in organization in the world actually had me helped them write the standards and guidelines.

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Toby Houchens: For security risk management because a lot of the security industry understands that security. It does impact risk on a day to day basis.

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Toby Houchens: And that it does have business outcomes and business impacts you know so or the impacts affect business outcomes.

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Toby Houchens: So on the security side, you’re really seeing this kind of convergence towards risk management and so we release the standards and guidelines in September at the global security exchange in Chicago.

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Toby Houchens: And it’s just an area that I find fascinating. And it’s also an area that you need technology to kind of help.

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Toby Houchens: Implement the solutions because it’s one thing to break down silos to make information and data useful and actionable and it’s an another thing to to implement it and to make that work in a culture cultural phenomenon that that works for the organization.

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Jason Mefford: Yeah, and I think is, you know, like you said, it’s it’s common sense that we should be doing this, unfortunately, it’s still not common practice just

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Jason Mefford: Talking about this. And you know, I don’t know, I’ve been on this bandwagon for 20 years on, you know, when it comes to it because maybe I’ll try to explain a little bit, you know, we’ve got the SRM that that you guys are kind of focused on a lot of people have heard of er.

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Jason Mefford: Right but but that enterprise risk management.

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Jason Mefford: But it’s really to manage risk and an organization. There’s a lot of different inputs, one of which is security, one of which is operations there can be financial there can be

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Jason Mefford: You know some of the external things as well, that all of these things are forces are things that are driving events that are about to happen or have happened right

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Jason Mefford: Right. So, especially from a military background. I mean, that’s where you came from. Right. I mean, you were monitoring from a security standpoint, what’s going on, to be able to assess risk and know

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Jason Mefford: What to expect right kind of from from that standpoint, and I see this again, you know, this is, it’s one of these areas that really has to be brought in. And this is where collaboration comes in.

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Jason Mefford: Because like you said a lot. I think a lot of times people take that very narrow view of risk management.

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Jason Mefford: To where maybe they’re only thinking about finances or they’re only thinking about operations and in, they don’t think anything else besides they’re very narrow scope would affect risk. But in fact, all of these things have an impact on everything within the organization. Right.

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Jason Mefford: That’s right.

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Toby Houchens: Yeah, and you know, on that note, I mean, if you look at the end because yes arm is most closely aligned to DRM like an SRM is a

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Toby Houchens: Is a topic that risk professionals can understand and appreciate and have some you know affinity with and an era itself has evolved over the years and what DRM was in 2001 is a lot different than you know what it is now. And you’ve had a couple of financial crises.

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Jason Mefford: And I was gonna say that’s what happens when you go through global financial crisis, right.

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Toby Houchens: Right, right. When you have a crises, you know, typically, everybody’s wondering well what did we do wrong. What kind of due diligence that we have done what kind of standards and guidelines and so then you have the the coast. So, and you know the the different types of

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Toby Houchens: frameworks that are that are out there that that help to provide a model. Sometimes there’s maturity models associated with that but

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Toby Houchens: But the idea of DRM is just simply all risks as it relates to the business and for the for the betterment of that business and, you know, being able to early

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Toby Houchens: You know, identify these these risks early being able to assimilate them report them. And then, you know, apply whatever controls medications management removal, you know, whatever you want to do to those risks and

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Toby Houchens: And and so, er, M is fairly well established. If, if not a little bit you know debated as far as what it entails. I mean, how much of it is governance, how much of it is operational you know how much of it is day to day

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Toby Houchens: How much of is it just a sea level type of reporting function but but the, you know, some of the one of the major limitations of DRM on its own is that it kind of lives in a

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Toby Houchens: In some tower, you know, in an office somewhere and you get, you have these

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Toby Houchens: Risk professionals that are basically looking at data that they have access to, and usually it fits into a model.

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Toby Houchens: You know, whatever. Some simulation or financial asset model that they’ve created or risk model for certain types of threats and they run the numbers you know that they have

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Toby Houchens: Through these models and come up with an output. And then they deliver this to the stakeholders and they make decisions based on that.

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Toby Houchens: So that’s great. But unfortunately, there’s a lot of other impacts.

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Toby Houchens: That would impact those models that are paid maybe not in there. And by the time you work through one of these, you know, simulations, or do the one of these big data analytics operations.

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Toby Houchens: You know some of the underlying assumptions and some of that data is changed, you’re missing data you’re missing impacts and that’s where security.

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Toby Houchens: Really comes into play because you’re looking at external impacts environmental impacts you know that impacted day to day operations.

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Toby Houchens: And so those organizations that have security siloed off and you’ve got one person doing mobility risk and other doing cyber and other human risk physical risk, you know,

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Toby Houchens: You know production risk. You know, you look at all these different you know types of risk in that are in the potential in the security purview.

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Toby Houchens: And if you’re not collecting, you know, information and turning that into intelligence that are going to kind of impact those those risk.

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Toby Houchens: Kind of that risk understanding and and what that risk reporting, you’re really doing a disservice. And with the technology that we have today.

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Toby Houchens: There’s no reason why we can’t be monitoring threats as they overlap across different silos and as they impact the business. I mean technologies evolved to the point where you can start getting closer to those sources.

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Toby Houchens: Receiving more sources more sensors, bringing that in so that you can have a more intelligent decision making capability than just sitting some kind of analytical framework on top of existing data that’s been, you know, sitting there for a while.

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Jason Mefford: Yeah, no, I think, you know, from what from what you said there were a couple of really important points, I think, to kind of just summarize that we can maybe go down on

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Jason Mefford: Because I think you know like you were talking about kind of this, the traditional era model, right, is we

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Jason Mefford: We gather some data we create some kind of model we come up with a point in time risk assessment.

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Jason Mefford: That we then usually use for, you know, a year, let’s say, because that’s kind of been the historical thing right we do an annual risk assessment.

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Jason Mefford: based on historical data and then we’re making decisions. But, you know, the point is, like you said, with technology with some of the changes that are going on, we can actually receive and get some of this data quicker. Right.

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Jason Mefford: Right, and we should move from more of a point in time assessment to more of a continual assessment, but

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Jason Mefford: But here comes the problem, right, is we’re overblown with data, right, you’re doing a lot of stuff with big data to write

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Jason Mefford: But data is not intelligence. So maybe we should spend just a minute on on talking about the difference between data.

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Jason Mefford: Versus intelligence because one of the things that I think is really cool what you guys do is you take that data and you create intelligence real time intelligence for people so that they can make decisions, especially when a security issue happens. Right, right.

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Toby Houchens: And and that’s an important distinction and people that are in the intelligence community or the security assessment reader and even some people in the risk modeling, you know, community, understand the difference between data and intelligence.

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Toby Houchens: But, but just for the purposes of the audience.

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Toby Houchens: Data is just what it is. It’s either you get some information you have a source that you know that came in some kind of a tidbit.

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Toby Houchens: Of data that’s come in intelligence is basically the you know what you have now done with that data to make it meaningful to the end user or to some kind of

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Toby Houchens: For some kind of goal intelligence usually has a requirements to begin with. Sometimes you don’t know what that requirement is exactly but you at least know hey I need to know these types of things and

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Toby Houchens: And that understanding and using that data to help with that understanding, you know, kind of turns that into intelligence, whether it be in the form of risk ratings.

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Toby Houchens: Whether it be in the form of kind of an analysis or whether it be trends predictive analytics, you know, these types of things. So

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Toby Houchens: So big data, you know, typically you know historically has rested on existing data sets that are there, you can find some trends.

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Toby Houchens: You can do some backwards, you know, kind of analysis on this, and even project, you know, given no historical data. But if you’re not updating that routinely

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Toby Houchens: And you’re missing a lot of impacts or other data sets that you’re just either missing because you don’t know that they exist. You don’t know that they’re part of the equation or the impact you don’t have access to them.

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Toby Houchens: You know, you come sometimes can have this false sense of comfort, you know, with some of the findings in a big data exercise and so

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Toby Houchens: When you talk about business intelligence of the future, you’re really starting to look at near real time impacts because there’s one thing to look at long term trends.

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Toby Houchens: And to be able to find some value there and you can, and this is not dissuading anybody from from running big data operations but but being able to now take some of those acute.

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Jason Mefford: Impacts

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Toby Houchens: Being able to look at multiple threads looking at how they overlap, how they impact different aspects of your business. Now that’s the real difficult part

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Toby Houchens: And so we try to help with that that process, but by making it easy by taking all aspects of the intelligence process data in analyze analysis and characterization, you know,

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Toby Houchens: Output in the form of analytics answering specific questions decision making support know those types of things.

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Toby Houchens: And we do that we help to do that for the for the client, because unless you have an army of analysts, unless you’re a bank, you’re a government or law enforcement.

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Toby Houchens: You know, you don’t really have a bunch of analysts sitting around, you know, doing stuff for you so you, you really need to find

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Toby Houchens: Software and technology capabilities that can at least do do some of that for you. But you’re right, you know, understanding

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Toby Houchens: The difference between information until this is important because from a cost effectiveness standpoint, I mean if you’re sitting there with an army of analysts crunching numbers and doing analytics and trying to create intelligence, whether it be reports analytics or otherwise.

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Toby Houchens: You know, at the end of the day, is it worth the squeeze the money that you’re spending on, you know, creating these these reports and these insights

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Toby Houchens: Is that worth what you’re getting are the insights that you’re getting is the value to the company worth it. So that’s why you have to move to more of a

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Toby Houchens: Hey, knowing upfront. What is important. What are those sources. What is that information I need, what kind of intelligence Delaney

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Toby Houchens: And then being able to take that data in in a more dynamic way as opposed to doing these static quarterly annual types of, you know, kind of, you know, real quick glimpses in a in a time capsule of what that exposure is

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Toby Houchens: What we’re moving towards a period in technology where, you know, everything is a lot of thing decisions are going to be driven by machine learning and AI.

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Toby Houchens: And and being able to have that advantage and have the advantage of no data that’s coming in on a regular basis.

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Toby Houchens: That’s targeted that’s going to help answer some of those intelligence requirements. It’s going to make those

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Toby Houchens: Those companies that are, you know, leveraging that technology, a lot more successful. They’re going to be limiting their losses, they’re going to be finding opportunities that aren’t seeing, they’re going to be creating efficiencies.

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Toby Houchens: The list goes on finding little of, you know, opera, whether it be operational gains or whether it be for your market gains.

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Toby Houchens: Whether it be, you know, being able to see creating a culture that’s more efficient, being able to collect information that’s more acute.

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Toby Houchens: That would have impacts on the bottom line of that company. You know those types of companies are leveraging technology to do that are going to be much more successful.

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Toby Houchens: And are going to rise to the top. Whereas people that are kind of in companies that are stabbing in the dark, if you will, or using what would I would call a breather your own exist, your exhaust.

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Toby Houchens: You know risk model like where you’re just taking data that’s there and, you know, not taking all of the other impacts into account the day to day impacts that impact your business.

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Toby Houchens: You know you’re you really are in some ways, breathing, you’re going to exhaust. There’s some insights that can be gained from it but but the future is moving towards

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Toby Houchens: You know, dynamic risk management dynamic decision making capabilities and you’re either going to be ready for that, or you’re not.

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Jason Mefford: Well, I think that’s, that’s one of the really cool things that I think you guys do is you know that you that you brought up from before as

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Jason Mefford: I like that analogy of breathing your own exhaust because, you know, you can do that for a while, but then you’re going to end up passing out you know from carbon monoxide. But, but the

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Jason Mefford: You know, the, the point is that so much of risk management is done only using internal data and only the intelligence within the organization. I don’t see as many companies actually looking outside

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Jason Mefford: Because like you said you know they’re they’re trying to run and analyze the data they have the problem is they don’t have some of the data that will also impact them.

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Jason Mefford: You know, which is where you know companies like you kind of come in to help out because there’s there’s just certain information.

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Jason Mefford: That you’re that you’re not going to have, you know, if you’re like you said, if you’re the military, if you’re

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Jason Mefford: You know, law enforcement, you get a whole bunch of information when it, when it comes to security.

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Jason Mefford: But, but the regular companies don’t and even, you know, large multinational companies don’t have some of that information and so

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Jason Mefford: If they’re trying to assess risk in their silo just with internal data they’re never going to see some of these external things coming

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Jason Mefford: That everybody else can see who has access to the data, you know, like you said, if, if you’ve got access to more of that, you know, dynamic instead of static data.

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Jason Mefford: You’re going to be able to win, where the static folks are going to be left wondering, you know, kind of sitting on their hands going

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Jason Mefford: What do you mean I i’ve never could have expected this, you know, whenever I say that it reminds me of the 2008 financial crisis and I don’t know how many people I heard say

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Jason Mefford: I never saw this coming. It was a perfect storm and it’s like, are you kidding me all the people that were looking at the dynamic data and we’re modeling the future being different based on what they’re starting to see. There were a lot of people that saw it coming.

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Toby Houchens: That’s right, yeah and and there’s a, you know, and that’s that’s part of it. It’s more than just governance and compliance checking the block.

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Toby Houchens: Those are important functions and there’s risk involved with that. And then you have to be monitoring that and you have to make sure that your, your mind and your P’s and Q’s there so

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Toby Houchens: So there are there are those, you know, internal metrics that have to be monitored and have to be modeled. And that’s part of it.

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Toby Houchens: But it’s not the whole thing. And so what you’re finding is the skill sets and the expertise required for risk officers are changing.

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Toby Houchens: And you have to be more than just a financial asset you know expert or you have to be more than just somebody that’s an expert in governance and compliance and

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Toby Houchens: Now you’re starting to have to have some intelligence capabilities as well. If you’re going to really thrive in the future. I mean, if you look at some x. For example, perfect.

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Toby Houchens: Example, they actually hired former intelligence experts to run their risk outfit.

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Toby Houchens: And there’s a reason for that. And if you look at their numbers. You look at how they how well they’ve done you know they’ve they’ve done very well in a very high threat.

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Toby Houchens: Environment and you don’t do that unless you have really solid intelligence about those threats, they’ve really got a great integration with their security teams.

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Toby Houchens: And and security can provide that. I mean, in some ways, your security gets you out of that silo. It gets you out of that that you know that basements, you know, crunching you know numbers and you know it helps you to really understand what the threats are externally.

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Toby Houchens: How they’re changing how they’re impacting organization that threats from within.

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Toby Houchens: But there’s a lot of security functions across the board that have daily impacts on that company’s risk. I mean, you just look at human risk by itself.

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Toby Houchens: I mean, this is something that security touches every single day, whether it be during

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Toby Houchens: Hiring, whether it be during just picking up indications that there’s, you know, a problem cultural issues you know training issues talent issues.

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Toby Houchens: You know, there’s a lot of data that just gets left on the bone.

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Toby Houchens: That could have serious consequences, you know, for an organization. If you’re not monitoring these things. And so not leveraging your security team and in your security operations as a collection

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Toby Houchens: Is just, you know, it just doesn’t make any sense. Honestly, and if you’re just leaving all that data there and you’re not even trying to get gather it you really are.

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Toby Houchens: You know, living in a bubble and and what the insights that you come up with

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Toby Houchens: You know, and in some cases, they’re not going to be earth shattering and and not overly helpful, you know, to the leadership of the of the organization, you know, and so and that’s another thing about

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Toby Houchens: You know, security and risk and the convergence of that insecurity, you see now, at least on the security side.

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Toby Houchens: They understand now more than ever that what they’re doing on a day to day basis impacts the company and is becoming a risk management problem and it’s becoming something that has to

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Toby Houchens: dovetail with risk management on the risk side, we’re starting to see that slowly, you know, you have these e RM

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Toby Houchens: Conventions and er M is starting to move forward in a, I think a positive way.

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Toby Houchens: But you still now need to connect the dots here completely across the organization and and stop living in a risk management silo. And I think that’s what he SRM seeks to do

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Toby Houchens: Is to start breaking down the silos that you, you start getting that intelligence, you start building that culture across the organization which is really nice.

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Jason Mefford: Well, and it is because I think, you know, again, that’s there has to be that collaboration and cooperation across all these groups, right, because again, if it’s not, then your

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Jason Mefford: Excuse me. You’re making decisions, you know, and I’m just making up numbers here. But let’s say there’s you know 10 or 12

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Jason Mefford: Different groups that you should be using and kind of collecting information from and getting their input and if your own, you know, if you’ve got 10 but you’re only listening to seven of those people

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Jason Mefford: Then when something goes wrong, what I’ve seen a lot of times, as you’re like again. Well, how could this have happened. We’ve we talked to these seven people and the other three people are like, well, if you would have asked us, we saw this

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Jason Mefford: coming six months ago, but nobody asked us, and so, you know, I think this is why it’s so important to get that discussion out there and

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Jason Mefford: It’s going to be different for every organization. But all of these different people that you need the input from you need to get their input and invite them to the table because those 10 heads are going to be better than the seven

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Toby Houchens: Right there’s context.

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Jason Mefford: That yeah there’s the context to it because in this is where without having all those different perspectives. It’s hard to see the true picture of what’s really going on.

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Jason Mefford: Right and and and that’s, again, you know, for a lot of smart people that are experts subject matter experts in their area. Sometimes they have a hard time realizing or admitting that other people’s perspective is also valid.

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Jason Mefford: And it is, man. I mean, if we don’t, especially as as connected and interconnected as the world is today, if you’re not thinking about that you’re going to miss some some really big things come along.

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Toby Houchens: Yeah. And you see that with schools safety and security right now. And the problem there is different in the sense that

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Toby Houchens: Historically, they haven’t been looking at this as a risk management problem and it is a risk management problem.

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Toby Houchens: You know, adding guards metal detectors cameras. These are all you know preventative reactionary, you know, types of measures.

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Toby Houchens: But in almost all of these major events that have happened you know 70 over 70% of them. There have been indicators. They’ve there’s been a cry for help. There’s been some kind of

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Toby Houchens: On social media, there’s been a conversation with a co worker with a another schoolmate there’s been problems at home. There’s been plenty of flags and indicators as to why there was a problem and

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Toby Houchens: And that’s the idea. If you’re not looking at the intelligence. If you’re not looking at the indicators, the leading indicators, you’re not leveraging the whole organization to work together.

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Toby Houchens: You can have all the walls. The metal detectors, the high speed cameras that detects motion it track people

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Toby Houchens: It’s just not going to, you know, lower the incidence, you know, demonstrably and it’s and so that’s why we, you know, an alpha recon we’re, we’re trying to help an education process to

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Toby Houchens: We had schools to start thinking about, you know, school safety and security through a risk management lens.

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Toby Houchens: So that you can start seeing exposure where those exposures are happening, what are those early indicators of risk and and how do you, how can you start to proactively you know address those risks as opposed to waiting for something to happen.

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Toby Houchens: So, and this obviously carries forth to almost any organization that there is. And so typically you’ll see a problem of either too much security focus

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Toby Houchens: And no risk management.

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Toby Houchens: Or you’ll have too much risk management and nobody cares about the day to day security impacts the culture and those those dynamic threats that are going to eat your lunch if you’re not

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Toby Houchens: If you’re not careful.

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Jason Mefford: Well, and I think it’s, you know, we we’re about out of time for today because we, I could go off on this whole other tangent right now too, but I think

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Jason Mefford: You know your your example of the schools, and I think this is something you know that most everybody

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Jason Mefford: Can relate to right because either you have kids or, you know, had kids or whatever. And so in you, you went to school yourself right but I think

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Jason Mefford: I think what we’re seeing kind of in in that space is also a mistake that we’re seeing in the corporate space. And this is what I mean is,

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Jason Mefford: There’s a school shooting that happens. And so the first knee jerk reaction is we got to put up a fence. We got to have an armed guard. We got to put in metal detectors. We got to do all this kind of stuff.

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Jason Mefford: There’s a whole bunch of spending up front, without really thinking about. First off, the return on investment for

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Toby Houchens: Exactly right.

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Jason Mefford: And and the negative side of it as well in here’s here’s where I’m going with this, too, is when when I was in high school. We had a brand new high school belt, you know, and so we were so excited because we got to be the first class that went into this new high school

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Jason Mefford: But to look at the building. It was just a big building with these really tiny narrow windows and it looked like a prison.

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Toby Houchens: Right.

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Jason Mefford: And so we used to joke like we were going to prison. Well, we didn’t even have a big old fence around us. But, you know,

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Jason Mefford: Assume now to, you know, these kids are going to school all in a place that looks like a prison. Sometimes

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Jason Mefford: That has to have an effect on your child’s learning as well. And just like you brought up you know 70% of the time. Plus, there’s

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Jason Mefford: There’s some other indicators, there’s some other things that if we would have spent the time and effort and money there probably could have avoided it instead of just trying to protect once the event has happened. And so you just like that we see so many companies that spend

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Jason Mefford: SHIT ton comes to mind of money on the

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Jason Mefford: Reactive or side of it after the event has happened with very little spend or effort on the proactive side.

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Jason Mefford: And that’s where we’ve got to get to. That’s, that’s what you guys are trying to help people get to, that’s what

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Jason Mefford: The RC SRM movement is trying to help. We’ll get to, as well as hey you know what if, if we’re proactive if we

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Jason Mefford: You know, in this instance, you know, give counseling to this kid or whoever this employee that so so that instead they never get to that point where some sort of a security.

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Jason Mefford: incident happens we catch it, we fix it before it ever gets there. We don’t have to rely on that other stuff in the back.

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Toby Houchens: Yeah. And then the last thing I’ll say about this is, that’s the other part of this is the optimization, you know. So now when you’re

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Toby Houchens: When you’re intelligence driven your data driven

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Toby Houchens: You’re now able to make those decisions that are going to have the maximum ROI and maximum impact and in some cases, save money. You know, it’s just like DRM

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Toby Houchens: You know, you’re looking at where you need to have that risk management spin. Same thing with the SRM. How do you optimize that security which which is going to have the best impact.

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Toby Houchens: And when you start using actual data to support that incidents events exposure you know metrics, you know, now you can really

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Toby Houchens: Measure the impact of what your security and risk team is doing and how that’s instead of just looking at profit and loss which is this one.

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Toby Houchens: Master. Now you can actually see changes and exposure changes and spend optimization of spend so that’s the other you know benefit of looking at things and having it with having intelligence as the core that is

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Jason Mefford: It is so I’m glad you came on, so we could talk about this because I think you know again for everybody listening.

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Jason Mefford: You know, whatever you’re doing, whether you’re an auditor, whether you’re in risk management, whether you’re in compliance, whether you’re in security or operations, whatever.

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Jason Mefford: We got to start working better together and start bringing in these different perspectives, because that’s how we’re going to be able to get that intelligence and make these better risk decisions for the entire company. Right. You know, again, that are linked back to

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Jason Mefford: What really matters for the organization and what it needs to be able to succeed, right, what it has to do right

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Jason Mefford: And what if it goes wrong becomes a very big deal for us and focus on those those areas. And we’ve been talking about and kind of the niche where you guys play really helps with that in organizations now now we just need to get it from being common sense to common practice right

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Toby Houchens: Right.

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Toby Houchens: And then technology can help that.

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Toby Houchens: Yeah, and we’re working on it. And I think there’s a lot of things that are happening on the technology side. And there’s been some improvements made

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Toby Houchens: Both in you know theory and practice. So we’re getting there. It’s just, you know, going to take a lot more education a lot more data points a lot more success metrics.

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Toby Houchens: For people to start looking at this and saying, oh, this does has an impact on my business. This can positively impact us

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Toby Houchens: So once you start to get more historical data points that that that show the positive impact. I think you’ll see a larger movement towards those more comprehensive holistic

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Toby Houchens: Risk management programs so

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Jason Mefford: Yeah, I think we’re very, very, very close. From a technology side.

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Jason Mefford: Well, Toby. Thanks for thanks for coming on today. As always enjoy talking to you and

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Jason Mefford: Kind of hearing about and trying to spread the message that I know both of us have been trying to spread for a long time, we just

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Jason Mefford: Again, everybody that’s listening. Let’s not make this just common sense. But let’s start making this common practice in your organization’s because thinking about it with no doing doesn’t help anybody in fact that probably hurt you more.

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Jason Mefford: So reach out to other people in your organization, go find your security people because they have a big, big impact on risk management as well in the organization. So

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Jason Mefford: With that, thanks. Toby, and I think it’s probably

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Toby Houchens: Probably time for us to to sign off. Alright. Thanks for having me. Jason and people can find out more on our website, if they’re interested in our technology.

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Jason Mefford: Yeah, and it’s alpha, alpha recon com i believe right

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Toby Houchens: That’s right. Yep. And we have educational events and there’s there’s various engagements that we, that we have and we do have content and blog content that we

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Toby Houchens: That we share to kind of help with some of that practical implementation. So a lot of that’s going to be, you know, coming forward this year in 2020

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Toby Houchens: Moving beyond the theory of this sounds great, or you should do this or you should think about these things to okay how do I implement this, how do I actually, you know what information do I need, how can security help, you know, how does this inter inter we’ve

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Toby Houchens: Know what are some best practices, we can use. What are some maturity. What does a maturity model look like that. So I know I’m on the right track. So there’s going to be a lot of that content coming out to help people implement these things.

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Jason Mefford: Well, good. Yeah, lots of good content. So I’ll make sure and link that up in the show notes for everybody so you can click on that and head over and get some of those resources. So with that we’ll catch everybody on the next episode of jam with Jason So yeah, okay.

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Toby Houchens: See you later, everybody.

There are some common problems and mistakes holding most #chiefauditexecutive back from elevating #internalaudit in their organizations, and moving into executive presence where they are perceived as a #trustedadvisor.

In this #jammingwithjason #internalauditpodcast I discuss these mistakes and how #CAE can take action to move their career and the profession of internal auditing forward. If you are a CAE, this is a must listen episode. If you are not a CAE, please listen and share with your CAE. You will still get tremendous value from the information to help in your career.

Listen in at: http://www.jasonmefford.com/jammingwithjason/

If you are a CAE and really serious about elevating the status of internal audit in your organization, improving your executive presence, and getting best practices and thought leadership from like-minded CAEs, the CAE Forum is for you.

Submit your application to join the Chief Audit Executive (CAE) Forum. We are accepting new member application until 31 January 2020. https://jasonmefford.mykajabi.com/caeforum

You can also watch a more extended video version of this discussion on that page.

Transcript

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Jason Mefford: Welcome to another episode of jamming with Jason. Hey, welcome back. My friends, and this week. Let’s get into talking about what’s holding most chief audit executives back

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Jason Mefford: Now from that title. Let me just give you a little, a little background here in the Internal Audit profession, there are certain challenges and opportunities that face our profession.

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Jason Mefford: And what I’ve seen over the years in coaching mini chief out of executives, is there some common problems and mistakes that people are making

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Jason Mefford: And by making those mistakes. They’re actually being held back in their career. So internal audit is not perceived well sometimes in organizations.

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Jason Mefford: The chief audit executive is not kind of seen as a trusted advisor from the other executives in the organization.

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Jason Mefford: And a lot of these things come back to the same problems or mistakes that I’m seeing over and over again. So that’s why I want to talk to you about this today.

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Jason Mefford: Now just to start off with. I just kind of want to level set a little bit and explain so I use the term chief audit executive

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Jason Mefford: Quite a bit. And let me just explain what that means it’s a generic term that represents whoever is leading the internal audit department in an organization.

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Jason Mefford: So it’s a generic term chief audit executive people’s titles may be director of audit VP of audit senior VP of audit there’s there’s different titles that people may have, but really it’s talking about whoever is leading the internal audit group, regardless of what their title is

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Jason Mefford: So today’s podcast is going to be more targeted towards chief out of executives, but if you’re not a chief audit executive listen anyway.

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Jason Mefford: Because the information that I’m going to provide will also be very valuable for you in your career.

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Jason Mefford: Because again, these are not mistakes that just chief out of executives are making, but our profession in general.

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Jason Mefford: Of internal audit are making. So you’re still going to get some value, but a lot of value actually out of listening today.

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Jason Mefford: Now, if you’re not a, CAE. Like I said, go ahead and listen but also please make sure and share this with your chief audit executive or others that you know

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Jason Mefford: That are chief audit executives, because I’m trying to get the message out there because I want to help elevate the status of internal audit in organizations.

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Jason Mefford: And help people really move into executive presence and become a trusted advisor in their organizations. And what I’m going to go through today.

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Jason Mefford: Is how you can do that. Now if you are a chief audit executive. Please listen, pay attention in. I also want to throw out there again. I mean, this is kind of a time sensitive podcast.

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Jason Mefford: Because right now, we are accepting new member applications for the chief audit executive forum. And so in that in the forum and I’ll explain a little bit more later.

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Jason Mefford: This is a great opportunity for you if you really want to elevate internal audit in your organization.

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Jason Mefford: And if you want to move into your executive presence and become that trusted advisor in your organization. It helps provide you with the support

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Jason Mefford: To be able to help you get there and we work more on that. But again, you know, based on the timing of when this podcast is coming out.

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Jason Mefford: Those applications are due this week. So if this is something that, that sounds interesting to you, make sure and check out the page, there’s a link in the show notes down below.

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Jason Mefford: Where you can go to learn more and submit your application. But again, those applications have to be in by the end of this week. By the end of January. So again, since that’s time sensitive. I wanted to make sure and tell you that to begin with. Now,

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Jason Mefford: I came across the quote from Helen Keller that I really enjoy and it says alone, we can do so little together we can do so much

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Jason Mefford: And you know, I really believe that. And this is one of the reasons why I’m doing things like you know this jamming with Jason podcast, the chief audit executive briefing the forum.

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Jason Mefford: All these different things, because I truly believe that together we can do so much more than we can individually. But what that means is we actually have to come together. Okay.

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Jason Mefford: Now, let me start, you know, again, kind of getting into this because like I said, this is going to be a little bit different of an episode.

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Jason Mefford: But my promise to you is, again, if you listen we really can elevate the status of internal audit and our careers together.

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Jason Mefford: Okay, this is something that we can do together. If you try to do it by yourself. It’s going to be really hard. And most of the time, you don’t end up making it

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Jason Mefford: So again, this is why I want to talk to you about this today. Now one of the things that, you know, one of my favorite quotes of all time is probably from Albert Einstein.

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Jason Mefford: You know where he said insanity is doing the same things over and over again and expecting different results. So let me say that again.

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Jason Mefford: insanity is doing the same thing over and over again and expecting different results. And like I said, some of these problems and mistakes that I see people are making them over and over again.

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Jason Mefford: But they keep thinking, well, if I just do it again if I just do it if I just work harder things are going to be different.

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Jason Mefford: But the truth is, things will only change if you change who you are being and what you are doing. And we’re going to talk more about that later. As we get into the material.

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Jason Mefford: So let me talk about first off some of the big problems and mistakes that I’m seeing, and then we’ll go through and talk about how you can actually overcome these

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Jason Mefford: So you know if you’ve heard me for very long. You’ve, you’ve seen that I put out there are a lot that most chief executives are not perceived as trusted advisors.

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Jason Mefford: We may like to believe that we are and that we’re adding value, but most of the executives in our organization don’t actually believe that. Okay.

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Jason Mefford: And and the way you can see that is again, many of us are fighting for budget and resources, all the time. Well, if you’re seen as a trusted advisor.

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Jason Mefford: Not that there’s not going to be questions, but you won’t have to be fighting so hard for those resources, you know, if you think about some of the other executives in your organization.

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Jason Mefford: Are they fighting as hard for budget as you are probably not right and you know if if it were true that we were actually trusted advisors.

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Jason Mefford: People would be knocking on our door all the time asking for our help. And again, sometimes that happens, but most chief out of the executives, that’s not happening. People are not asking for their help. And again, it’s because you’re not being perceived as a trusted advisor.

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Jason Mefford: Now, often we end up focusing on wrong things. So what we think is important.

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Jason Mefford: You know, it kind of at an operational risk level, a lot of the executives don’t really feel that’s as important as what we do.

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Jason Mefford: And so again we can go out, we can do a great, a great audit and you issue the report and everybody goes in. Okay, whatever.

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Jason Mefford: Because we’re probably not focusing. We’ve got to elevate ourselves hire in thinking about really what the key objectives of the organization are and how we can really provide the most value to our organization.

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Jason Mefford: Another one that I see over and over again is people thinking. Everyone else is the problem.

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Jason Mefford: So let me give you a little story on this because this is really what a lot of people refer to as victim mentality.

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Jason Mefford: So when you think everybody else’s the problem. And there’s nothing wrong with you that’s victim mentality.

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Jason Mefford: And it usually goes bad. When that happens, because here’s the reality, most of the time. The problem is with us and things that we need to change, we need to change how we’re being and what we are doing. It’s not everybody else’s problem. Now let me let me share an example with you.

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Jason Mefford: I was speaking with a chief audit executive. That was kind of going into detail you know this person had

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Jason Mefford: had just been outsourced. So what happened is you know the executives decided, hey, we don’t need an in house internal audit department anymore. Let’s get rid of these people.

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Jason Mefford: And we’re going to outsource it to a professional service firm. Now, when that happens usually they’re not happy with what internal audit has been doing

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Jason Mefford: And there can be a whole myriad of reasons. And again, I don’t have all of the sides of the story. I just have what I heard from this chief executive.

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Jason Mefford: But as they were going through and kind of talking about it. It was always about somebody else this executives not doing what they’re supposed to be doing.

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Jason Mefford: They don’t see my value, you know, when I try to bring up these things they don’t listen to me and and on and on and on. And the end the picture that this person was really painting.

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Jason Mefford: And actually used in said several times is that all of the executives in in this organization are unethical and they just don’t get it, and they’re unethical.

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Jason Mefford: And and the problem is, you know, I want to do a big time out there because you know if really all of the executives in an organization are unethical and doing all of these bad things.

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Jason Mefford: Then instead of, you know, getting fired and kind of walking away quietly, we should actually be going to the regulators and saying, Hey, the next Enron is right here.

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Jason Mefford: Now, I don’t think that’s what was happening here. Because again, those, those Enron world com, you know, pick, pick a name.

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Jason Mefford: Those things happen, but they happen so infrequently. It’s a very small percentage of all organizations. So when I hear people complaining about

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Jason Mefford: It’s the other people’s fault I’m going to, I’m going to cry bullshit. Okay. For most people, because that’s usually not the case.

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Jason Mefford: There’s something this person was doing or not doing or how they were being that was getting that kind of reaction from the other executives.

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Jason Mefford: And again, you know, one of the problems that I see is thinking. Everyone else is the problem. Nope. Most of the time we’re the problem.

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Jason Mefford: Now, once we can actually admit that. Now we can start getting help, so that we can change those perspectives. Okay.

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Jason Mefford: So those are some of the big problems that I see now some of the mistakes that I see people making

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Jason Mefford: Because again, people know this. They see some of these things going on. And so they’re trying to fix it. Okay.

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Jason Mefford: But here’s what I what I’m seeing a lot of times when people are trying to fix it, that are mistakes and they aren’t actually working.

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Jason Mefford: First one, they’re not seeing the big picture, you know, change happens very slowly in organizations and sometimes we end up focusing on a very small aspect.

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Jason Mefford: Without thinking about the bigger picture. And we just end up going down this rabbit hole that ends up getting us fired or stressed out because

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Jason Mefford: We kind of grab on to one thing. And honestly, folks. Sometimes we’re a little self righteous and we need to quit being that way. And think about the bigger picture in our organization.

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Jason Mefford: You know, another mistake that I see people making is thinking they can do it alone. If I just work harder if I if I just do this if I just do that.

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Jason Mefford: Most of the time, that doesn’t work, the real power comes when you’re able to be a part of a community and actually together. Remember the Helen Keller, quote, together we can do so much more

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Jason Mefford: So if you think you can do it by yourself. Good luck. If you’d like a little help. There’s options for you that I’m going to go through and talk about

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Jason Mefford: Because honestly, every single one of us needs a little help from our friends. Sometimes, okay. I love that line from the Beatles song.

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Jason Mefford: I get by with a little help from my friends because that’s true. Now if you’re you know bullheaded and stubborn and think I can do it by myself again. Good luck.

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Jason Mefford: It’s probably not going to work because again, even in my life when I’ve been stubborn and thought. Nope, I can just do this myself. I don’t need anybody else’s help

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Jason Mefford: I usually go down in flames the times that I actually reach out for help and get the support community that I need. That’s when I actually am able to make a lot of progress.

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Jason Mefford: Another mistake that I’m seeing a lot of people making is they’re looking for a quick fix. Now, there are plenty of people out on the internet.

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Jason Mefford: That will be trying to preach to you that there’s just some quick fix. If you change the way you you you have the report format. Right, so if you

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Jason Mefford: If you change the format of your reports now all of a sudden, everybody’s going to love what you do and probably not going to happen.

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Jason Mefford: Well, if you just start doing data analytics then everything’s going to be okay. And it’s probably not going to work, folks. Okay, those are both quick fixes.

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Jason Mefford: And what we’re talking about here is something that takes years there will not be a quick fix. There may be some quick wins. But you will not get to where you want to be for a while.

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Jason Mefford: Now, this happened to me. Both times I was chief audit executive, it happens again with all the successful CEOs that I talked to, you’re on a three to five year journey.

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Jason Mefford: So don’t look for quick fixes as a way to try to make things better. It’s a long game. You have to be willing to put in the work.

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Jason Mefford: Be the kind of person you need to be and do the things you need to do over a long period of time, if you’re just looking for the quick fix my friends. It’s just like you’re shooting up heroin.

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Jason Mefford: And you’ll feel good for a little while, but after a while you become a drug addict and you end up crashing and burning, you know, as far as kind of a metaphor to think about this.

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Jason Mefford: You know, instead, if you want to feel better, instead of shooting heroin, you know, eat better exercise do some mindful activities.

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Jason Mefford: But a lot of times people don’t want to do those because they take time, but if you really want to get to where you want to be. It’s going to take some time and you’re gonna have to put in the work.

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Jason Mefford: Just being honest with you, because like I said, there’s a lot of people out on the internet a lot of people in some of the different firms that are trying to sell you things

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Jason Mefford: And they’re promising. If you do this quick fix if you hire them. If you do this if you do that then magically everything is going to change.

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Jason Mefford: It doesn’t work that way. Okay, so let’s go through it and and talk a little bit more about maybe some of the things that you can do.

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Jason Mefford: Because really there are three things that I think if you do you will be able to help overcome some of these challenges, you won’t be making the same mistakes and creating problems for yourself like often that we do.

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Jason Mefford: So here’s what they are. The first one is we have to change how others perceive us. So if you’re if you’re not driving or exercising pull out a piece of paper and write these down.

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Jason Mefford: And I’m going to go through and talk about it or go back and listen to this again.

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Jason Mefford: In fact, actually, I’m going to tell you now because I might forget again later. But a longer version of this information is also included on that website.

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Jason Mefford: That is in the show notes below so you can go back and actually watch it, you’ll see some slides and other stuff as well. It’s in a video format.

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Jason Mefford: So you can actually, you know, go over this information again. But the first one is we change how others perceive us. Okay.

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Jason Mefford: The second thing is we actually need to develop our executive presence and I’m using that term on purpose. And I’m going to, I’m going to show you how we do that.

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Jason Mefford: Because again, if you’re a chief audit executive, you want to be seen as an executive, which means we need to act like an executive and we need to have executive presence.

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Jason Mefford: And there’s, there’s a few things that you need to be doing to have that in fact there’s three that we’re going to talk about later. Most people are not doing all three of them. Okay, so we need to move into that executive presence.

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Jason Mefford: Our third one is we need to have a collaborative community.

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Jason Mefford: Okay. And again, like I talked about before. If you think you can do it by yourself at probably not very few people are able to do this by themselves. They need a community around them.

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Jason Mefford: And the reason for that is, we’re good, we’re going to get into it more later, but that having that community helps you right now. For many of you, things may be going. Okay.

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Jason Mefford: And you think, I don’t really need help, but at some point in the future, you know, the proverbial shit is going to hit the fan. Okay. And I’m being a little bit more colorful this time.

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Jason Mefford: Because it’s important, and I want you to listen and I want you to get this. Okay. At some point in the future, the shit is going to hit the fan.

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Jason Mefford: And if you do not have that community around you. It is very, very difficult to deal with those things much better to be proactive. Get a community around you that can help.

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Jason Mefford: In advance and actually start doing some of the work. Now while things are going well. Because guess what, if you’re proactive and you’re doing those things, the proverbial shit hopefully will never hit the fan. Okay.

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Jason Mefford: So those are the three things that I want to go through and talk again a little bit about now how to change how others perceive us developing our executive presence and having this collaborative community.

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Jason Mefford: OK. So, again, as I said, Most chief audit executives are not perceived as trusted advisors by executive management.

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Jason Mefford: And here’s the reason. Let me, let me go through and just kind of talk to you a little bit about this. And again, like I said, go to the go out to the website and look at the video because there will actually be some visuals in that that will help you to really to really get this concept.

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Jason Mefford: But here’s what what usually happens. Okay, there are some different ways that you can be perceived in your organization. And I’m just going to talk about them briefly.

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Jason Mefford: And see if this resonates with you. Okay. The first one is sometimes we’re just tolerated by everybody else. Okay, so what is tolerated me

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Jason Mefford: Well, they know they have to have you around because, you know, maybe you’re publicly traded and they know we have to have internal audit.

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Jason Mefford: They tolerate you maybe they actually kind of like you but they just tolerate your presence. Okay. So, do any of you ever feel like you’re just tolerated by others.

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Jason Mefford: So that’s one of the ways that we’re kind of perceived you know another way that we end up getting perceived as in this is kind of more internally for us but we just feel frustrated

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Jason Mefford: Right is. It’s like, you know, people just don’t get it in and we know what needs to be done, but we just can’t seem to get it done. And so we feel frustrated

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Jason Mefford: You know, do any of you feel frustrated. Another way you know that we’re often viewed is we’re just ignored.

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Jason Mefford: Right you you are in the organization. Nobody really acknowledges that you’re there you’re just kind of off to the side, you’re a necessary evil that we have to have

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Jason Mefford: But nobody gives you the time of day. Heck, a lot of people may not even realize you have internal audit in your organization. Right.

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Jason Mefford: at the executive level. So let me ask you to do you sometimes feel ignored. So could you feel tolerated frustrated or ignored.

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Jason Mefford: Most CEOs feel one of those things. Now, the only way to get out of that. Is there some things that we have to do.

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Jason Mefford: And it’s around technical and soft skills. Okay. If you only have technical skills, but you don’t have the soft skills you’re never going to be perceived as a trusted advisor.

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Jason Mefford: Because you’re not able to communicate the way that you need to, you’re not able to influence people and as a result of that, like I said, you’re going to either be tolerated ignored or frustrated

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Jason Mefford: Okay, and that’s that’s kind of the first one. Now let’s let’s jump in. Next, and talk about executive presence.

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Jason Mefford: And again, this is just because you have a fancy title doesn’t mean you’re being or doing what an executive would do.

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Jason Mefford: Because there’s really kind of three areas that you need to be focusing on. And so I want you to think about this, imagine somebody juggling balls.

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Jason Mefford: Now, if you’re only juggling one ball. It’s pretty easy. You just throw it up and down in the air. If you’re juggling two balls. It’s it gets more difficult, but it’s not

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Jason Mefford: That that hard to do. You can kind of balance and juggle two balls. Okay, where it really comes in is when you start trying to juggle three balls, then it becomes a little bit harder.

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Jason Mefford: And as I said at the beginning, you know a lot of you are probably, you know, focusing maybe on one area, maybe two areas, but you’re not doing all three very well. And this is one of the reasons you know of what we have to do to move into this executive presence so

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Jason Mefford: What are these three different areas. Well, the first one is around stakeholders. And so what we have to do is be able to actually manage the relationships with our stakeholders.

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Jason Mefford: If you are an executive, that is one of the biggest parts of your job is actually developing the relationships with other parts of the organization.

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Jason Mefford: And managing those stakeholder relations. So again, internal audit, again depending on your company. There’s lots of different ones, the obvious ones, the board executive management could be regulators your external auditors.

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Jason Mefford: You know your staff. Other people like that are all really kind of stakeholders and you have to be able to manage all of those stakeholder relationships. Now,

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Jason Mefford: Some of the things you know that most of the time, you know, a lot of the other executives may look at us like we’re little kids, you know,

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Jason Mefford: And I know that can be difficult, but this is where, again, as we learn how to manage these stakeholder relationships we start to evolve from that point.

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Jason Mefford: And the reality is there’s, it’s like a lot like a minefield in organizations often

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Jason Mefford: You know that you have to be careful and understand really how to navigate the executive politics and organizations. If you don’t understand it. It’s just like you’re stepping on landmines.

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Jason Mefford: And eventually, you know, if you don’t know what you’re doing. You’re going to step on a landmine and that landmine maybe the equivalent of a career limiting move we used to talk about these

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Jason Mefford: public accounting when I was there. That was a Colm move a career limiting move. Well, I don’t want you to make career limiting moves.

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Jason Mefford: And so, you know, again, you need to learn how to manage those stakeholder relationships because the reality is if you don’t have the respect and trust of executive management.

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Jason Mefford: It’s either because of what you’re doing or how you are being. And so again, there’s ways that you can learn. There’s things that you can do to change that.

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Jason Mefford: And one of the biggest ways is to not let some of the theoretical stuff in our profession, get in the way.

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Jason Mefford: So, for example, don’t let theoretical independence, get in the way of doing what is necessary and practical

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Jason Mefford: You know sometimes we feel like, Oh, I can’t do what the executives. Want me to do, because that would impair my independence, you know, stop, stop thinking that way.

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Jason Mefford: Because the reality is your organization pays your paycheck, you know, last time I checked, know ca was getting paid by the Institute of internal auditors.

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Jason Mefford: While the standards are important. We want to follow those you have to do what’s necessary and practical for you, your team and your organization.

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Jason Mefford: So don’t get self righteous and in letting things like independence, get in the way of doing what needs to be done. Now another quick point on this.

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Jason Mefford: Winston Churchill, I just watched a movie about him. And one of the quotes that he said was, you will never reach your destination. If you stop and throw stones at every dog that barks.

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Jason Mefford: Now, one of the reasons why you’re not, you may not be doing well with your stakeholders is to them. It feels like we’re always throwing rocks at them.

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Jason Mefford: We come back. There’s always improvements that need to be done. We tend to be more negative. And the problem is you know other people view us like somebody throwing rocks at them.

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Jason Mefford: Well, I don’t know if you’re like me, but I don’t want to be around. Anybody who’s throwing rocks at me. I want to stay far enough away from them.

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Jason Mefford: So if that’s a perception that you’re having, there’s some things that need to change. Okay. The second area that we need to really deal with in this executive presence.

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Jason Mefford: Is our staff and, you know, I know, I know a lot of times, this is a very difficult part of the job. You have to deal with HR issues when you are a chief audit executive

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Jason Mefford: You have to find the right people. You have to do what you need to to keep the right people right there are sometimes, you know, you have to discipline.

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Jason Mefford: You know, and think about, well, how am I going to structure, how am I going to staff, all of these different projects. Right.

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Jason Mefford: But here’s another big one, too, is that as you move into a chief audit executive role you move from being a manager to a leader.

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Jason Mefford: And often that is difficult for people to make that transition, you know, a leader is more controlling and direct supervising telling people what to do.

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Jason Mefford: And and this is where that term micromanaging comes in that a lot of times, as we move into the leadership position we continue to manage people and often micromanage people instead of really stepping into the role of a leader.

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Jason Mefford: Because there is a difference between being a leader and being a manager. So again, that may be something that you need to work on as well.

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Jason Mefford: Now the third area of executive presence and this is one that a lot of people forget, but it is managing yourself. Okay.

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Jason Mefford: And sometimes this can be the hardest thing to do, but it is the most important thing to do. So, you know,

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Jason Mefford: I’m a fan of Bill and Ted’s Excellent Adventure as well. And so in there you know they they talk about all these famous dead dudes. Well, here’s a couple of famous dead dudes that talked about this.

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Jason Mefford: Layout so right mastering others is strength mastering yourself is true power. And so when we can really master our self.

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Jason Mefford: That goes a long way in our executive presence and it’s not easy to do. Mastering yourself may be one of the hardest things you ever do. And that’s why we need help.

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Jason Mefford: We need help in learning how to do that, how to develop the right habits, so that we can actually have that confidence have the integrity of actually managing ourselves.

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Jason Mefford: You know, Plato also said the first and best victory is to conquer self and I know this is true. And this is actually one of the areas that will have one of the biggest impacts on those other aspects of

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Jason Mefford: Your executive presence. Now I’m going to let you in on a little secret about this, you know, when you’re managing self. Most people work from what’s called the have do be model.

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Jason Mefford: And so it kind of goes like this when I have the time when I have the money, then I can do that. And then I will be calm or be that person.

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Jason Mefford: And that’s what most people operate from this is why people don’t take action because they think, Oh, well, that would be great. But I don’t have the money for that.

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Jason Mefford: And so they never actually get started. They never become the person that they need to be okay.

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Jason Mefford: Instead, you have to flip that model around, you have to be do and then you will have which means sometimes when it’s a little scary. You actually have to take action.

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Jason Mefford: So again, instead of saying, I don’t have time. I don’t have money for that we need to switch that around and be the kind of person who will take the time

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Jason Mefford: And take the money to invest in ourselves. Okay. So again, if you’re an Olympic athlete.

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Jason Mefford: If you say, Well, I don’t have enough time, I don’t have enough money to hire a coach and a trainer to be able to help me become an Olympic athlete, guess what, you’re never going to be an Olympic athlete.

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Jason Mefford: If instead you start acting like an Olympic athlete you figure out ways to take the time and to find the money to get the coaching that you need.

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Jason Mefford: That you will really have at the end of the day, you know, a gold medal hanging around your neck, but you will never get that gold medal hanging around your neck.

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Jason Mefford: If you don’t have the courage to take the time and money to begin with and start doing the work necessary to be able to have that gold medal.

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Jason Mefford: So the same thing applies to us if you want to be that confident executive. You have to be willing to invest the time and money and do the work, so that you are actually will have the respect of people when you are that kind of an executive

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Jason Mefford: Okay, so the last of the three areas that I wanted to kind of talk to you today is again about the collaborative community.

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Jason Mefford: And as I told you, you know, to begin with, this is very important, and I know you know a lot of us think, well, I’m independent, I should be able to do it by myself.

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Jason Mefford: Reality is, folks. It just doesn’t work that way. Okay, so, so think about if any of you have

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Jason Mefford: You know, since again we’re we’re close to the beginning of the year. A lot of you may have said you know what

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Jason Mefford: I’m going to start going for a walk or running or exercising doing something like that. Now if you decide, and you are doing that by yourself.

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Jason Mefford: What ends up happening is we usually run out of steam. So the first week or two. We do great. But then, you know, maybe it’s raining outside. And so we think

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Jason Mefford: You know, I don’t really want to get up, it’s raining. I don’t really want to go outside.

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Jason Mefford: And so because it’s just a commitment that you’ve made to yourself and you’re not a part of a community, you just let it go.

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Jason Mefford: And then all of a sudden a week or two goes by and you realize you haven’t been doing what you said you were going to do.

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Jason Mefford: Now flip that around. If instead at the beginning of the year, you said you know what, I’m going to start exercising more and and my buddy.

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Jason Mefford: You know, Frank, or Bob or Joe or sue, whatever their name is hey, let’s go for a walk every day at 630 in the morning.

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Jason Mefford: When you create that group, it builds in some accountability for you.

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Jason Mefford: So again, you do. Well, the first two weeks and then you’re laying in bed going, Oh, man. It’s raining outside. I really don’t want to go outside.

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Jason Mefford: Oh, but Bob’s going to be waiting for me. It will help you get your butt out of bed to go meet Bob because you’ve made a commitment to Bob. That is one of the examples of why having a community around you is helpful. It gives you some accountability and it helps you keep going.

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Jason Mefford: Another reason for having a community around you is, again, as I said before, right now, things may be going well.

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Jason Mefford: But in the future. They may not be going so well and if you don’t have a community that you can reach out to and ask for help.

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Jason Mefford: When the when the trouble comes. You’re going to be dealing with the trouble by yourself.

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Jason Mefford: As opposed to having already developed those relationships with people and so you can actually get best practices asked questions. See what others have gone through

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Jason Mefford: Because here’s, here’s what I found is somebody else has already gone through whatever problem. I may be facing at the time.

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Jason Mefford: Okay, somebody else has already gone through that. Now I can either learn the hard way by trying to figure it out myself or I can learn from others and make it much easier.

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Jason Mefford: I prefer to learn from others and make it easier and I hope you do too, because it really does make all the difference.

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Jason Mefford: You know, as an example, I was I was talking with a with a chief audit executive this person that has been in the industry for a long time 30 plus years.

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Jason Mefford: But there were some things going on, half this person’s organization things that they had never dealt with before. Okay.

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Jason Mefford: And I remember as I was talking to them. They even made that comment. They said, you know, in 30 years of all my training of working for some of the biggest companies in the world.

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Jason Mefford: I have never come across this and you know what, that’s what happens is that at some point in your career, you’re going to come across something that you have never experienced before.

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Jason Mefford: But here’s the good thing somebody else probably has or somebody else from an outside perspective can give you some guidance or coaching to help you get through it.

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Jason Mefford: And so again, this is why community is so important, but you have to develop it before you end up having the problems, usually. Now, I kind of blabbering and gone on for a little while, but is this resonating with you, you know. Are you understanding. Are you seeing

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Jason Mefford: How doing some of these things can actually help you to elevate the status of internal audit and to be able to move your career forward, you know,

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Jason Mefford: We need to change how others are perceiving us. We need to develop our executive presence and we need to become a part of a collaborative community.

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Jason Mefford: Now the good thing is, again, if you are a chief audit executive there’s help out there. Okay, this is exactly what the chief audit executive forum.

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Jason Mefford: Does it is a group of like minded chief audit executives, where you can share best practices. Ask questions get advice, get that sense of community.

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Jason Mefford: So that again as a group, just like Helen Keller said, you know, at the beginning, that, you know, together we can do so much more

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Jason Mefford: That’s the idea behind the chief audit executive forum, you know, it’s, it’s an opportunity to come together. Each month as a group.

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Jason Mefford: Have group calls where we can talk about different things, you know, there’s kind of an educational side of it as well.

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Jason Mefford: But really, you’re able to get thought leadership and best practice best practices from your peers, you know, and really it is an exclusive executive community where you do learn. Hey,

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Jason Mefford: What have others done to help change the perceptive the perception of internal audit in their organization will this work for me.

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Jason Mefford: You know, how do I say, you know, develop my executive presence. Oh, here’s some ways that I can do it.

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Jason Mefford: Here’s some other people that I can look to as an example that I can learn from and can move into that role. And like I said, again, it’s that collaborative community.

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Jason Mefford: Okay, now I want you to, I want you to think about this, because I know sometimes, especially in our profession. We’re very risk averse. We don’t like change.

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Jason Mefford: But here’s the, here’s the thing. Folks like I talked about before. Remember the Albert Einstein quote

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Jason Mefford: If you keep trying to do things the same way, you’re going to get the same results. If you want things to be different. You have to start taking different action.

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Jason Mefford: One of those actions that you can take now is to apply to join the chief audit executive forum.

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Jason Mefford: Now the forum is different. It’s not anybody who wants to get in gets to get in.

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Jason Mefford: You actually have to go through an application process. You have to go through an interview to be able to be offered membership and the chief audit executive forum.

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Jason Mefford: Go out to the web page look through the information and there’s actually a link there where you can submit your application.

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Jason Mefford: This is different than anything else out there. And because of that, it’s a different process for joining as well.

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Jason Mefford: You have to go through an interview, you have to fill out an application. And the reason for that is to make sure that it’s a safe.

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Jason Mefford: Space and the right people are included in there so that you really can have those frank discussions and know that whatever said is kept within the group, it’s confidential.

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Jason Mefford: And and and again it’s like I said it’s it’s these like minded CEOs who were all trying to

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Jason Mefford: Elevate the status of internal audit in our organizations and really move into that executive presence and become a trusted advisor.

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Jason Mefford: In our organizations. So again, if that’s something that sounds like what you want make sure and submit your application.

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Jason Mefford: Now applications are only open until the end of January, because we only open applications, a few times a year. And so this is your opportunity to get in to that kind of a group and start working on those three areas that we talked about.

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Jason Mefford: Now just to wrap up, you know, again, as you’ve listened through this. There’s probably you fall into one of three groups. One of you know one group is. Wow, I’m ready to get started right now. This is exactly what I need. Well, if it’s exactly what you need.

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Jason Mefford: Go, click on the link go fill out your application, get it in today. So we can set up the interview with you just take action now.

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Jason Mefford: If you’re, if you’re one of those people that are saying, Well, I don’t really think it’s for me. Okay.

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Jason Mefford: Right. And this is not for everyone. And in fact, we turn away people each time that are not a good fit. So if you don’t think it’s a good fit.

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Jason Mefford: Don’t waste your time filling out an application. Okay. But at some point in the future, you may realize that you need this. And so we’re going to be here.

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Jason Mefford: When you get to that point and you feel like this is something that you need reach out and let me know. And the next time that we open up membership.

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Jason Mefford: Will let you put in your application and see if you’re a good fit. OK. Now the third group which some of you may be in as well.

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Jason Mefford: You’re sitting there and thinking, Well, I don’t know. I need to think it over. I need to talk to somebody. Okay, well,

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Jason Mefford: Okay, if you need to do that again go out to the page. If you need to talk about it a little bit schedule a time to talk to me.

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Jason Mefford: But here’s the thing. Don’t think too much because the problem is we tend to again in our profession. We like to overthink and overanalyze things

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Jason Mefford: And if you overthink and over, analyze, you usually miss out. And so what ends up happening is there’s still plenty of time until the end of the week for you to go ahead and submit your application.

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Jason Mefford: But if you if you overthink it. You’ll end up sitting on your hands and not make a decision and I don’t want you to regret.

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Jason Mefford: making the decision if three months from now, you end up having that proverbial shit hit the fan. Okay, so don’t think too much about it.

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Jason Mefford: Remember to be having do find a way to make the time, find a way to get the money and apply for the CA forum because here’s the thing I want you to imagine if you know

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Jason Mefford: In maybe as little as three weeks after you join the forum, all of a sudden, you know, you start to realize and get clarity about what you can do differently that will start to make an impact in your organization, how are you going to feel after three weeks when it’s like

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Jason Mefford: You know all that stress all that frustration that I was feeling before starts to get lifted, because now you’re realizing hold it. I can do this. And here’s how I can do it.

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Jason Mefford: It’s going to feel great. What if three months from from now you all of a sudden start getting asked for your advice. Other people start viewing you differently in the organization.

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Jason Mefford: Maybe three months from now, you’re actually invited to the executive table. How is that going to feel it’s going to feel great, you know, what if three years from now.

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Jason Mefford: Internal Audit really is viewed as an equal to others in the organization. If people look at you and realize that you are a very, very valuable part of this organization.

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Jason Mefford: If people are viewing you as a trusted advisor, if they’re coming to your regularly for help. That my friends is a great feeling. So I want you to imagine and think about how good that is going to feel

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Jason Mefford: And then have the courage to take the action now. Because how grateful, you’re going to be three weeks, three months, three years from now.

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Jason Mefford: That you actually had the courage to do what you needed to do to get the help to get become a part of that ca forum and be able to have all of those things that you want.

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Jason Mefford: You’re going to feel really grateful and it’s going to be really, really great. You just have to take action now.

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Jason Mefford: So with that, my friends, I’m going to wrap up again as a reminder applications are due by the end of January for the chief audit executive forum.

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Jason Mefford: So click on the link below go out to the website look at the information and make sure and submit your application and schedule your interview.

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Jason Mefford: And I look forward. For those of you that want to get into this group of like minded chief audit executives. I look forward to getting your applications and being able to talk with you.

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Jason Mefford: And for the rest of you. Have a great rest of your week, and I will catch you on the next episode of jammin with Jason. See ya.