Feeling well by being together: Study of Swedish auditors

1 Introduction

The auditing profession is characterized by its complexity, embedded not only in the broad variety of tasks the auditors have to perform [1] but also in the special role auditors take in society, as guardians of markets [2] and protectors of public interest [3]. Recent developments in the auditors’ environment have only increased the pressure on the profession. For instance, auditors’ independence has been brought into question following business scandals such as the Enron scandal (e.g. [4]), resulting in revised regulations and stricter controls as well as increased public scrutiny and greater pressure from clients and stakeholders [5, 6]. Also, globalization and the demand for harmonization have required auditors to adhere to international accounting and auditing standards [7]. Furthermore, an increased client focus, market orientation [1, 8] and changed conditions, such as the abolishment of statutory auditing throughout Europe, have pushed auditors to compete on the free market, forcing them to leave the security associated with a previously oligopolistic market structure. This has recently been observed in Sweden (November 2010), where statutory audits for all public companies have been abolished. Such changing conditions have pushed auditors not only to add marketing activities to their portfolio of tasks [9] but also to adopt a market-oriented approach focusing on clients’ satisfaction, audit costs and added value [1]. This has not just been observed in Sweden, but seems to be a general trend in the auditing industry as well as in other professional service industries and is a consequence of ongoing industry-specific developments (see also [10]). This new orientation and tasks associated with it are positioned in stark contrast to the traditional view of the auditors’ role as public watchdogs serving the public interest [8, 11]. This orientation is not completely new; it has been claimed that auditing has been and still is about “working for people who [can] pay”, (8:1169). However, it continues to be an important issue as auditing firms and auditors seem to be putting more emphasis on market and customer orientation, especially in their everyday auditing work [1]. This issue goes to the very heart of the auditing profession due to its traditional lack of association with marketing [12] and due to tensions between being professional and being commercial [7]. This development gives rise to strong criticism towards the auditing profession and calls the traditional role of serving the public interest into question [8, 11], creating tensions experienced by individual auditors and the industry as a whole [13]. Thus it can be observed that the auditors are being presented with a number of roles –roles that may often compete with or be in conflict with each other.

The relationship of multiple roles and professional well-being is by no means a new topic in occupational health. Attention in that field of research has traditionally been directed towards professions such as medical doctors (e.g. [14, 15]), teachers (e.g. [16]), nurses (e.g. [17, 18]) and lawyers (e.g. [19]), where the authors have usually investigated different environmental and individual aspects of the profession in relation to well-being. When it comes to environmental/contextual aspects in studies of health sciences professions, researchers have often investigated isolated, narrowly defined dimensions such as time scheduling pressures [14, 20] and social support from colleagues in the working environment [21], among others, in relation to well-being. When it comes to an individual level of analysis, demography has often been used to understand differences in well-being of professionals [22] as well as their families and social relationships outside and inside the workplace. Moreover, recent research has paid particular attention to the multiple roles many professionals play, and how the tensions between these roles are related to well-being. While there is an abundance of studies on well-being within the aforementioned professions, research focusing on auditors is very limited, even though this profession is on par with the others in terms of being invested with responsibility for the welfare of the society [23]. Moreover, auditors, similar to other professionals (especially those in medicine and law), are ascribed high status, must complete a lengthy professional education, and are faced with variable and complex work tasks and time pressure [8, 24]. The limited studies investigating auditors and (very indirectly) some aspects of their well-being, look at internal and external pressures in relation to the quality of their work. Yet in the fields of both health sciences and business administration (where auditing is often positioned), research usually emphasizes individual professional characteristics or specific aspects of the work environment. Moreover, while health-related research has been successful in developing the concept of well-being (e.g. [25-27]), environmental aspects affecting it are often fragmented and isolated from each other. The shortcoming of business administration research has been that it has often emphasized the environmental aspects, such as changes in the regulatory environment, work climate and organizational climate, while splitting the health aspects, of which well-being is an integral part, into separate aspects such as time budget pressure and job satisfaction. We suggest that in order to understand the complex nature of the interaction between professionals’ environment and their well-being, one has to combine both fields of study to allow the multidisciplinarity to enrich our understanding of this relationship. Inspired by business administration research we propose that, by exploring organizational culture as a holistic aspect of the work environment and by using concepts of well-being developed in health research, we might provide a better understanding of issues arising in professions in general and in the auditing profession in particular. The organizational culture in any profession shapes the work environment; in auditing firms, the culture is characterized by rigid hierarchical structures and competitiveness [28] which have often been related to a variety of organizational and individual outcomes (e.g. [29]).

Research has long demonstrated that organizational culture could represent one of the most important drivers of organizational effectiveness, by creating an internal environment for individuals within the organization where they can be most productive [30, 31]. We can also observe that concepts of effectiveness and productivity have often been associated with a healthy workforce [32], which allows us to assume that a specific type of organizational culture will be reflected in auditors’ well-being [33]. Apart from making a theoretical contribution and establishing the link between organizational culture and auditors’ well-being, this paper addresses a very important practical aspect. Recently, Swedish media and professional organizations have been raising concerns about the high turnover of personnel in Swedish auditing firms, resulting not only in issues related to recruitment and retention of auditors, but also to the fact that those auditors that remain in the firm face increasing pressure due to overflow of work tasks left behind by their departing colleagues. Reasons as to why auditors quit are rather ambiguous, but regardless, their departure is problematic since the workload is increasing while the number of people left to deal with it is decreasing. This paper attempts to identify possible indirect causes of the high turnaround as well as what might make some people remain in the profession. Thus the research question guiding this paper is how organizational culture affects the well-being of auditors. The remainder of the paper is structured as follows: We first present the method of our study, followed by empirical results and analysis. The paper concludes with a discussion of the findings and suggestions for future research.

2 Method

Ethical approval was not sought for the study, since data collected was of non-biomedical nature [34, 35]. The study has adhered to the basic principles for research given in the Helsinki Declaration [36]. The initial sample consisted of all authorized and approved auditor members of FAR, the professional institute for accountants and auditors in Sweden. The total number of registered member e-mail addresses in spring 2014 was 2738 (FAR search result, 2014). These addresses were collected and an electronic survey was distributed to all of the 2738 auditors in the initial sample [37]. An electronic questionnaire was chosen for this study, as it is deemed the most efficient method of collecting data from large samples [9, 12]. Prior to sending the questionnaire to the auditors we conducted two exploratory interviews with authorized auditors in order to check whether our questions were understood in the way we intended. As a result of those interviews, we rephrased some of the questions from the original questionnaire.

From the initial sample, a total of 311 respondents submitted their answers. While the response rate (11%) might be considered low, other studies on auditors in Sweden have reported similar or even lower response rates (e.g. [13]). Further we aim not to generalize for the population but instead to generalize for the relationship between the concepts, reflecting the explorative nature of the paper. When considering the non-response rate, it appears that our respondents represent the total population both in terms of age and gender as well as audit firm affiliation [38]. The final sample of this study has been reduced from 311 to 207 observations, so that only fully complete questionnaires were included in the final analysis. The final sample also does not significantly differ from the total population on the aforementioned dimensions. The average age of our respondents was 45.15 years; 31% were women and 69% men; 50% of the respondents represented Big 4 auditing firms (Deloitte, Ernst & Young, KPMG, PriceWaterhouseCoopers) while the remaining 50% represented other bureaus. Distribution in our sample does not differ from that in the recent study on Swedish auditors by Broberget al. [9].

3 Results and analysis

The analysis of the data was conducted via Pearson correlation tests and linear regressions. A number of highly significant correlations are evident in the correlation matrix (Table 1). An increasing degree of collectivistic organizational culture appears to have a significant positive correlation with all dimensions of subjective well-being. The three dimensions of subjective well-being are also shown to highly correlate with each other. Only one dimension of subjective well-being, Life Satisfaction, has a weak positive correlation with one of the control variables, age. There appear to be two highly significant correlations between control variables, namely between gender and age, indicating that the men are older than the women in our sample. Moreover, we can also observe a negative correlation between age and Big 4 affiliation, indicating that in our sample other bureaus have younger auditors.

Further tests were performed through multiple linear regression analysis (Table 2). All the regression models are shown to be significant at p < 0.001. The model exploring how organizational culture relates to the job satisfaction dimension of subjective well-being shows the best explanatory power with R2 = 0.301; in this model collectivistic organizational culture is shown to have a significant positive relationship with job satisfaction. The next models, Life Balance and Life Satisfaction, are also significant with R2 = 0.121 and 0.122 respectively. In both models one can observe that an increasing degree of collectivistic organizational culture has a positive relationship with subjective well-being in its Life Balance and Life Satisfaction dimensions. None of the control variables appear to have a significant relationship with all three dimensions of subjective well-being. All models pass the test of multicollinearity judging by the VIF values of 1.126 in all models.

4 Discussion

Our study presents a number of interesting models in exploring how organizational culture relates to different dimensions of auditors’ well-being. The main finding is that the higher the degree of collectivistic organizational culture, the greater the positive effect on three distinct dimensions of well-being, namely job satisfaction, life balance and life satisfaction. The findings of this study are surprising since previous research on auditors has shown that auditors interchangeably perform their assignments in both groups and individually [1], leading to the assumption that neither an increase nor decrease in collectivism/individualism would be reflected in well-being. On the other hand, researchers have also suggested that while individualism represents an important aspect of auditing work, group work and building a “community of experts” at the workplace represent the more substantial part of an auditor’s working day [1, 47]. Moreover, auditing and professions in general are characterized by a strong emphasis on in-socialization, where more experienced auditors in-socialize less experienced auditors into the profession by means of work on joint projects [28]. Thus, while auditing and the regulations it follows stress the importance of independence from colleagues and even more so from clients, the importance of being in-socialized into the profession, and through this, the formation of a collectivist organizational culture, becomes dominant. Thus with increasingly complex assignments auditors feel a need to belong to an organization that is characterized by team orientation and team spirit, which improves their subjective well-being, especially in terms of job satisfaction. One can further assume that individuals who become auditors are consciously seeking to become part of the profession that some have characterized as similar to a clan or sect (e.g. 1,on audit firmalization). Thus one cannot discount the possibility that some individuals knowingly seek employment in the auditing firms, aware that they feel best in collective types of environments.

While organizational culture and job satisfaction find themselves on the same level of analysis (e.g. organizations), and correlation between those two is theoretically unproblematic, our findings on the other two dimensions of well-being representing an individual level of analysis and capturing Life Balance and Life Satisfaction are worth elaborating on. Research has now established that work represents an integral part of individuals’ lives, especially taking into account that a majority of individuals spend significant amount of time in the workplace in relation to other activities. This study confirms these findings in showing that the work environment, represented here by organizational culture, has a relationship with related aspects of well-being. Yet these findings represent new knowledge for the auditing profession in that they show that auditors’ organizational identity, represented here by organizational culture, is closely related to overall individual identity, represented by life-related aspects of subjective well-being. This becomes particularly significant when discussing an important outcome of auditors’ work–audit quality. As the quality of auditors’ work increases, the probability of organizations doing wrong decreases. Feeling good, both as an individual and as a part of an organization, might be an important aspect of high quality in one’s professional work, as indicated in some studies (e.g. [48]). Thus, apart from establishing the link between organizational culture and different aspects of subjective well-being, this study has a number of implications for policy and practice.

Firstly, this study can serve as a guideline to the HR managers of auditing firms in terms of which individuals are best suited for auditing jobs, since this study indicates that the people that appreciate a collectivist environment would feel best in these positions. Secondly, it indicates the need for auditing firms to nurture the collectivistic nature of their organizational culture rather than emphasizing purely individual professional work. Finally, these findings suggest that individuals working in auditing firms are affected by their work environment beyond their professional identity, and there are apparent spillover effects on their overall well-being, which could thus further motivate auditing firms to nurture a collectivistic organizational culture not only to recruit suitable candidates but also to retain them.

Being an explorative study, and to our knowledge the first study exploring the relationship between organizational culture and well-being in auditing firms, this study raises more questions than it answers. Further studies, taking into consideration the special position auditors occupy in the society, could explore other factors affecting their well-being. Such factors could include other dimensions of organizational culture and organizational climate, which could be explored in combination with extended demographic attributes of the auditors. Another potential avenue for future research could be an exploration of how auditors’ different identities, for example, professional and organizational, and their strengths, affect auditors’ well-being. Finally, future studies might inquire into the link between auditors’ well-being and audit quality, where well-being might represent an important mechanism through which audit quality is achieved.

Conflict of interest

None to declare.