(This is a continuation of a series of posts focused on Corporate Taxes. To read the first article, click here.)
Leading a corporate tax organization is a complex and sophisticated role which requires an extraordinary effort on the part of tax executives today. Corporate tax executives today are leading teams across multiple times zones with ongoing tax deadlines and a schedule of expectations by management that is never ending. The opportunity to work with corporate tax executives over three decades has taught me a lot about this highly educated group of professionals.
Corporate tax executives are very hardworking, highly educated and responsible for reducing the company’s overall effective tax rate. They are an extraordinary profit center for an organization! Companies who include tax as part of their executive management teams are run by the best CEOs and CFOs in the country. How does a lead tax executive work with management to get what they need to run an effective tax organization?
Corporate tax executives have a lot to think about including, “How can our tax team accomplish everything that needs to be done this quarter and year? Did I miss anything that will cost the company money? Here I am working another weekend again to meet tax deadlines.” The late-nineteenth century French mathematician, Henri Poincare (1854-1912) studied the Theory of Chaos. Poincare explained, “It may happen that small differences in the initial conditions produce very great ones in the final phenomena. A small error in the former will produce an enormous error in the latter.” As the lead tax executive with responsibility for tax, you know there are many complicated tax matters that can potentially go unnoticed on a complex corporate tax return, and a small issue can turn into big issue that is costly to the company!
Corporate tax organizations need more help than ever today. While company goals can often be solved by increasing staff, upper management is focused on adhering to strict budgets promulgated to meet projections; and human resources is focused on headcount and staying within targeted salary ranges for each position. The biggest problem for the majority of corporate tax organizations hiring today is the misinformation they have on compensation of tax executives. It was readily apparent to us as we conducted a tax compensation study during the past year. Unless you are out in the market talking to thousands of tax executives privately, you will not have access to this important information. While a lot of public filings provide compensation information on CEOs, CFOs, VPs HR they do not include the elusive compensation on tax executives in corporations. This is valuable information we obtain during hard work and thousands of private conversations over many months. The point is you must start out with accurate data to get the tax team you desire.
A conversation I often have with CEOs and CFOs is educating them that an understaffed tax organization is low hanging fruit for International, Federal and State tax authorities who are searching for tax revenue. Companies who have understaffed their tax organizations provide plenty of opportunities for audit surprises. With three decades of experience, I have experienced a particular scenario over and over again. A CFO decides they want to outsource the entire tax function to a firm, and two years later these CFOs call me because they realize the big mistake they made in outsourcing the entire tax function. They now realize they have a revolving door of consultants and a big consulting bill they never anticipated. What they really lose is valuable history on their organization that can be used to claw back millions in tax dollars.
If you leading a corporate tax organization, here are some ideas to help you in working with management to get what you need in your tax organization.
1. Plan for 20%-25% turnover in your tax department annually. People’s lives change so you must prepare for natural turnover in your organization.
2. Know and understand what is appropriate on tax compensation and do everything you can to keep your tax team as it is costly to replace them.
3. Companies who expect the very best tax professionals on the market must learn tax professionals will not submit their resumes into the company resume portals. Tax professionals want privacy and do not trust resume portals.
4. Interview candidates (meet and engage with potential hires throughout the year even when you do not have an opening)
5. Everyone is searching for the 5-10 year corporate tax candidates and there are currently not enough people to fill these available tax roles.
6. Flexibility is what people expect now and if you can offer a role (i.e. compliance role that they can do home one day a week/offer it and expect to see work at the end of the day)
7. Get creative and if you can even hire part-time prior to full time then do so. TaxConnections knows a lot of experienced tax professionals who would love to work part-time.
8. Gather as much information as possible on corporate tax compensation.
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