Usually when the impact of our workplace is assessed, it’s done so in terms of providing a boost to employee engagement or productivity, maybe even innovation and collaboration.  A recent study from the University of Kansas School of Business suggests that a great workplace can have a wider range of somewhat unexpected benefits.

The study found that both the length and cost of audits are reduced when the workplace environment is a positive one.

“Auditors seem to consider firms less risky if employees like their workplace and more risky if employees complain about dysfunction at work,” the authors say. “Auditors judge companies with worse workplace environments as more risky, and as a result, they charge higher fees.”

Happy workplaces

The researchers trawled the employee ratings posted on the Glassdoor website for around 1,000 large firms over a four year period, with a total of nearly 100,000 ratings.  This analysis was accompanied by interviews with professional auditors to see if there was any correlation between the happiness of the workforce and the audits a firm would receive.

The analysis found that not only did auditors tend to apply greater scrutiny to more negative workplaces, but these audits would take longer and involve more procedures as a result.  This would typically result in higher fees being charged.

“A lot of work on collective employee satisfaction shows it can have influence as a spillover effect,” the authors explain. “When you walk into a restaurant or a retail operation, you can pretty quickly get a sense of how people feel about their sense of work, for example.”

This atmosphere is picked up on by auditors, which results in them applying extra scrutiny to ensure they don’t miss anything that may come back to haunt them.

This is perhaps not surprising as a negative work environment is well known to increase instances of fraud or theft in the workplace.  It can also result in lower efficacy of control procedures, all of which are things auditors are on the hunt for.

“For people who are interested in understanding corporate culture, this suggests another data source to capture workplace environment that has not been used that often,” the authors conclude. “The Glassdoor data apparently captures some aspects of firm risk that we could not measure until recently.”