A succession plan is a process for identifying and developing new leaders for your organization. What do you do if your lead tax executive is ready to retire? Succession planning is a process that ensures your company is prepared for the future. Every CFO should have a succession plan in place for their corporate tax organization. The turnover rate of corporate tax executives is at an all-time high due to tax reform, baby boomers retiring, and now a pandemic. CFOs operating proactively will have a succession plan in place for their tax organizations. More than ever, companies require a strong second in command tax executive to back up their lead tax executive. Especially if you think your tax executive will retire in the next few years. The new legislation coming out of Washington D.C. is guaranteed to tax corporations and individual taxpayers to the hills and over the moon and then some more. Get your in-house tax team in place and ready to protect your company from mistakes that will be made by those who have decided to outsource their entire tax function to people who do not understand their business.
More than ever, CFOs should partner closely with their corporate tax executive and provide every resource they need to protect the company and its employees. Although corporations may not feel the tax increases immediately, brace for impact because higher taxes are going to affect companies globally. Corporate tax executives now have the additional cost of time and financial resources to research new legislation and its impact on their business. It will take months to research, analyze and discover what is hidden in legislation than spans more than 880 pages. CFOs are smart to support their corporate tax team as this legislation unfolds in the months ahead. The strength of your in-house corporate tax team will have a direct impact on your financials. Guaranteed!
Over three decades, we have observed a trend we have seen repeatedly. CFOs make a decision to outsource the tax function to an outside firm versus keeping an in-house tax team. This is by far the biggest mistake CFOs make because they lose valuable historical information due to large turnover in the accounting firms. You will see an immediate layoff due to the pandemic. With the Big Four accounting firms having a turnover rate upwards of 30% annually, companies lose valuable historical information if an accounting consultant leaves and the company often pays for a new consultant to do the research over again. Another aspect is the low hanging fruit for auditors when they arrive to the building asking for more information. Let an experienced corporate tax executive decide what work is to be kept in-house or outsourced. When you are setting up a succession plan in your corporate tax organization, listen to what your corporate tax executive advises you to do. Great tax executives have spent years perfecting their highly technical tax skills and they should be the person you go to in order to decide who to insource and outsource for the tax function.
There are two types of CFOs we have worked over the years: CFOs who work closely with corporate tax executives, and those CFOs who have little engagement with their tax executives. Given thirty years’ experience finding lead tax executives for multinational corporate tax departments, we have observed CFOs who have developed a strong business partnership with their in-house corporate tax executive have a much better business outcome. Any succession planning for your corporate tax organization should involve building a strong partnership with the lead tax executive and anyone who could succeed them in their role.
The question is “Do you have a succession plan in place for your corporate tax organization?” If you do not have one in place at the moment it is time to get one in place. The ideal timing for succession planning is starting two years out. Yes, you can do a search in 90-100 days but if you give yourself two years, you create the best possible outcome in transitioning the new tax executive into the lead tax management role. It takes time to thoroughly search the market and identify the best tax executive candidate for your organization and its culture. A good search is a good marriage and business partnership. You are looking to find a tax executive you can build a long term relationship with and who will be with your organization for a very long time. The most important thing to do now is take action and put a tax department succession plan in place for your organization or get taxed to the hills.
If you currently have a need for a tax executive now or in the future for your tax organization, you can reach our CEO at email@example.com.
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