Mental health matters

By Beth M. Schwartz, Ph.D., & Dennis P. Stolle, Ph.D., JD

A CPA’s work is inherently stressful. Success depends not only on the knowledge and skills necessary to perform the job, but on the availability of psychological resources.  Managing stress is an essential skill for CPAs.1

This is true throughout the year but is critical for public accountants during the busy tax season, with prolonged workweeks, persistent stress and tight deadlines. The work environment necessitates that CPA firms help employees manage stress and it means they must consider a different type of capital: psychological capital.2

The business world is familiar with financial capital, human capital and social capital. Where does psychological capital fit in to the equation?

Given the inherent stress of the profession, and the relationship between the ability to manage stress and success, professional service firms need to consider what resources to provide to their professionals. Innovative firms have already increased focus on this issue. In response to the pandemic, many firms have begun to do more to address personal and psychological resilience among their accountants.3 This has included encouraging accountants to address stress and burnout through compassion and caring for their well-being and mental health.4

The concept of psychological capital; however, provides a more holistic approach that incorporates resilience as just one of four components necessary for building a reserve of psychological well-being that can be drawn upon in difficult times.5 

What is psychological capital?

Introduced in the scientific study of organizational management, psychological capital is defined as a worker’s mental resources and positive psychological state of growth and development, which facilitates the capacity to overcome challenges and achieve goals.6

Psychological science has identified four components of psychological capital: hope, efficacy, resilience, and optimism, represented by the acronym “HERO.” An individual’s psychological capital is composed of the abilities to create goal-focused strategies (hope), manage the tasks on one’s plate related to goals (efficacy), continue to venture forward even when faced with adversity (resilience), and sustain a positive outlook (optimism).

When a business or organization increases psychological capital in the workplace, it helps workers overcome obstacles, lowers stress, improves job satisfaction, and improves workers ‘overall performance, well-being, and career success.’ Psychological capital also contributes to factors such as reductions in burnout7and ultimately stress, and turnover.8

Assessment of psychological capital is possible at both the individual and organizational levels. 9 If training is provided to employees on how to develop their own levels of hope, efficacy, resilience and optimism, then employees can build a reserve of psychological capital. That reserve is needed most when challenging situations arise.

If that reserve is depleted and an individual is psychologically exhausted, it is more likely that a state of crisis will result. At the organizational level, when a reserve of psychological capital exists, workers are committed to help overcome the challenges at hand, and as a result the whole organization can better withstand times of crisis.

In recent years due to a change in work conditions and environments, many employees began to ask themselves if or how their current employer supports their overall well-being.

During this time, employers saw evidence of workers rethinking their careers, their work conditions, and their career goals, leading many in the workforce to consider new opportunities — with some deciding to resign from their jobs even before finding new employment. Essentially, workers were asking if their employers were supporting their well-being, and when the answer to that question was “no,” workers were seeking alternative opportunities.

How employers can help

The key is to keep in mind the four components of HERO described below.10 Success is dependent on the presence of all four components, which results in more than the sum of the parts.6

• Hope is the ability to see a potential path forward. That path may not be easy to follow, but if you see at least one plausible path forward, you have hope. But hope alone is not enough.
•  Efficacy is short for the term self-efficacy. Psychological science defines it as the sense of confidence in one’s ability to put forth effort and successfully achieve one’s goal.
•  Resilience is one’s capacity to bounce back. Having psychological resilience in the face of a stressful or challenging situation allows one to bounce back to where they were before the stress, or perhaps lead to an even stronger state of mind. When faced with emotional or psychological stressors such as uncertainty, trauma, loss, professional setback, or tragedy for example, resilience refers to the process of coping with the circumstances and successfully adapting to the situation. Resilience is often dependent on mental, emotional and behavioral flexibility.
• Optimism is the general tendency to expect good things in the future. This is the sense that even when faced with a difficult path, one believes everything will most likely work out fine in the end. This positive outcome is believed possible even when one understands that additional potential challenges are likely, and that all things will not necessarily go as planned.

When psychological capital is developed, a buffer is created against future stress. And, as a result the availability of greater psychological capital, an organization experiences an overall improvement of workplace culture, a lower rate of burnout, improved psychological well-being, enhanced performance, and an increase of innovative approaches.

How to foster psychological capital in an accounting firm

Through strategic business planning, professional service firms can prioritize psychological capital, just as all other types of capital are considered and prioritized. There are several best practices that can be considered when an organization wants to increase psychological capital: recognizing, modeling and training.     Recognizing is perhaps the simplest tactic and is a necessary first step. For a firm to begin working on increasing psychological capital, the people within the firm need to understand what psychological capital is. This includes educating members of the firm about the definition of psychological capital. But it also involves providing examples to ensure that they understand that psychological capital is a valid concept supported by scientific literature that actually can be measured at the individual and organizational levels. And inspiring enthusiasm for psychological capital involves providing examples of how it can positively impact individual and firm success.

Modeling, as the term implies, refers to the leaders in an organization illustrating high levels of psychological capital. We know from psychological science that team leaders’ psychological capital can have a positive influence on their team members’ psychological capital. Researchers have also observed that when team leaders have a deep reserve of psychological capital, they tend to be more active and energetic, and they show a stronger will to search for solutions to problems.

When leaders, such as partners and managers, show high levels of psychological capital, they also tend to be more active in cultivating mutual trust and loyalty with other team members. This leads to a high-quality exchange of information and ideas. As a result, the psychological capital of other team members gradually increases due to the improved social interaction between team leaders and team members. Training in the workplace has also proven to be effective at increasing psychological capital. In the organizational and psychological science literature, these training programs are focused on positive opportunities to improve one’s performance and well-being rather than addressing deficiencies or dysfunctions.

This is important to keep in mind given that, at times, this type of training is referred to as an intervention, which conjures up thoughts of bringing an individual to a group meeting to help with a significant problem. We are not referring to that type of “intervention.”
 
Rather, the goal of psychological capital training is to allow strong performers to become even stronger and higher performing. The training, often organized around the four HERO components, comes in all shapes and sizes, ranging from one-day sessions to multiple sessions presented over months. Similar to other types of corporate training, psychological capital training can take the form of video presentations, interactive quizzes, lecture presentations, group discussions, or individual coaching sessions.

The benefits of prioritizing psychological capital for both an individual accountant and for an accounting firm require time, effort and resources. In the end, however, patience and persistence can result in significant long-term benefits that likely far outweigh the costs. For long-term success, managing partners and leaders in the profession should recognize the value of psychological capital and prioritize it alongside the more widely recognized forms of capital in the world of CPAs.
 
Beth M. Schwartz, Ph.D., is the associate director, and Dennis P. Stolle, JD, Ph.D., is the senior director, in the American Psychological Association’s Office of Applied Psychology. The office collaborates with leaders in business, government, academia, industry groups and nonprofits to bring psychological science to bear on the human aspects of important social issues. In their roles, they focus their efforts on applying psychological science to help solve real-world problems and advance psychological and emotional well-being. 
 

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9.  Lorenz, T., Beer, C., Pütz, J., & Heinitz, K. (2016). Measuring psychological capital: Construction and validation of the compound PsyCap scale (CPC-12). PloS one, 11(4), e0152892.
10.  Stolle, D. P. (March 2023). Law360. Why all law firms should foster psychological capital.