Cautionary note: Technology will not solve all talent shortages in corporate tax departments

Technology investment is not enough for corporate tax departments to weather the onslaught of talent shortages they will face in the coming years.

A host of converging factors around talent will increase pressure on already existing challenges among corporate tax departments, according to the Report on the State of Corporation Tax 2022.

Among the most pressing problems are:

      • lack of technology skills and leadership skills;
      • feelings of undervaluation and lack of career progression as drivers of decisions to leave current employers;
      • time constraints to invest in short-term employee learning and development;
      • risk of flight from the next generation of corporate tax leaders; i
      • lack of succession planning.

These factors add to the increased demands facing corporate tax departments, which include managing increased regulatory requirements, providing governments with tax data faster and more accurately than ever before, enterprise-wide data collection and analysis, the provision of strategic intelligence and research in new ways. to extract value for society.

The direct consequence of all these additional demands is that the tax and accounting professionals who do the work in the corporate tax departments feel squeezed, and this is compounded by employees who are already exhausted after 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 underway, which include older employees retiring, mid-career professionals leaving their employers more often, and younger workers strongly indicating they want a better work-life balance work and family life.

All of this is a wake-up call for corporate tax departments and corporations in all sectors. Clearly, they need to find creative ways to retain existing staff for longer and replenish their workforce with people who have the skills needed to meet the variety of new challenges facing corporate tax departments. Again, technology is an important factor, but it will not be enough to solve all of the industry’s talent problems and meet current and future needs.

Determinants that limit the fiscal talent of companies

The “emergency button” is flashing red for many business tax departments, and leaders of these functions need to take action now to address the additional constraints that occur in the near term. Among the most difficult issues they face are:

flight risk — The threat of employee turnover looms large in many corporate tax departments, while the power of the 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 among all corporate tax professionals, according to the report. In addition to this fact, the risk of escape of those close to the line (between 41 and 50 years old) to manage corporate tax functions is even greater, with 44%.

Without proactive efforts by corporate tax managers to address the three main drivers of employee decisions to leave employers: feelings of undervaluation, lack of career progression, and dissatisfaction with corporate culture, the problem will only get worse in the future.

Skills gaps in technology and leadership — Some corporate tax departments are making investments in technology to increase efficiency. The challenge, however, is that today’s employees don’t feel they have the skills to take advantage of this innovation. In fact, 43% of corporate tax professionals indicated that their current tax technology experience is ill-equipped to succeed.

Limits on time to invest in learning and development — Furthermore, these same time and resource challenges for employees prevent them from having the time needed to invest in learning and development to close these 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, where almost three-quarters (72%) of respondents said that time constraints prevented them from improving. their professional skills. Even more illuminating is that when companies had better supply balance, more than half (55%) of respondents still said that finding time for professional development was their biggest challenge.

Investing in efforts to improve skills requires a commitment of time and resources from management; and without that, the current state will only get worse unless corporate tax managers can proactively find ways to free up time beyond simply investing in technology for efficiency.

Lack of succession planning — Many tax departments are reluctant to develop a succession plan because potential staff successors lack the necessary skills. 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 taxation and the ability to communicate with senior executives, on their own. Interestingly, younger respondents (under 40) expressed an interest in improving their leadership and people management skills.

The stark reality, however, is that the likely flight risk for companies without a succession plan is approximately 11 percentage points higher than for companies with a succession plan.

The constraints on corporate tax talent are currently great, but the challenges will only grow over time if efforts are not made at the management and business level to avoid the risk of flight. Lack of time to address current and future functional tasks, lack of bandwidth to address skills gaps and the already high risk of flight is a negative multiplier effect on talent within tax departments business Without immediate attention, these leaders will soon fail to meet even their most fundamental requirements.

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