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Christmas upside down
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Christmas upside down

Peter Bonisch takes a timely look at the culture of (internal) audit.

 

It’s almost Christmas time again. In the UK, that means major retail stores competing for the most nauseatingly cute Christmas-themed advertising campaign.

 

This year, two have caught my kids’ attention – and have thus been thrust into mine. The first involves Helena Bonham Carter (Bellatrix L’Estrange for Harry Potter fans; Ophelia circa 1990 for Shakespeare – or Mel Gibson – fans) reprising her 2010 role as the Red Queen in Alice in Wonderland (directed then, of course, by her husband, Tim Burton). But don’t ask me what it is advertising (the ad agency will hate the ‘cut-through’ implications of that; remember, half of all advertising spend is wasted and in this case we know that I am in that half).

 

The other involves a rabbit disturbing the hibernation of his (or, equally possibly, her) friend, a bear, with an alarm clock, presumably bought from the store that is the object of the advertisement; again, don’t ask me which store. Forget that any form of reality would have the aforementioned bear adding to its mid-winter calorific intake at the expense of the rabbit. Or that the rabbit would not, anyway, have the dexterity to set the alarm clock, or, for that matter, the cerebral capacity to understand time as divided in to 24 equal periods in the course of a day. In the world of advertisers, you should never spoil a schmaltzy story for the sake of the truth.

 

On the plus side, both capture a certain number of truths; one is snow. Christmas should have snow. Everywhere. Even places that never see snow. And turkeys (except that my daughter has recently opted for vegetarianism on moral grounds, a lifestyle choice that ignores the lifestyle choice of her immediate, meat-eating family). But let’s focus on the snow.

 

As a young child, I have a vivid memory of snow on Christmas Day. This would be unexceptional for my children (or the other several million children growing up in greater London). But, where I am from, the average December temperature is more than 20 degrees higher than the temperature at which snowflakes form. So, no snow, but lots of turkeys. Except that, in keeping with many of the popular stories about that part of the world, we tended to have barbecues on Christmas Day. I’m sure it is possible to barbecue a turkey but it is well beyond my culinary skills. Think beef, lots of beef. Not a cranberry in sight.

 

So, if the Christmas auditor visited my house back then, we would have failed dismally at the traditional, turkey-filled, snow-covered Christmas (and, even now, the memory test on which UK retailers best capture this spirit – or, at least, have the greatest creative spend on their 2013 Christmas advertising campaigns). But then, come to think of it, so would most of the world. Especially those parts where people do not routinely celebrate Christian religious festivals. But that’s not my point.

 

If we had received a visit from the Christmas auditor, the stockings would be there (tick); the tree would be there (tick); it would be suitably decorated with a star – or in our case a Christmas moose purchased at Niagara Falls (although on the Canadian side) – so no tick there. There would be presents under the tree (tick) and champagne (tick) and those silly cracker things that you pull that never work properly (tick) and napkins in seasonal colours (tick) but here the ticks would run out.

 

There would be no snow - except in that one case in 19xx (deleted by the editor for fear of revealing the decrepitude of the author); there would be no woollen jerseys (except in pre-shorn, pre-spun, pre-dyed, still-frolicking form); there would be no hats with pom-poms on them; no snowmen (redundant, obviously, as there would be no snow); there would be no mittens and there would be no Wellingtons (although, that last one is debatable as it always rains there and everybody has Wellingtons, they just don’t call them that). We would have failed the traditional Christmas audit dismally.

 

Of course, it is highly unlikely that, outside American television scripts – scripts, only, mind; such a show would never make it in to production or broadcast – anyone would audit Christmas except for the rather pointless auditing of gifts received and violation of companies’ gift policies (although, that is also the jurisdiction of the happiness police). But, there is a serious point herein.

 

Recent UK regulatory initiatives, both in financial services and major, listed companies, require firms to attend to their cultures or ‘risk cultures’; one such document has actually been developed and promulgated recently by the UK Financial Reporting Council and, for financial services, another in the last year by the Chartered Institute of Internal Auditors; still others by financial sector regulators. The CIIA document met with widespread favourable comment. This is wrong-headed and is a worrying development. In 1952, two American anthropologists famously identified 164 different definitions of culture. It is stretching credulity to imagine that the number of definitions available has declined in the intervening 60 years. So, we face the need to audit the organisational equivalent of Christmas: it is different everywhere, means different things to different people and is wholly dependent on cultural context: there is no right answer.

 

Christmas cannot be quantified or its attributes summed, any more than organisational culture can be. Certain attributes can be ranked by preference or noted as present or absent – think board risk committees or green napkins. We can compare this year’s tree to last year’s and, even, comment on the infrequency of having a family’s Christmas moose adorning the tree.

 

But no one can tell me that it is right or wrong to have such a moose adorning such a tree – or to wear sandals at the beach rather than Wellingtons in the snow. Auditing culture is simply not meaningful or, at the very least, it is a highly specialised activity that requires considerable skill and, probably, training in behavioural analysis and research methods; such backgrounds are uncommon in the audit world.

 

Auditing culture involves having previously sought to understand the validity (or not) of a good chunk of the 164 definitions identified by Alfred Kroeber and Clyde Kluckhohn in 1952; OK, I admit that one may be setting the bar a bit on the high side. But it is the province of social science, not of evidential standards (except, possibly, at a clinical level). Most auditors have no such knowledge or training.

 

For me, Christmas should be spent at the beach. But there is no ‘right’ way to spend Christmas. Not everybody can or should have snow. We need to stop pretending that there is a ‘right culture’ or that organisational structural or analytic attributes can define a culture any more than turkeys or trees define Christmas; they contribute, certainly, but it is a braver man or woman than I am who would stipulate how they contribute. This is not the stuff of audits any more than it is validly the stuff of regulations.

 

Auditing, done well anyway, requires humility; it requires recognising the limits of one’s evidence and inference. Christmas just doesn’t belong on the list; nor does culture. Who are you to say I cannot have my Christmas moose?

 

Peter Bonisch – managing director, Paradigm Risk Ltd

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