Constrained Resources:
Winning the War for Tax Talent
Corporate tax departments are in a difficult bind these days. They must navigate a complex regulatory and legislative environment, with additional pressure from the C-Suite, and increased scrutiny from activist shareholders, audit committees, and other key constituents.
All in all, today’s tax departments find themselves responding to a growing chorus of internal and external demands for tax information that is more accurate, timely, globally visible, and comprehensive than ever. Yet even as they strive to meet these challenges, they are forced to cope with the reality of constrained resources. First and foremost among these: An increasingly difficult set of constraints that relate to the corporation’s most valuable tax resource, its human capital.
Indeed, tax executives frequently confide that the “talent” challenge is the toughest one they face. Throughout the global marketplace, there is a significant supply-and-demand imbalance, when it comes to skilled, experienced accounting professionals. The U.S. Department of Labor’s Bureau of Labor Statistics reported that demand for accounting and auditing staffers was expected to grow by nearly twice the rate of demand for professionals within the engineering and legal sectors.
One recent study revealed such an intense “war” for talent that more than half of 1,000 hiring managers surveyed noted they were forced to recruit on a year-round basis, sometimes offering signing bonuses, premium compensation, and accelerated salary reviews to attract the right people to their tax teams.
Worse still, in an environment in which it is tough to attract qualified tax professionals, it is even more difficult for departments that are overworked and under-resourced to retain them. It’s no surprise, perhaps, that “personnel” topped the list of problems that 400 public companies reported experiencing during the second year of Sarbanes-Oxley. Compliance Week, which conducted the study, found that more than 40% of companies described weaknesses due to insufficient staffing, poor training, or related problems.
Fortunately, in an environment of constrained resources, there is a solution: technology. Many companies assume that, when it comes to taxes, there’s an “either/or” choice to make in relying upon either talent or technology. But that’s short-sighted. In fact, for those corporations that aim to achieve, and maintain, excellence in their tax teams and tax management processes—and practices—technology can provide the competitive edge. Rather than replacing human capital, state-of-the-art technology enhances and optimizes this invaluable asset in a number of significant ways.
Here’s a given. When qualified tax professionals have plenty of career choices, they will gravitate toward corporations that rely upon best practices to create a world-class tax function. Standards will be high at these companies, of course, but top-quality performance will be rewarded. And within this environment, people increasingly recognize that technology offers the key to success, by reducing error, strengthening controls and compliance practices, and reallocating constrained human resources in the most valuable ways possible. Clearly, technology enhances a company’s hiring prospects.
How’s this for a win-win? State-of-the-art technology benefits both the corporation – by facilitating compliance, communication, and operational efficiency – and its tax professionals, by freeing up some of the 60% to 70% of their time that they now spend, on average, locating, organizing, and reworking data. Work life in a tax department can be incredibly interesting, or it can be tedious. Few tax professionals would choose to devote their energies and talent to repetitive, tedious “heavy lifting,” when automation can free them from low-value tasks such as data gathering, formatting, and spreadsheet maintenance. There’s much more payoff for everyone, when tax professionals have the time to spend on decision analysis and other interesting challenges.
With tax professionals in short supply, the savviest corporations appreciate that staffers will find it more fulfilling to function in a state-of-the-art workplace, where best practices are the norm and there’s the time and opportunity to learn new skills. Another plus: Thanks to automation’s time-saving features, members of the tax department will only need to burn the midnight oil when absolutely necessary, rather than as a matter of course. That makes any job more appealing.
Technology offers countless other benefits, as well. Without it, many tax professionals find themselves virtually overwhelmed by the relentless uptick in requests for information. Research from 2006 revealed that 80% or more of respondents complained about increases in documentation requirements, auditor information requests, inquiries relating to SOX 404 compliance, and more.
There’s no end in sight to these increasing demands, with time pressures often tight, whether requests come from tax auditors or a CFO who must present information about the company’s tax risk profile to its board of directors. These challenges come from many directions. After all, other high-pressured requests may come from finance staffers who are working under shorter windows for closing the books, or a business unit manager who is under the gun to make an acquisition recommendation.
It’s no wonder that, in companies that have failed to upgrade their tax technologies, tax professionals complain about being frazzled, overworked, and even demoralized. There’s little tolerance for error, but ramped-up time pressures make mistakes almost inevitable. Demands continue to mount, since budget limitations prevent most companies from adding to their tax teams. At the same time, conditions get tougher, as turnover within the tax team necessitates a continual cycle of hiring, training, and frequently replacing staffers with newcomers who may lack the skills or experience level to perform well from Day One – or 101.
Technology can break this vicious cycle, but without it, conditions for the tax team often continue to worsen. After all, without automation, it’s very difficult for tax professionals to keep up with today’s “speed of business.” People may try hard, but if and when they fail, they risk jeopardizing the confidence that executives and colleagues place in the tax team.
The corporation’s confidence will be well earned, however, by a top-quality tax management system that is built upon the right people, the right technology, and best practices that will support them. In an increasingly complex business world, the most successful companies will undoubtedly be the ones that recognize this reality and act accordingly – as opposed to those that struggle to keep pace with financial regulatory and legislative change, as well as other corporations’ technological advances.
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