Investment in technology is not enough for corporate tax departments to offset the onslaught of talent shortages they will face over the coming years
According to Department of Corporate Taxation Report 2022.
Among the most urgent problems are:
- skills gaps in technology and leadership skills;
- feelings of undervaluation and lack of career advancement as drivers of decisions to leave current employers;
- time constraints to invest in employee learning and development in the short term;
- the flight risk of the next generation of corporate tax executives; AND
- lack of succession planning.
These factors come on top of the increased demands facing corporate tax departments, which include managing increased 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 extract value for the corporation.
The direct consequence of all these additional demands is that tax and accounting professionals working in corporate tax departments are feeling the squeeze — and that’s made worse by employees who are already burned out from the pandemic. Indeed, more than half of the tax professionals who responded to this year’s survey said they didn’t have the resources they needed to do their jobs. This could accelerate trends already underway, which include older workers retiring, mid-career professionals leaving their employers more often, and younger workers strongly indicating they want a better work/life balance .
All of this is a wake-up call to corporate tax departments and corporations across the board. They must find creative ways to retain existing staff longer and replenish their workforce with people who have the skills needed to meet the variety of new challenges facing corporate tax departments. Here again, technology is a major factor, but it will not be enough to solve all the industry’s talent problems and meet current and future needs.
Determinants Limiting Corporate Tax Talent
The “emergency button” is flashing red for many corporate tax departments, and leaders of these functions must take action now to address the additional constraints occurring in the near term. Among the most challenging problems they face are:
Flight hazard — The threat of employee turnover looms large in many corporate tax departments, 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 stands at 36% on average for all corporate tax professionals, according to the report. Compounding this fact is that the flight risk of those next in line (between the ages of 41 and 50) to lead corporate tax functions is even higher, at 44%.
Without proactive efforts by corporate tax managers to address the three main drivers of employees’ decisions to leave employers—feelings of undervaluation, lack of career advancement, and dissatisfaction with corporate culture—the problem will only get worse. the future.
Skills gaps in technology and leadership — Some corporate tax departments are making investments in technology to increase efficiency. The challenge is, however, that current employees do not feel that they have the necessary skills to take advantage of such an innovation. In fact, 43% of corporate tax professionals indicated that their current tax technology expertise is not well equipped for success.
Time constraints to invest in learning and development — In addition, the same time and resource challenges for employees prevent them from having the necessary time available 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 under-resourced tax departments, with almost three-quarters (72%) of respondents saying that time constraints prevented them from improving. their professional skills. Even more illuminating is that when companies had a better balance of resources, more than half (55%) of respondents still said that finding time for professional development was their top challenge.
Investing in efforts to improve skills requires a commitment of time and resources from management; and without that, the current situation will only get worse if corporate tax managers can’t proactively find ways to free up time beyond simply investing in technology for efficiency.
Lack of succession planning — Many tax departments hesitate to develop a succession plan because potential successors on staff lack the appropriate skills. However, those who are 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 management – on their own. Interestingly, the youngest respondents – those under 40 – expressed an interest in improving their leadership and people management skills.
However, the grim, complicated reality is that the potential risk of flight in companies without a succession plan is roughly 11 percentage points higher than in companies with a succession plan in place.
The constraints on corporate tax talent are currently great, but the challenges will only increase over time unless efforts are made by management and at the corporate level to avoid flight risk. The lack of time to meet current and future functional tasks, the lack of bandwidth to address skills gaps and the already high risk of flight is having a negative multiplier effect on talent within corporate tax departments. Without immediate attention, these leaders will soon fail to meet their most basic requirements.