Over the years, we have been retained by hundreds of CFOs to locate lead tax executives for their tax organizations. We have learned valuable lessons along the way we would like to share with you. As a CFO, you are an Officer of the company with primary responsibility for managing the company’s capital structure, finances, financial reporting and planning, record keeping and mitigating financial risks. The best CFOs in the world understand the importance of the tax organization in mitigating risks. We have observed that CFOs who work closely with their tax executives are working as a team to mitigate risk to the company; and CFOs who have their tax executive reporting to anyone other than a CFO is often missing opportunities to mitigate risk.

With the tax laws ever changing all over the world, it is imperative to have an in-house tax executive who partners with the CFO to mitigate risks. These integral relationships between a CFO and a lead tax executives increase opportunities for companies to outperform competitors. A close relationship between the CFO and in-house tax executives is an important driver for successful organizations all over the world.

As a CFO, you have the opportunity to learn from the mistakes of CFOs before you in managing a financial organization. Over the years, there have been many CFOs who have called to retain me to search for a lead tax executive. What you do not know is many CFOs called after a big acquisition and asked “find me a tax executive who can figure out the tax situation this acquisition left us in.” This is usually an up and coming inexperienced CFO who has yet to face a big tax bill like the one they are now facing. This is the CFO who did not pay much attention to a tax expert before the deal was completed. This is the CFO who has their lead tax executive reporting to someone else in the organization. This is the CFO who has not developed a close partnership with an in-house tax executive. There is a CFO reading this post right now who is thinking “ Holy #$%^”, if I had only involved a tax expert on the front of this deal we would have saved a billion dollars.” The point is if you are building a company through acquisitions, the CFO must work closely with a tax expert. This is the best way to mitigate risks. There are tax saving opportunities only a seasoned tax executive will be able to identify for the organization.

Although your in-house tax executive will not tell a CFO this openly, it is a lesson for every CFO to learn early on in their career. Lead tax executives want to report to the CFO so they can be close to the business deals management is involved in order to mitigate risk for the company. Companies who have the lead tax executive reporting to the Controller are losing opportunities to reduce risk for the organization. When we are retained by companies to find a lead tax executive the first question prospective tax executive candidates ask is “Who does the lead tax position report to?” If the response is anyone other than the CFO, the prospects generally decline interviewing for the tax opportunity. Organizations who have the tax function reporting to anyone other than the CFO lose access to the best talent the market has to offer. The leading tax experts we deal with want to provide value to an organization. They do so working closely with the CFO to identify opportunities, tax savings, and reduce financial risks to the organization. They are not particularly fond of being asked to clean up management messes.

What we learned from CFOs over the years is that if they have a tax background they place higher importance in developing a strong partnership with the tax organization. If the CFO does not understand tax, they prefer the tax organization report to someone else. They simply do not want to deal with taxes because it is difficult to understand. This is when I educate CFOs there are tax executives who are skillful in breaking down highly technical tax code into a language they can easily understand. What we do then is search for a tax executive who can break down tax into a language that is understandable. It is an important communication skill we search for in identifying tax executive candidates we introduce to our clients.

Another important fact to note is how to compensate your tax executives and the teams who support them. The increase in the number of companies hiring tax expertise in this competitive market is staggering. The available supply of tax experts to meet current demand is a challenge even the most experienced recruiters. If you have an open tax role and you want access to the very best talent, remember this: The biggest mistake companies are making today in hiring tax expertise is the compensation they offer. You must make an offer that is in line with the market. If you are a CFO and need compensation information please contact kat@taxconnections.com for information. Each situation is different depending on tax knowledge and skills required and location.

The majority of corporate tax executives we work with prefer to be contacted privately and introduced by a source they trust. They are not out actively looking, they are gainfully employed, they would only consider an opportunity through a private and confidential introduction. Bottom line, if you want access to the very best in the tax profession you will want to contactus to request a private introduction.