Technology investment is not enough for corporate tax departments to face the onslaught of talent shortages they will face in the next few years.
A plethora of transformational factors around talent will put increasing pressure on the challenges that already exist among corporate tax departments, according to 2022 State of Corporate Tax Department Report.
The most pressing of these problems are:
- skill gaps in technology and leadership skills;
- feelings of lack of appreciation and lack of career progression as drivers of decisions to leave current employers;
- time constraints to invest in staff education and development in the short term;
- The flight risk of the next generation of corporate tax leaders; and
- Lack of succession planning.
These factors come on top of the growing demands faced by corporate tax departments, including managing increasing regulatory requirements, supplying governments with tax data faster and more accurately than ever before, collecting and analyzing data across the enterprise, providing strategic intelligence, and finding new ways to is To extract value for the corporation.
A direct result of all these additional demands is that tax and accounting professionals working in corporate tax departments are feeling the squeeze – and this is compounded by already burnt-out staff following the pandemic. In fact, more than half of tax professionals who responded to this year’s survey said they don’t have the resources they need to do their jobs. This could accelerate trends already in progress, with older workers retiring, mid-career professionals frequently leaving their employers, and younger workers strongly indicating they want a better work/life balance.
This is a wake-up call to all corporate tax departments and corporations across the board. They clearly need to find creative ways to retain existing employees for longer and replenish their workforce with people who have the skills needed to meet the new challenges facing corporate tax departments. Here again, technology is a key factor, but it will not be enough to solve all the industry’s talent problems and meet current and future needs.
Determinants Inhibiting Corporate Tax Incentives
The “emergency button” is flashing red for many corporate tax departments, and leaders of these functions need to act now to address further near-term disruptions. Among the most challenging issues they face:
Flight risk -Many corporate tax departments face the threat of employee turnover, while the power of a tight labor market remains in the hands of employees. This fact is even more acute for corporate tax functions. Flight risk sits at an average of 36% among all corporate tax professionals, according to the report. This is further emphasized by the fact that the next line (between the ages of 41 and 50) has a higher flight risk to lead corporate tax functions, at 44%.
Without proactive efforts by corporate tax managers to address the top three drivers of employees’ decisions to leave employers—feelings of underappreciation, lack of career advancement, and dissatisfaction with corporate culture—the problem will only get worse in the future.
Skills gap in technology and leadership – Some corporate tax departments are investing in technology to increase efficiency. The challenge, however, is that current employees don’t feel they have the necessary skills to take advantage of such innovation. In fact, 43% of corporate tax professionals indicated that their current tax technology expertise is not equipped for success.
Investing in learning and development is a time constraint – Additionally, these same time and resource challenges for employees prevent them from having the time they need to invest in learning and development to close those skills gaps. Without exception and by a wide margin, “lack of time” was identified as the biggest barrier to meaningful professional development, particularly for low-resource tax departments, where nearly three-quarters (72%) of respondents said time constraints prevented them from improving. their professional skills. What’s even more illuminating is that while companies have a better sourcing balance, more than half (55%) of respondents still say finding time for business improvement is their primary challenge.
A high-capacity effort requires a commitment of time and resources by investment management; And without that, the current situation will only worsen unless corporate tax managers actively seek ways to free up time beyond investing in technology for efficiency.
Lack of succession planning – Many tax departments are reluctant to develop a succession plan because employees do not have the appropriate skills to succeed. However, those next in line to lead corporate tax departments do not have time to develop the necessary skills, including leadership skills, technical expertise in global tax, and the ability to communicate with senior executives. Interestingly, younger respondents – under the age of 40 – expressed an interest in improving their leadership and people management skills.
However, compounding the harsh reality, potential flight risk in companies without a succession plan is about 11-percentage points higher than in companies with a succession plan in place.
Barriers to corporate tax talent are high now, but if efforts are not made to prevent flight risk at the management and corporate level, the challenges will increase over time. Lack of time to complete current and future functional tasks, lack of bandwidth to address skills gaps, and already high flight risk have a negative multiplier effect on talent within corporate tax departments. Without immediate attention, these leaders will soon fail to meet their most basic needs.