Increased Talent Risk Coming to UK Internal Audit

Internal audit in the UK is at the brink of a potential labour shortage in the near future, and it’s time to start preparing now. In a post-Brexit world with a pandemic still raging, the labour market has already shifted dramatically. During this period commonly known as the Great Resignation, almost a quarter of all workers are considering a job change. While most of the media coverage focuses on supply chain and logistics workers, internal audit and white collar professions are likely to feel pressure from pending changes as well. Talent shortages caused by Brexit immigration policies, COVID burnout, and a pre-existing skills gap will lead to increased talent risk within internal audit across the UK.

Skills Shortage

Internal audit is a complex function, requiring an adaptable set of soft skills. As auditors, we are tasked with reviewing all areas of an organisation, while most departments are expected to master only a specific area that matches their education and experience. However, risks and controls span every facet of an organisation.Modern auditors are called on to execute their audits and assessments from a place of understanding and compassion, understand emerging risks, and develop a range of skills, including both soft skills (communication, persuasion, empathy) and hard skills (assessing risk, writing concise audit reports, managing projects). Any shift in the talent pool for internal audit will likely exacerbate an already tight market for skilled internal auditors. Within the UK, the two predominant events that will continue to increase both the impact and likelihood of talent risk felt by internal auditors are Brexit and COVID.  

Brexit Emigration

After the dust settles from Brexit, the talent pool will have shrunken. Many internal audit departments are staffed with rotational positions that depend on individuals from around the world. Britain’s EU departure has made it more difficult for foreign nationals to return: skilled auditors from the EU seeking work in the UK are required to apply for visas under the new immigration policies. To do so, UK-based organisations are required to apply for licensed sponsor status so they can sponsor foreign workers. Likely as a result, the UK has lost 200,000 EU nationals since 2019. The inability to source talented auditors from beyond the UK’s borders will have an impact on many organisations’ ability to find the people they need.

Great Resignation

To make the situation worse, the pandemic has further tightened constraints on staffing. While the shift to remote and hybrid working models has become the norm, many people have had to reprioritise their family responsibilities over their work. Unfortunately, this has had a disproportionately negative effect on female workers. In past research published by The IIA, the global average showed the gender composition of internal audit teams to be 60% male, 40% female. As COVID raged through Europe, women often bore the greater share of home and child care responsibilities. Even as lockdown restrictions are lifted and children return to school, women are disproportionately taking on responsibilities related to daily logistics and after-school care. Pressure at work and increased responsibilities have led to burnout. A report from McKinsey & Company points out that “in the past year, 1 in 3 women has considered leaving the workforce or downshifting their careers—a significant increase from 1 in 4 in the first few months of the pandemic.” With so many people, especially female workers, leaving the workforce, it will become harder to fill critical audit positions.

Assessing Your Talent Risk

For those in the UK — moreover, for all who do business with UK organisations, it is important to consider the increasing level of talent risk. When you look across your internal audit department, ask yourself about the makeup of your team. To assess your own talent risk, ask these questions:

• Has my department experienced increased turnover during the past few years?
• Does my department maintain diversity in gender, race, age, and other demographic markers?
• How is my organisation providing support to working parents who must juggle their childcare with work responsibilities?
• Does my department have the skill sets needed to audit the organisation effectively?
• Do I have short and long-term staffing plans that consider the reduction in talent availability?

Only by taking an objective look at your department and performing an unbiased risk assessment can you prepare for a potential talent shortage in your organisation. Once you understand the full perspective of your team’s talent landscape, you can plan for alternative staffing solutions (such as cosourcing or hiring freelance auditors), and you can explore opportunities for increasing efficiency through technology. The talent gap is quickly evolving into a threatening category of emerging risk, and you should not wait to fully assess it.