Redefining Internal Audit’s Role in Human Capital Management for a Boundaryless Future

In today's evolving landscape, work is no longer defined by traditional structures. With digital advances breaking the notion of work as a physical space, companies now rely on skills over jobs to make workforce decisions. Simultaneously, employees are demanding meaningful work, flexible environments, and personalized career paths, pushing organizations to emphasize the social aspect of environmental, social, and governance (ESG) frameworks.

Internal audit plays a pivotal role in helping leaders navigate this unbounded work environment. Whether by assessing recruitment strategies, evaluating diversity, equity, and inclusion (DEI) efforts, or conducting culture audits, internal audit helps identify risks and recommend improvements. It also ensures the accuracy of social metrics shared with the marketplace, providing assurance on their completeness and reliability.

In this technology-enabled, employee-focused future, internal audit can offer insights into human capital risks like talent retention, productivity, brand reputation, and cybersecurity. The key question is not whether internal auditors will influence the future of work, but how significantly they will shape it.

Red Flags to Watch For:

• Toxic Culture: Negative posts on job boards or recruitment sites may reveal underlying cultural issues.
• High Turnover: Excessive attrition suggests that the organization’s human capital strategies may be ineffective.
• Helpline Overload: An abundance of calls to internal hotlines may signal unresolved risks in human capital management.
• Reputation Risk: Poor labor practices can harm the company’s image. It’s crucial to ensure your organization isn’t viewed as a bad employer.

Strengthening the Core:

• Culture Audit: Regularly evaluate risks related to employee engagement, behaviors, and external market signals.
• Ongoing Integration: Include human capital risks like DEI and organizational culture in the audit plan.
• Support Leadership: Provide leadership with insights on the risks and opportunities within the organization’s culture and policies.

Building Trust:

• Diversity & Fairness: Ensure processes are in place to attract and retain diverse talent, eliminate bias, and treat employees equitably.

Next Steps for Improvement:

• Visibility & Insight: Evaluate human capital programs to identify strengths and areas for improvement.
• Maturity Check: Analyze key areas such as talent, culture, leadership, and brand to offer both quantitative and qualitative insights.
• Metrics that Matter: Recommend metrics tied to specific talent goals and conduct special culture-related audits when necessary.

Internal audit’s broad perspective on risks and close collaboration with stakeholders make it an essential partner in shaping the future of human capital management.