BetterUp Labs, a leading organization in the field of occupational health, reported that during the peak of the 2019 COVID pandemic, resilient individuals were 31% more productive and 35% more content than their less resilient colleagues. They found that active engagement in techniques such as conscious mindfulness, intentional optimism, goal setting, and time management can be beneficial in boosting employees’ resilience levels. Their research also suggests that resilient employees experience less burnout and have lower levels of turnover than their less resilient co-workers (A. Jeannotte, E. Eatough, and G. Rosen Kellerman, “Resilience in an Age of Uncertainty,” BetterUp Labs, 2020, https://bit.ly/3gaSt2t). This is important because organizations with resilient employees have been shown to have higher levels of innovation, more team creativity, and better performance.
This article presents the results of a comprehensive study of stress and resilience among auditors working at regional, national, and international CPA firms. Results showed that individual-level resilience was associated with higher levels of employee job satisfaction, lower levels of turnover intention, and improved audit quality practices. The study’s results were published in two separate papers referenced at the end of this article. Readers interested in the theoretical foundations of this research are encouraged to review these articles for more information.
Causes of Job Stress
The potential benefits of enhancing employee resilience may best be viewed through the lens of the Role Stress Model, which is depicted in Exhibit 1. This model, which has been the foundation for numerous investigations using auditor populations over the years, illustrates how job stressors influence employee stress arousal and burnout levels, which in turn have been shown to have negative job-related consequences—not only for the firm, but also for employees’ health and well-being. The nature and consequences of each job stressor are critical components of this model and deserve attention if their potential impact is to be minimized:
- Role overload creates job stress when employees cannot complete their assigned work within the allotted time. Among CPAs, role overload is common during periods of staff shortages and seasonal workload compression. Both of these situations are expected to become more frequent and intense as the world faces challenges presented by the digital age, natural disasters related to global climate change, and economic disruptions such as the worldwide COVID-19 pandemic.
- Role conflict arises when employees are given incompatible (or contradictory) instructions. This is similar to role overload because it also occurs mainly during periods of staff shortages and seasonal workload compression. Prior research has shown that as audit staff members become overloaded with extra work, projects run over time and the pressure to finish work increases. This pressure can directly conflict with the requirement to produce high-quality work. When faced with a quality versus time conflict, employees are often forced into an extremely stressful no-win situation where they feel forced to engage in procedural shortcuts that subvert their primary responsibility.
- Role ambiguity creates job stress when employees try to meet unclear or conflicting goals. For most employees, role ambiguity usually comes from management’s failure to provide sufficiently detailed training or instruction. Research by Ronald Jelinek and Kate Jelinek (“Auditors Gone Wild: The Other Problem in Public Accounting,” Business Horizons, vol. 51, pp. 223–233, 2008) shows that auditors are particularly prone to role ambiguity arising from shortages of experienced staff, internal control auditing procedures required by the Sarbanes-Oxley Act (SOX), and regulations related to highly publicized accounting scandals (e.g., Dodd-Frank). Role ambiguity can also be caused by changing tax laws, the complexity of COVID-19 relief programs, and emerging technologies.
Job Stress Consequences
Job stressors affect individual employees differently. Some can cope and maintain a positive attitude through hard times. Prolonged periods of job stress, however, lead to stress arousal, burnout, and other undesirable consequences. Stress arousal is an individual response to stressors; because of differences in each person’s susceptibility to those stressors, stress levels that would result in negative consequences for one person may have little or no effect on another. Once stress levels have been perceived as harmful, however, stress arousal is triggered that, if unabated, inevitably leads to burnout. Burnout occurs consequent to sustained stress arousal that has persisted long enough to overwhelm an employee’s coping skills.
Burnout is nearly always detrimental to one’s mental and physical health. Burned-out employees often experience emotional exhaustion, which can be described as a lack of energy and a feeling of “depletion.” Burnout can also create feelings of reduced personal accomplishment, low self-esteem, and low motivation. Detachment is probably one of the most extreme consequences of burnout. Detached employees often display an uncaring attitude toward tasks, work quality, co-workers, and others—sometimes even family and friends outside the workplace.
For employees in general, job stress, stress arousal and burnout are indications of future problems—poor health, absenteeism, and turnover, to name a few. Turnover is a significant issue, particularly for CPA firms where finding and retaining quality staff is a perennial problem. In 2015, the Platt Consulting group estimated that 1 in 6 large CPA firms had turnover rates above 20% per year. But turnover is more than just the loss of talented employees; it is also the loss of client relationships, recruiting dollars, training hours, and productivity. The cost of replacing just one employee is estimated to be 50–60% of the employee’s annual salary. Additionally, turnover in audit firms can have a cascading effect—where the departure of one auditor leads to work overload, job stress, burnout, and more turnover among the remaining staff.
From an audit firm perspective, the most troubling consequences of job-related stressors and burnout are reduced audit quality practices (RAQP). RAQP are intentional actions that can compromise audit quality and increase the risk of an inappropriate audit opinion. Several behaviors qualify as RAQP; these include premature signoffs of audit steps, superficial review of documents, acceptance of weak client explanations, failure to perform adequate research on accounting principles, and unreasonable reductions in audit work.
Audit managers and partners must be on the lookout for signs of RAQP among their staff. These signs often manifest as low devotion to tasks, minimal effort, corner cutting, and low productivity. Although it may be tempting for supervisors to assume that RAQP is not a problem, other research has shown that RAQP behaviors are likely a pervasive problem. More than 50% of the auditors in this study admitted to engaging in these activities at least once during their career. As shown in Exhibit 2, auditor engagement in RAQP is a widespread and significant problem.
Auditors’ Responses to RAQP Questions
It is important to note that the actual rate of RAQP is likely higher than that reported in Exhibit 2 because, despite assurances of anonymity, any disclosure of such activities would be an admission against the employee’s self-interest and may have detrimental consequences or contradict the individual’s self-image.
Can Resilience Help?
What can be done to reduce stress and burnout in audit firms? As depicted in Exhibit 1, resilience may be the answer; that is, interventions at the firm-level may help employees build and maintain resilience. Resilience is a person’s ability to remain calm during and after stressful conditions, and to rebound in the face of adversity. Though some people consider resilience to be an unchangeable personality trait, there is evidence that individuals can learn to increase their natural resilience levels.
To assess the potential of resilience to reduce the negative consequences of job stressors, stress arousal, and burnout, audit firm staff at various occupational levels at several large U.S. accounting firms completed a survey that measured individual auditors’ levels of job stress, stress arousal, burnout, job satisfaction, turnover intentions, and RAQP.
The results of the survey provide some interesting insights. As expected, job-related stressors (i.e., role overload, role conflict, role ambiguity) were all associated with stress arousal and burnout. In turn, stress arousal was associated with higher levels of burnout symptoms.
Burnout was the most significant predictor of negative firm outcomes, such as RAQP, low job satisfaction, and turnover. As shown in Exhibit 3, as burn-out increased 1.0 unit, job satisfaction decreased (–.39 units), whereas turnover intentions increased (+.56), as did RAQP (+.45). The importance of stress arousal should not be overlooked, however, as each of its reported relationships with the three organizational outcomes were also statistically significant. Moreover, though not illustrated graphically, role conflict, role ambiguity, and role overload were each found to have significant associations with stress arousal (+), burnout (+), job satisfaction (–), turnover intentions (+), and RAQP (+). These results are informative. If, as suggested, stress arousal (which is often unseen and historically unmonitored) is the trigger point in the stressor-to-outcome process, it may be advisable to implement interventions among audit staff before symptoms are readily observable, and before they lead to burnout and its associated significant negative influence on the illustrated organizational outcomes.
The most encouraging finding in the study is the significant protective effect provided by individual resilience. Exhibit 4 indicates that a 1.0-unit increase in resilience can reduce auditors’ stress arousal (–.39 units) and burnout (–.40). The influence of resilience on the other outcomes can be interpreted in the same manner. These results strongly suggest that early, proactive efforts to bolster individual employee resilience are likely to be an effective way to increase job satisfaction and limit the detrimental effects that stress and burnout can exert on turnover intentions, and RAQP.
Ways to Build Employees’ Resilience
It may seem unusual to suggest that resilience can be learned, but there is evidence that behavioral training can promote reduced feelings of stress at work. According to Alexi Robichaux, co-founder and CEO of BetterUp Labs, firms that foster a resilient workforce benefit from enhanced financial performance as well as a more productive and happy staff. As evidence for these claims, Robichaux summarizes the key findings of a study entitled “Resilience in the Age of Uncertainty,” which examined tens of thousands of working professionals both before and during the COVID-19 pandemic (A. Robichaux, “3 Reasons Investing in Employee Resilience Pays Off,” 2020, https://www.entrepreneur.com/article/356617). The study found three substantive benefits that accrue to firms that sponsor resilience training for employees:
- Revenue growth. Firms that increased employee resilience tripled their annual revenue growth over a three-year period. In addition, reported salaries for resilient employees were 22% higher than their peers.
- Innovation. Reported innovation for the most resilient employees was 22% higher than their peers. Resilient employees also scored 18–19% higher in cognitive flexibility and team creativity.
- Reduced burnout and turnover. Employees on teams with highly resilient leaders had 52% lower reported burnout, were 78% less likely to leave their firm, and felt 57% greater enthusiasm for their work.
What can be done to help auditors build resilience? Below is a list of the attitudes, activities, and exercises that should be included in any high-quality resilience training program. According to BetterUp Labs, consistent application of these six tools can significantly improve individual employee resiliency in as little as three months:
- Optimism. Purposefully reflecting on positive people, events, and situations is an essential first step to building resilience. Keeping a gratitude journal and limiting access to news sources are good ways to maintain an optimistic outlook on life.
- Mindfulness. Individuals should regularly take time to contemplate and express their thoughts and emotions to recognize when job-related stressors are causing feelings of stress. Without this recognition, feelings of stress may persist for some time before they are addressed, increasing the likelihood of burnout and adverse job outcomes.
- Goal setting. Self-efficacy is grounded in the idea that one is capable of success. Therefore, setting and achieving realistic goals is a practical and straightforward way to increase individuals’ feelings of self-efficacy and decrease stress. It is important to note that setting unrealistic goals will often have the opposite effect.
- Time management. Time management is not a skill that comes naturally to everyone. Accountants are known for their organization and attention to detail. These talents do not necessarily translate into the efficient use of one’s time, however. Training that focuses on choosing which projects to work on and when to work on them is especially beneficial.
- Connection. Social networks are an important protective factor against feelings of stress. Accounting education has traditionally paid little attention to the “soft skills” of communication and relationship building. People skills greatly improve opportunities to form strong professional networks. It is also important to connect with family and friends. Isolation from these groups can cause loneliness and subsequent feelings of stress.
- Self-care. Working long hours and late nights takes its toll on mental and physical well-being. Staff members should be taught ways to recognize when they are not feeling well, especially during busy season, so that they can take steps to address their own needs. It is recommended that adults receive annual physicals from a medical professional. If individuals feel stressed, doctors can check for underlying diseases (e.g., diabetes, hypothyroidism, vitamin D deficiency) that can be treated with medication. Exercise and a healthy diet are also very important.
The benefits to audit firms that work to build individual employee resilience appear to be tangible and significant. Unfortunately, RAQP, job satisfaction, productivity, and turnover data indicate that many firms may not be investing enough to address this critical employee competency. Admittedly, not all employees have the knowledge, skills, and abilities to succeed, and their departure is in the best interests of the individual as well as the firm. But organizations incur great costs when otherwise talented employees cannot cope with workload and other stressors due to low resilience levels. For most employees, resilience training should be extremely beneficial. It offers the prospect of enhancing employee perseverance and success in the firm, as well as the firm’s retention of talented employees—a win-win scenario.
Empirical analyses of the data in this article first appeared in “An Analysis of the Relation Between Resilience and Reduced Audit Quality within the Role Stress Paradigm,” by K.J. Smith and D.J. Emerson in Advances in Accounting (vol. 37, pp.1–14, 2017). Additional analyses were reported by K. J. Smith, D.J. Emerson, and C.R. Boster in “An Examination of Reduced Audit Quality Practices Within the Beyond the Role Stress Model,” in Managerial Auditing Journal (vol. 33, no. 8/9, pp. 736–759, 2018) and “Resilience as a Coping Strategy for Reducing Auditor Turnover Intentions” by K.J. Smith, D.J. Emerson, C.R. Boster, and G.S. Everly in the Accounting Research Journal [vol. 33(3), pp. 483–498, 2020]. Interested readers are encouraged to consult these additional resources for more information on this topic.