Love Your Auditor. A wise person* once explained to me why they enjoyed a visit from their auditors. The gist of the story revolved around the benefit provided by auditors in presenting an ‘outside viewpoint’, something valuable that helped them improve their business. A challenge in the style of a ‘critical friend’ was a catalyst that helped to get things moving. I don’t remember if they actually used the word ‘love’ and ‘auditors’ in the same sentence, but they certainly looked forward to the visits and remembered the auditors fondly (rather than with dread or fear).
Then I woke up and had my corn flakes… it was just a dream…
Sorry, I shouldn’t be so negative. This wasn’t a dream, it really happened and the wise person* was the lovely David Hain, telling me about his early career as a manager in the retail sector. I’m not sure of exactly how many people that have ‘loving’ relationships with their; inspectors, regulators, auditors, tax inspectors etc etc., however, there are plenty of people who don’t. Please stick with me and I’ll explain.
‘Six Ways to Deal with an Ofsted Invasion’ is an article written about Education Inspectors, published by the serious and grown up Times Educational Supplement. The article presents Inspectors as ‘the enemy’, and recommends 6 ‘tactics’ that Educators can use to ‘thwart their attack’. I wrote about it in this post ‘Beating the Inspectors Number 7. Satisfaction of Search Bias’ which links back to the article. None of this does much to suggest a ‘loving’ relationship does it?
If you want more… my former colleague Mike Palmer, who spent a large part of his career in regulation, frequently talks about the concept of organisations presenting a ‘mirror of assurance’. Basically this refers to the practice of ‘ reflecting’ back to the regulators the things they are looking for. Anything else just isn’t ‘seen’ or hidden and the regulators are satisfied with ‘finding what they are looking for’.
This all represents some pretty bad (pathological) practice and there are a number of reasons why:
- It gives a false sense of assurance that things are ‘ok’ when they might not be.
- It costs a lot of money / resources (which are essentially wasted).
- It creates an ongoing culture of mistrust (there’s no trust or love).
Fear, Blame and Failure. There are some long-established and deeply rooted human behaviors that go hand in hand with this ‘lack of love’ for the regulators. Basically it’s about the fear of failure and punishment as individuals, teams, communities and organisations. There’s lots been written on this by far clever people than me, but here’s a few links to what I’ve had to say:
- Taking Risks: How to make it safe to fail (Academi Wales)
- The James Reason Swiss Cheese Failure Model in 300 Seconds
- Link to a variety of posts I’ve written about Failure
I’m not going to dwell on any of that, just show you two diagrams created by Professor Keith Grint at Warwick Business School. These are taken from a presentation based upon his paper: Wicked Problems and Clumsy Solutions: the Role of Leadership
Bruce Willis is going to save us! I promised there was a connection. It’s not actually Bruce that’s going to save us, it’s over 30 years of learning how to develop the safety culture in the oil and gas industry. Anyone who’s seen Bruce and his crew drilling holes in the meteorite will however appreciate that he might not be the greatest health and safety role model – but he does save the world.
What I’m actually going to use is the work of Prof. Patrick Hudson from Delft University in the Netherlands and his 2001 paper, Management and Safety Culture – The Long, Hard and Winding Road.
Before anyone switches off because, ‘safety culture in the oil and gas industry has nothing to do with our business…’ just bear in mind this advice from Bruce**
- it’s all about humans and how they behave; that’s relevant to every organisation,
- the oil and gas industry have made some big, highly visible mistakes and have been forced to learn from them,
- they’ve been doing this stuff for ages, and have made major improvements over that time (the statistics prove it), and
- they’ve thrown a ton of money at it. The oil and gas industry is very rich, which has allowed them to invest relatively modest amounts (tons of money) in making things better.
Think about it? Still not relevant? **By the way Bruce didn’t actually say that.
From Pathological to Generative Cultures. Patrick Hudson’s ‘Long, Hard and Winding Road’ paper covers a lot on leadership and how the industry developed its safety culture. It also talks about the impact of legal requirements and the role of auditors and regulators. I just want to illustrate two of the key parts that I think are relevant to audit and regulation; a table describing the features and behaviours associated with different types of safety culture; Pathological, Bureaucratic, Generative and, a graphic which illustrates the ladder or evolution of safety cultures.
What does this mean for regulation and audit? I think it is possible to map audit and regulatory activity directly onto what is described in Patrick Hudson’s tables and graphics.
For example, if information is hidden in a pathological organisation the regulators might ‘turn the place upside down’ looking for it. Where information is actively sought in a generative organisation there’s a fair chance that emerging thinking will be shared early on with the regulator. That’s the kind of behaviour I’ve heard spoken about many times, “talk to us early on about what you are planning to do, we might be able to help you avoid the pitfalls…”
For the regulators, the operators and everyone else, the generative culture has to be the place to aspire to. I want to talk about the detail of ‘how you get there’ in a future post. Part of that will cover the idea that there isn’t ‘one size that fits all’ and a generative regulatory approach is unlikely to work with a pathological organisation, and vice versa.
In the meanwhile there’s a part in the paper’s conclusion where it talks about a generative culture making financial sense. Basically it costs less money if you haven’t got to maintain labour intensive processes to satisfy the regulators. Also, you aren’t ‘deploying defences’ to withstand something like the Ofsted Inspector Invasion that was described earlier. These resources could then be used positively to help achieve the real purpose of your organisation. Imagine that.
So, What’s the PONT?
- Adversarial (pathological) regulation costs more than a more generative approach.
- Different behaviours are required from both operators, regulators and the legal framework for this to happen (they need to compliment each other).
- It can happen, I know someone it happened to. I’m not quite saying ‘love your auditor’, but we can all try a bit harder.
Finally, Bruce Willis must have a useful quote on safety culture. Can anyone help me out? By they way anything starting with ‘Yippie-Ki-Yay’ is banned Dyfrig Williams.
[…] This lovely flowchart was developed by Professor Keith Grint paints the picture. The details are explained in this post about moving from Pathological to Generative Regulation. […]
[…] you can have the ‘Hollywood’ version I wrote; Pathological to Generative. Moving up the Regulation Ladder with Bruce Willis. The most useful thing I can point you towards quickly is the graphic that illustrates the […]