Voices

The impact of the flu on auditor productivity

Influenza is estimated to infect up to 60.8 million people in the U.S. every year, or approximately 20 percent of the population. The 2019 flu season has started off strong, with 24 states reporting widespread activity as early as January. The flu creates unavoidable threats for U.S. companies, whose workforces are susceptible to the disease. According to the Centers for Disease Control and Prevention, the flu causes employees to miss 17 million workdays per year, costing their employers an estimated $7 billion in annual productivity loss.

New research that we conducted at Bentley University examining the impact of the flu on the work of auditors employed by public accounting firms suggests that when employees are sick with the flu, the quality of their work declines. The majority of auditors’ work products — audits of publicly traded companies — are completed during flu season, which historically peaks between the months of December and March. While this overlap creates an ideal test case for studying the impact of the flu on company output, the findings apply to any organization operating during flu season.

The research found the following:

  • In states most impacted by the flu, the quality of the audit performed by the auditors declines.
  • In states most impacted by the flu, the length of time it takes to file the audit report increases. This suggests that when auditors are sick, they are less efficient in their work, and it takes more time to complete the deliverables of the audit.
  • In states most impacted by the flu, service fees paid to the auditor increase. This suggests that as auditors experience inefficiencies due to sick personnel, the costs of these inefficiencies are passed on to clients, resulting in higher fees.
  • The negative consequences of the flu apply to firms that service more complex clients. As the complexity of the work increases, the impact of employees being sick is more likely to result in a decline in the quality of auditors’ work.

The above described results apply only to the Big Four (PwC, Deloitte, EY and KPMG), but not to smaller national or regional accounting firms. Prior research confirms that smaller audit firms have different cultures and emphasis on work-life balance. Thus, the findings may be due to the cultures of smaller firms encouraging employees to stay home and rest when sick.

The results described above are due to the level of flu activity varying by state and over time, as illustrated in the figure below.

Seasonal influenza activity changes across states and over time

Flu map

This image maps influenza activity across states from 2009 through 2016. Darker-colored states have worse influenza epidemics.

The results of this study offer important implications for public accounting firms and other companies interested in lessening the impact of the flu on the quality of employees’ work.

Companies should re-examine their work culture, and whether it encourages employees to stay home when sick. Cultures that promote strong work-life balance may mitigate quality threats resulting from employees feeling pressure to go to work when sick.

Scheduling capacity and labor resources are of critical importance during flu season. Companies should assess whether they have sufficient resources to make up for productivity losses when employees are out sick.