2013 Cox Enterprises Transformation_IIA Local_2

Report
Shifting the Paradigm:
A Case Study in Transforming Internal Audit
Atlanta IIA Chapter Meeting
April 2013
Presenters’ Overview
Randy Earley – VP of Audit Services
— 1.5 years at Cox Enterprises
— 28+ years in Audit
— Industries: Retail; Financial Services; Telecom; Manufacturing; Media; Automotive
— Previous Employers: JCPenney; Citigroup; Nortel Networks; Flowserve; SuperMedia
— Certifications: CIA; CISA; CRMA; CRISC
Elton O’Neal – Advisory & Assurance Director
— 5.5 years at Cox Enterprises
— 11+ years in Audit and IT
— Industries: Telecom; Media; Automotive; Manufacturing
— Previous Employers: Deloitte; International Paper
— Certification: CISA
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Cox Enterprises Overview
Cox Enterprises is the nation’s largest, privately-held media and broadband
communications company. Headquartered in Atlanta, Cox Enterprises' 2012
revenues are more than $15 billion, and the company has more than 50,000
employees nationwide.
$9.6B
$2.7B
$1.9B
$1.2B
2012 Revenues
2012 Revenues
2012 Revenues
2012 Revenues
Cable Television
Vehicle Auctions
TV/Radio Stations
Online Auto Ads
Telephone
Repair Services
Newspapers
Kelley Blue Book
Internet Access
Certification Services
Ad Sales Rep Firms
vAuto
Telecommunications
Web Tech Products
Valpak
HomeNet Automotive
Advertising Solutions
Financing Products
Cox Digital Solutions
VinSolutions
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Cox U.S. Market Reach
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Today’s Discussion
 The Impetus for Change
 Our Plan vs. Execution of Our Plan
 Our Most Compelling Strategies
 Measuring Success
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Our Prologue
The Domino Effect
Poor Employee Surveys Results
(outlier from the rest of the org)
Change in Org
Reporting
Changes in Audit
Profession
No Change in Dept
Strategy for 15
Years
Questions that could not be answered…
“Are you the right size?”
“Are you spending time in the right places?”
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Where We Were

PEOPLE: Big 4 external audit alum (mostly SOX experience)

AUDIT PLAN: Cyclical annual plan based on revenue and time

CAREER PATH: Outplacement within Cox to Accounting/Compliance

TECHNOLOGY: Industry tools for audit planning and execution

DEPT VISION/STRATEGY: Aligned with business need
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Strategic Assessment Results
ORGANIZATION &
PEOPLE
COMPETENCY
Financial
Financial & Operational
Financial, Operational
& Strategic
GOVERNANCE
No Involvement
Limited Involvement
Internal Audit as
Advisor/Facilitator
CHARTER/ROL
E
Financial Controls &
Compliance with Policy
Financial Controls &
Operational Effectiveness
Business Controls &
Risk Advisor
PROCESSES &
METHODOLOGIES
RISK FOCUS
Financial & Compliance
Financial, Compliance &
Operational
Enterprise Risks
METHODS
SOX controls &
Compliance Checklists
Process & Controls
Internal Audit Programs
Risk Intelligence Frameworks
REPORTS
Financial &
Compliance Issues
Process & Operational
Improvements
Proactive Risk/Trends
Analysis & Reporting
STAKEHOLDER &
TECHNOLOGY
INTERNAL AUDIT MATURITY AND VALUE CONTINUUM
STYLE
Corporate Police/Reporter
Consultative
Trusted Advisor
PERSPECTIVE
Historic/Reactive
Current
Proactive/Future
TECHNOLOGY
Basic
Project Management &
Administrative Systems
Data Analysis & Continuous
Auditing/Monitoring
Perceived Current State
Desired Future State
* Strategic Assessment Review (SAR) completed by Deloitte in December 2010.
Copyright © 2010 Deloitte Development LLC. All rights reserved.
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Feedback from Our Customers
“… too much focus on things that don't matter.”
“… majoring in the minors.”
“… need an approach to prioritize [risks].”
“… staff is long on compliance, short on strategy/ops.”
“A paradigm shift is in order….”
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
The Start of Our Journey:
Tweaking Our Compass
Deloitte’s Action Plan Roadmap
Q4
2010
Deloitte’s
Strategic
Assessment
completed
Jan-Feb
2011
Confirm
management
expectations
Scope Risk
Assessment
Phase I
Mar-May
2011
Conduct a
comprehensive risk
assessment
Jun 2011
Develop an
expanded audit risk
universe & audit
plan
Jul 2011
Report out Risk
Assessment results
Develop organization
and skill set
requirements
Jul 2011+
Rebuild
methodologies,
processes, and
technologies
Aug 2011+
Enhance reporting
and communication
practices
Scope Risk
Assessment Phase II
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Our Immediate Next Steps
 Performing benchmarking
– Other companies
– Online tools/services
 Collaborating with a transformation partner
– Risk Assessment processes
– Talent Management processes
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Our Transformed Vision
INFRASTRUCTURE
ORG
PORTFOLIO OF SERVICES
INPUTS
AUDIT SERVICES VISION
STRUCTURED
OBLIGATIONS
DYNAMIC IDEAS FROM RISK ASSESSMENT, STAKEHOLDER MEETINGS, INDUSTRY
PRACTICES, AND COMPANY STRATEGIES/GOALS
ASSURANCE
VERIFY
ADVISORY
PROTECT
ENHANCE

STRATEGY AND VISION (UPPER MANAGEMENT)
PROJECT RESOURCES (MIDDLE MANAGEMENT & STAFF)
TECHNOLOGY & TEMPLATES
METHODOLOGY & FRAMEWORK
PERFORMANCE METRICS
TALENT MANAGEMENT
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Our Transformation Roadmap
STAKEHOLDER
& TECHNOLOGY
PROCESSES
& METHODOLOGIES
ORGANIZATION &
PEOPLE
WORK STREAM
COMPETENCY
JAN 2011
PLAN
30 DAYS


60 DAYS
New AS Org Structure
Inventory of Existing Skill Sets
90 DAYS


120 DAYS
Coordination with CEI HR
New Recruiting Requirements
PLAN
GOVERNANCE
CHARTER/ROLE
PLAN

Transformation Steering
Committee


2011 Budget Update
Mission/Vision Statement
RISK FOCUS
PLAN


Enterprise Risk Assessment
2011 Audit Plan Update

Q2 Project Scheduling &
Plans
METHODS


PLAN
Audit Program Rationalization
Process Analysis Framework


120+ DAYS


AS Training Plan
AS Talent Management Plan


Business Leader Program
AS Emissary Program

New AS Charter
Project Selection & Scoping
Project Staffing Strategy
REPORTS
PLAN


Reporting Methods
Reporting Formats

Reporting Tools
STYLE
PLAN


AS Corporate Rebranding
AS Management Org /Role

Stakeholder Feedback Loop
PERSPECTIVE
PLAN

Audit Transformation
Benchmarking

End-to-End Transformation
Work Plan

Transformation & Dept
Metrics
TECHNOLOGY
PLAN


Technology Requirements
Data Requirements


Tech Tools Research
Tech Tools Selection

Technology Implementation
Roadmap
CHANGE MANAGEMENT/PROJECT MANAGEMENT
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Our Transformation Roadmap
STAKEHOLDER
& TECHNOLOGY
PROCESSES
& METHODOLOGIES
Despite building a comprehensive plan for 2011, our greatest
needs and gaps from our stakeholders’ perspectives were
focused on two distinct areas.
So, our true transformation was focused on:
RISK FOCUS
PLAN
METHODS


Enterprise Risk Assessment
2011 Audit Plan Update

Q2 Project Scheduling &
Plans
AuditF
Program
Rationalization
RISK
OCUS


PLAN
REPORTS
PLAN
STYLE
PLAN
Process Analysis Framework




Project Selection & Scoping
Project Staffing Strategy
Reporting Methods
Reporting Formats
 AS Corporate Rebranding
COMPETENCY
 AS Management Org /Role

Reporting Tools

Stakeholder Feedback Loop
PERSPECTIVE
PLAN

Audit Transformation
Benchmarking

End-to-End Transformation
Work Plan

Transformation & Dept
Metrics
TECHNOLOGY
PLAN


Technology Requirements
Data Requirements


Tech Tools Research
Tech Tools Selection

Technology Implementation
Roadmap
CHANGE MANAGEMENT/PROJECT MANAGEMENT
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Three Year Vision (circa 2011)
2011
2012
2013
TRANSFORM
BUILD
STABILIZE
RISK FOCUS
COMPETENCY
EVERYTHING ELSE
INTERNAL
IMPROVEMENTS
We identified our greatest needs and gaps,
and then addressing them became
the foundation of our transformation.
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Exploring New Territory:
Our 1st Risk Assessment
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Our Risk Assessment Approach
Overall
Approach
April
2011
Q1
2012
2012 &
Beyond

Point-in-Time assessment featuring 60+ stakeholders from CCI, MAN, and CEI

Target audience: VPs and Directors

Risk ranking performed internally by Audit mgmt team and Deloitte

Update of 2011 results featuring stakeholders from all Cox Divisions

Target audience: EVPs and SVPs initially (top-down approach)

Risk ranking vetted through Cox Divisional stakeholders

Ongoing function and responsibility of VP and Director roles

Target audience: EVPs/SVPs quarterly; VPs/Directors monthly

Quarterly validation of risk identification and ranking
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Focused Risk Heat Map
RISK
IT
1
Current State DR
2
Information Security
3
Future Growth DR
4
Growth Infrastructure
5
IT Investments
STRATEGIC
6
Maturing Market
7
Innovation Incubation
8
Organizational Effectiveness
9
Transformation/Centralization
10
Market Response Time
OPERATIONAL
11
Data Governance
12
Business Intelligence
13
Inventory Planning
FINANCIAL
14
Investment Integration
15
Investment Due Diligence
16
Internal Controls
COMPLIANCE
17
Company Policies
18
E-Rate/Lifeline Compliance
AUDIT
COVERAGE
2







1
3
9
8
10
IMPACT (Inherent Risk)
#
15
11
16
14
4
13
12
7
6
5
17
18



VULNERABILITY (Residual Risk)
White diamonds indicate areas of current Audit coverage.
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
The Iterative Process
Hold risk and relationship management interviews with key
stakeholders (SVPs, VPs, and Directors) across business units
JAN
FEB
MAR
APR
MAY
Debrief
executive
stakeholders
on risk update
JUN
JUL
AUG
SEP
Debrief
executive
stakeholders
on risk update
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
OCT
NOV
DEC
Going Off-Road:
Talent Assessments
Assessing Our Current Staff
Required across the
organization in order for
leaders and professionals to
be successful
Leadership
Competencies
Focused on a
specific job role or
the application of
specific knowledge
Needed for success in a
particular job family or
position/level
Professional
Competencies
Technical
Competencies
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Our New Operating Model
VP
Vision
& Strategy
Director
Planning
& Operations
Relationship Management
& Operationalization
Manager
Delivery
Project Management
& People Development
Specialist
Data Analyst
COLLABORATION – CASH FLOW – CUSTOMERS – COMMUNITY
Delivery
Project Execution
& Project Delivery
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Building a Talent Assessment Center
How?




Develop a highly objective and scalable process
Assess performance against clearly defined
competencies
Simulations
Psychometrics
Use realistic, work-based scenarios to predict future
potential
Develop standardized scoring and success measures
Critical Success Factors?

Well-defined job descriptions and competencies

Well-defined decision-making methodology

Well-trained and dedicated Assessors

Well-organized logistics (free from distractions)
Interviews
Measure of Candidate Potential
+
Consensus
Final Decision
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Our Assessment Process
Types of Assessments
 Analytical Fit
 Behavioral Fit
 Position/level Fit
 Cultural Fit
Personnel Requirements
 3 – 8 Candidates
 6 – 16 Assessors
Candidates
Timeframe: 5 Weeks
 Recruiting/Initiation as Needed
 Full Day of Exercises
 Same Day Decisions
Assessment
Workforce Transition
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Paving a New Path
Department Priorities thru Transformation
 AutoTrader.com
 Cox Media Group
 Phase I Follow-Up
Risk
Assessment
Phase II
 Recruiting
 Staff Training
 Co-Sourcing
Talent
Management
Projects
 Change Mgmt
 Stakeholder Mgmt
 Communication Plan
Brand
Build-Out
Dept
Infrastructure
 Technology Tools
 Methodology
 Project Data
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Where We Are Today

PEOPLE: Diverse mix of Big 4 alum and mgmt consultants

AUDIT PLAN: Rolling 6-month, risk-based plan

CAREER PATH: Outplacement within Cox to varied career options

TECHNOLOGY: GRC implemented; technology and data roadmap

DEPT VISION/STRATEGY: Strategic business partner
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Three Year Vision (circa 2012)

People – Build competency and proficiency to support a best practice, world class
internal audit function and serve as a springboard for Cox leadership

Process – Develop and operationalize internal processes to be as efficient and effective
as possible while being aligned with Cox strategies and management’s intentions

Technology – Implement solutions expanding risk coverage and achieving efficiencies
that will allow us to focus on value enhancement without compromising the oversight of
risks and controls
2012
2013
BUILD
 Complete 2012 Audit Plan
within the approved budget

 Standardize methodologies &
implement technology
solutions to drive efficiencies
 Finalize talent mgmt and
recruit to full headcount
 Pilot the business leader
development program
STABILIZE
Complete 2013 Audit Plan
within the approved budget

Rotate projects and resources
through each DIV quarterly

Complete one full rotation of
the business leader
development program

Maintain full headcount
2014

SUSTAIN
Complete 2014 Audit Plan
within the approved budget

Graduate 1-2 AS associates to
leadership positions within
Cox Divisions

Maintain full headcount

Reassess alignment of
department services with
stakeholder needs
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Our Current Org Structure
Exec
Assistant
Vice
President
Director SME
Director SME
Advisory & Assurance Manager
Advisory & Assurance Specialist/Data Analyst
PwC Staff/Seniors
PwC Subject Matter Resources
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Our Value Proposition to Our Staff
OUTPLACEMENT
ADVISORY & ASSURANCE DIRECTOR
PROMOTION
OUTPLACEMENT
OUTPLACEMENT






Divisional SME
Functional SME
24 – 28 projects
+240 hours IDP training
2 – 4 direct reports (mgmt)
16 career dev sessions





Functional SME
18 – 22 projects
+180 hours IDP training
3 – 5 direct reports
12 career dev sessions





Major/Minor
12 – 15 projects
+100 hours core curriculum
+40 hours IDP training
8 career dev sessions
ADVISORY & ASSURANCE MANAGER
PROMOTION
OUTPLACEMENT
OUTPLACEMENT
ADVISORY & ASSURANCE SPECIALIST
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Technology-Enabled Methodology
Reporting
MULTI-LAYER REPORTING CAPABILITY
• By Function
• By Division
• By Risk
Deliverables
AUDIENCE
Risk
Assessment
• Audit Committee
• Management (John Dyer)
• Stakeholders
Advisory
Prioritization
Strategy &
Objectives
Stakeholder
Discussions
Project
Selection
Staffing &
Scheduling
Assurance
Compliance
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Manage
Projects
Department Branding
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
The Moral of Our Story:
Lessons Learned
The Top 5 Critical Success Factors
 Executive Sponsorship
 Executive Sponsorship
 Executive Sponsorship
 Prioritization & Communication
 Talent: Get the right people on the bus!
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Tie your transformation to the things that
matter to your organization.
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Focus of Cox Employee Survey
CHANGE MANAGEMENT
INVOLVEMENT & BELONGING
COMMUNICATION
LEADERSHIP
COMMUNITY OUTREACH
PERFORMANCE MANAGEMENT
COMPENSATION & BENEFITS
RECOGNITION AND REWARDS
CUSTOMER FOCUS
SURVEY FOLLOW-UP
DIVERSITY
TEAMWORK
ETHICS
VALUES
FUTURE/VISION
WORK-LIFE BALANCE
GROWTH AND DEVELOPMENT
Addressed by Transformation
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Communicate early, frequently,
repeatedly, and transparently!
Don’t be afraid to share your vision and
plans, even if you know they’ll change…
and they will change.
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
The Evolution of Our Vision
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Don’t underestimate the effort and time
required for every work stream.
Execution will feel more like
revolution than evolution.
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Talent Assessment Workstream
E
08/02 &
08/03
A,B,C,D
07/19
Aon
HR
Review
B
06/29
A,B,C,D
07/18
Audit
Team
A
06/29
Week 0
B,C
07/07
Week 1
Jun
H
08/12
F
08/05
H
08/12
D
07/08
A,B,C
07/08
Legal
Review
F
08/05
D
07/15
Week 2
July 8
G
07/27
Week 3
July 15
Week 4
July 22
Week 5
July 29
Week 6
Aug 5
Aug 12
Assessment Center Materials / Activities
A) Competency
Framework &
Mapping
B) Job Descriptions
•Develop
departmental
Competency
Framework
• Conduct Job Level to
Competency Mapping
•Design Job
Descriptions
•Validate Competency
Framework against Job
Descriptions
+
C) Assessment Center
Methodology
/Exercises
+
•Identify Critical
Competencies (for
assessment)
•Develop AC* Exercises
•Develop AC*
Methodology
(schedule, scoring
process, AC*templates)
D) Assessor & Role
Player Briefing
+
•Develop Assessor
Briefing Deck and
materials
•Brief Assessors on AC*
Methodology and
Exercises
•Identify and train role
players to deliver
consistent experience
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
E) Assessment Center
•Conduct AC* per Job
Level per day
=
&
F) Consensus Meeting
•Determine Successful
Candidates
Complex doesn’t mean better.
Strive to streamline and simplify your
transformation roadmap and solutions.
Why?
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Project delivery is still expected.
Exceeding expectations on project delivery will
give your transformation tremendous
momentum.
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
How did we measure success?
 Candidly positive stakeholder feedback
– On both new state and old state
 Steady flow in our project pipeline
– New types of projects: strategic and operational
 Highly engaged Audit staff
– Positive 2012 employee survey results
– Project staffing shifted from capability to bandwidth
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Thank you for
your attention!
Questions?
[email protected]
[email protected]
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES

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