Measuring Up To Become World Class In TaxWednesday, June 17, 2009
What does it take to build a “World Class” tax department? Like any organization today, pushing the limits of performance and success takes a new level of thinking. The question is can your department rise to the occasion and how can you effectively measure just how well you are performing on behalf of the company?
In several upcoming blogs, we are going to look at benchmarking performance of both the tax personnel and the tax function. We are going to examine how industry standard “best practices” are not necessarily the ideal metric for measuring performance. The challenge is that these industry standards are not fluid. They don’t address the changing needs and objectives of the company under specific time periods. Furthermore standard “best practices” benchmarking does not encourage communication and alignment with the top level company objectives which are frequently subject to change. Tax and financial departments need to become much more involved in the business conversations to ensure that they are aligned and thus performing under a focused set of deliverables that match the company’s needs.
Traditionally, tax has been a bi-product of finance, which in turn should support the overall goals of the organization. The flow of company objectives throughout the organization provides the best scenario for benchmarking performance. When deliverables do not meet the needs of the company, the basis on which to measure performance is no longer an internal factor.
Every tax department that strives to be world class needs to benchmark performance specifically against the needs of the company. For the most part, the deliverables of the tax department will fall under five main areas. These are:
- Risk Mitigation
- Cash Planning
- Effective Tax Rate
- Compliance Efficiency
- Organizational Alignment
The standard thinking in performance measuring has been to benchmark tax performance against industry standards or by directly comparing one set of tax results with another company’s performance. This thinking is flawed, outdated and needs to be modified if true performance measurement is the ultimate goal.
Every company has a unique set of issues and objectives. The goals of the company will require the tax department to align itself in the appropriate area to meet the needs of the company both short and long term. If the goal at the top of the company management is to bring down the effective tax rate, but the tax department is more focused on compliance efficiency, this disconnection not only makes performance measurement worthless - but actually harms the overall health of the organization.
Tax departments must begin to modify their process of performance measurement by identifying and aligning with the core business objectives and connecting performance to the specific areas that need resources. This process will support the company, allow for accurate performance measurement and bring your tax department one step closer to a world class standard.
~Tony
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Will all of the Tax Compliance Work be Out-sourced Offshore?Friday, May 8, 2009
Simple Answer = NO!
Professional service firms and corporations are sending tax compliance work to supposed lower cost foreign locations. Some public accounting firms have operations in India and some corporations have shared service centers there as well as other non-U.S. locations. However this is a very small percentage of the work load in the U.S. tax compliance pool.
This will never be a major strategy because:
1. It is politically unsustainable. Pushing high paying jobs offshore is a no no.
2. It cannibalizes the training of U.S. based tax professionals. (How can we develop people who have no base of experience in the tax compliance arena?)
3. Cost savings always evaporate as supply and demand eventually raises the costs to do business in a new location over time.
What I do see is a strategy of public accounting firms and corporate in-house tax departments moving tax compliance and potentially tax provision work to low cost locations INSIDE of the U.S.
Obviously, the first two reasons that I mentioned above as to why outsourcing to non-U.S. locations wouldn’t work out, would no longer apply if tax departments moved compliance & provision work to low cost locations within the U.S. Also, the third reason will eventually have an impact, but it will take many years to develop and a strong in-house training program could easily keep the salary inflation under control.
What are your thoughts?
~Tony
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Book RecommendationMonday, May 4, 2009
Careers in Tax Law: Perspectives on the Tax Profession and What It Holds for You
The Tax Section of the American Bar Association is pleased to announce its latest publication, Careers in Tax Law: Perspectives on the Tax Profession and What It Holds for You. In this very informative publication, 75 tax professionals share their knowledge and experiences to create a compilation of essays in reference to the different types of opportunities in tax law. Chapters include: An Evolving Profession, Finding a Fit, Roads Less Traveled, Smaller Firm Practice, Larger Firm Practice, Cases and Controversies, State and Local, Going In-House, Serial Careers, Academia, Public Service, Lawyers and Accountants, The Cross-Border Lawyer, Other Ways, The Greater Good, From the Bench, Points of View, Certain Constants and finally, The Recruiter's Perspective.
I contributed the essay on page 285 which is titled: Pathways to an In-House Career. This is a very interesting and valuable publication and I recommend it to any individual who may be thinking of entering the field of Tax Law.
This publication is available to Law Students for $40 and is also available to members of the Taxation Section of the American Bar Association for $55. This publication is available to non-members for $70. To order, reach the ABA directly at 800.285.2221 or visit the ABA Store here.
Lastly, I would like to send out a special thanks to Tom Herman, Wall Street Journal contributor on Tax matters, in appreciation for his effort to put the spot-light on tax issues for 30 years, we wish him the best in his retirement!
~Tony
TaxDiversity's Campus Outreach Event in HoustonMonday, April 27, 2009
On Saturday, April 18th at Texas Southern University, TaxDiversity held its second Campus Outreach Event. Students from over 17 area universities were invited to attend the program along with representatives from the Tax Executives Institute, PricewaterhouseCoopers, the IRS, and Deloitte & Touche. Gina Cricchio of TaxDiversity and Adam Golden of TaxSearch Incorporated, hosted the meeting.
As with TaxDiversity’s past event, the audience was comprised predominantly of racial minorities along with representation from the female gender population. Though it was an exceptional stormy day we had a good turnout.
During the event, students were able to hear Ms. Niloufar Molavi, a Tax Partner for PwC, and Carlos Arevalo, a Senior Associate at PwC educate them on what opportunities are out there from a tax career standpoint. Two Senior Tax Counsels from Shell Oil, Chris Rice and John Misso, spoke about opportunities within corporations from a tax perspective. They also spoke about things that they wish they had known when they were looking for their very first tax job. Gwen Giles, who is Team Manager in the Large & Midsize Business Unit at the IRS spoke about opportunities in the IRS and why a student might want to choose the IRS for their career. Brenda Thompson, Tax Manager for Deloitte also spoke about opportunities in tax as a career in a public accounting firm. Finally, David Fine, Houston Chapter President at TEI and Tax Manager at Apache Corporation wrapped up the speaking portion of our meeting.
The session concluded with an hour and a half networking session in which students were able to meet with our speakers and participating organizations and discuss internship opportunities that exist at each organization. According to Gina Cricchio of TaxDiversity, the feedback that we received from the students immediately after the event was overwhelmingly positive as they were very thankful and said that our event was extremely informative. In the near future, TaxDiversity will host Campus Outreach programs in the New York tri-state area as well as in San Francisco. We will continue to make everyone aware of the dates of these events. Check TaxDiversity.com for more details.
Finally, I want to send my sincere appreciation and thanks out to everyone who, despite the horrible weather, attended and spoke at our event. Again, I cannot stress enough how critical it is that we engage and educate a more diverse population of students about the opportunities in the tax profession. I want to send my appreciation to PriceWaterhouseCoopers and the IRS for being Platinum Sponsors, and also TEI for contributing 2 of the Apple Store gift cards once again.
~Tony
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TEI Mid-Year Conference RecapWednesday, April 1, 2009
What’s Wrong with These Kids?
On Monday, I spoke at the TEI Mid-Year Conference on retention. I was told that the attendance was off approximately 30%, but that still left over 400 attendees which is not bad considering the current budget constraints.
From the staffing perspective, I heard loud and clear, that finding quality tax staff is still hard and that very few staff reductions have occurred in the corporate in-house tax departments.
It was interesting to hear the frustrations that were consistently voiced by the baby boomers (born before 1964) and the Gen X-ers (born 1965-1980) about the difficulties in managing the GenY-ers (born after 1980). It seems like these young folks dislike over-time and weekend hours (like the rest of us do!).
When I asked the room of well over 200 folks to raise their hands if they were born after 1980, I was not surprised to find that no one raised their hand. Imagine a discussion on retention and not one person attending who is under 30 years of age.
The exact pool of candidates that are the hardest to hire and retain and we did not have even one person from this group!
There was a question asked about how we can get these “Kids” to participate so that we might better understand what motivates these types to come to take a job and then to stay.
Gen Y-ers will participate if the interaction is efficient (think technology-Web ex- live chat etc.) and will not infringe on their personal time (lunch hours). Dave Klausman who was speaking with me on this topic reminded the members that a similar culture change occurred when they had to accommodate more female tax professionals wanting to join who had family issues. He commented that the national conferences were shortened in length and that at the local chapter level, the use of luncheon meeting time frames became the norm in order to accommodate working mothers.
This topic is HUGE and due to the demographic realities of the tax profession (Boomers being the largest group and retiring in clusters over the next 5-7 years; Gen X-ers are a very small pool and Gen Y-ers being a large pool that has intrinsically different values than the 2 prior groups). We must learn to work together.
I arranged for all of the attendees to receive a free copy of “Decoding Generational Differences” written by W. Stanton Smith, Principal, National Director, Next Generational Initiatives Talent, Deloitte LLP.
If you wish to receive a copy of this book, which I feel does a tremendous job in addressing this very issue, please email JuSmith@Deloitte.com and mention my name with your request for a free copy.
~Tony
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What is Really Going On with the Staffing Demand for Tax Professionals?Wednesday, March 18, 2009
Last week we did a research project on how many active job ads for corporate tax professionals were on the internet in Houston, TX. By narrowing this to one city, we could use our software to capture the total number on the net and then manually check for duplicate listings or broken links, indicating these were filled or no longer available and whether they were truly corporate tax jobs at the professional level (degree required with experience).
The results were surprising in that in Houston alone we found 374 current job ads on the internet for corporate tax professionals.
These numbers were initially higher than I expected but upon reflection, they make sense. Our retained search firm TaxSearch, is fully utilized with a backlog of work rapidly increasing. Our job board at TaxTalent has consistently held firm as to the total number of jobs being posted directly by corporate clients. As I had mentioned in earlier entries, while the current market for tax professionals is not as dynamic as it was last year, it is still not easy to hire quality tax professionals.
In the future our TaxTalent network will be developing a Tax Hiring Index based on the staffing demand for professional tax staff in a select group of major cities. I hope this will finally provide a valid statistical measurement on an ongoing basis to quantify the demand levels for professional tax staff going forward. After we get the Tax Hiring Index up and running, we can easily identify demand increase and decrease levels over time.
These results are proof that we still show a strong demand in Houston for professional tax staff, but we cannot identify what the trend is at this time. We will track the Houston numbers monthly and post the results on this blog until the new broader Tax Hiring Index is up and running at TaxTalent.com.
~Tony
P.S. For anyone attending the Tax Executive Institutes Mid-Year conference, I will be speaking on March 30th at 2:15pm on the State of the Market for Tax Professionals and on What you Must Do to Retain Key Staff. Please feel free to stop by afterwards to say hello.
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PwC: to Lay Off or Not to Lay OffThursday, March 5, 2009
As we all know the tax profession is heavily dependent upon the Big 4 accounting firms when it comes to developing the talent within the profession.
We can save the debate for another day on the merits and wisdom of this but no one can deny that the majority of tax professionals in the corporate tax arena are hired and trained by the Big 4.
In this current market, only PwC has publicly communicated a policy of no layoffs other than performance based layoffs. This is a first! In my 28 years of recruiting within the tax profession, every major public accounting firm has chosen to use layoffs as a measure of reducing costs in every recession I have seen (1981, 1987, 1992 and 2000). This is a bold step which I hope will pay big dividends for PwC when we pull out of this downturn.
Because accounting firms are flow through entities, it has been hard to persuade them to make capital investments in their people when the economy turns south. The appetite for partners to see reduced unit allocations or even capital calls is understandably not strong.
However, the benefits at this specific time of supporting the existing staff in my opinion and avoiding layoffs will outweigh the short term costs.
The demographics are in PwC’s favor (Gen Xers are half the number of the baby boomers) and the costs to re-staff this pool (Born between 1965 and 1980) will be very expensive when the economy starts to recover.
The Gen Y-ers (Millennials) born after 1980 are very savvy from a technology perspective and use social networking like no previous group has. Surprisingly, studies show that most want long term relationships in their careers. This group will talk to each other and the impact of PwC’s decision to avoid layoffs will have tremendous short and long term benefits.
The baby boomers are still the primary buyers of the Big 4 accounting firm services and I believe they as a group will be highly appreciative of this no layoff policy.
First off, it hits an emotional card with those of us in this demographic group. We grew up seeing the bond between employer and employee broken time after time until we started questioning whether collegiality and loyalty ever really existed.
PwC’s decision will be a PR win no doubt, but these corporate in house tax leaders will also recognize the “Value” of having a service provider who minimizes turnover with this policy and therefore increases the “Quality” of their service at the same time.
Kudos to PwC and I hope all the service providers reconsider their policies of using reduced headcount as their primary means of managing costs in a down economy.
~Tony
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Not a Time to be the "Weak Link" in the Chain!Wednesday, February 25, 2009
From an individual tax professional’s perspective, one might feel relatively secure, even in this economic climate since we still see a lot of tax jobs being recruited for.
General speaking I would concur with this sentiment with one major exception. The “Weak Link” is very vulnerable in a down market. I have seen a trend with my existing clients where financial management is asking the tax function to evaluate and rank their existing staff. Regardless of whether the person that is identified as the lowest rank person is above average, average or below average, that person will still be viewed as the department’s weakest link.
Why is management putting Tax Departments through this exercise?
One of two reasons:
1. To indentify a potential LAY-OFF candidate.
2. To identify opportunities to UPGRADE in this softer market.
What should you do?
Please sit down with your direct reporting supervisor ASAP and find out what they really think about your level of performance and what you could do now to improve in the areas that are currently the most impactful from upper management’s point of view.
This is not the time to wait for someone to come to you, but rather a time that necessitates you TAKING ACTION before you are identified as the “Weak Link”.
~Tony
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Candidates Caught in The Lay-OffThursday, February 19, 2009
Whether you are a tax professional who got caught in a lay-off or you are nervous about the security of your current situation, the first thing to do is make sure to get your resume and achievement addendum ready to go. Make sure that you’ve created a strong resume that will make you a stand out from the rest of the competition as well as an achievement addendum which will clearly show a prospective employer that your accomplishments are exactly in-line with the expected deliverables of the position. Keep in mind that while the resume is more of a static document, your achievement addendum is a dynamic document which should be modified in a way that would educate each particular hiring authority on specific accomplishments in your background that match the employer’s needs. In order to do this you’ll need to first capture as much information about what the employer wants to accomplish and then make sure your addendum reflects this. The more you know about the position going in, the better you can tailor your addendum accordingly, making sure it is accurate and relevant in relation to the position they need filled. For a refresher course on how to create a solid resume and achievement addendum, click here.
The next step is to penetrate the market. Find out where the available jobs are. If you are limited to a local search, this task becomes much easier. Immediately utilize the internet to identify the job boards that have tax jobs posted to them and the recruiting firms that specialize in recruiting tax professionals. Using keywords like “tax jobs” when searching with yahoo or google.com (for example) will bring these up. A great example of a job board would be our TaxTalent.com job board or the Tax Executive Institute’s job board. On TaxTalent.com, one can set up a Job Agent (which takes only a few minutes to do) that is based on the criteria (location, title, compensation etc.) that you input and will notify you when jobs are posted that match your criteria. Also, reach out and contact the tax specialty recruiting firms like our retained search firm, TaxSearchInc.com . Keep in mind that retained search firms will be able to help you if they have active searches available. But if not, you will have to take the marketing of your background into your own hands. A word of caution: while contingency search firms can be very beneficial, avoid having them market your background without your approval because the fee may be a negative for certain companies. Market yourself out to all of the tax service providers that you have relationships with like public accounting firms and law firms. If you are a member of TEI, which has employment chairs in every major city, reach out to them at TEI.org.
Finally, realize that time is not your friend. If you are in an unemployed situation, remember that the longer you stay out of the market, the more it will work against you. Do not procrastinate in getting your search for work started. In contrast to that, do not settle for something that you know you are not going to be happy with in the long run. Short term job moves may have a negative impact on your marketability and on how employers view you. However, in this current climate, you may find that employers are more understanding of this.
~Tony
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Who has the time to write a detailed job description in the current tax world?Wednesday, February 11, 2009
The answer is no one, but it is essential for the two reasons listed below:
1. It is required by HR!
2. A well-written job description will reduce the risk of a bad hire!
With that in mind, TaxTalent.com has now made available a FREE library of detailed tax job descriptions complete with organizational charts written for companies based on four different revenue tiers. Here one can view, print and custom tailor the job description templates to fit the position as appropriate, as well as save the document. We encourage you to utilize them for your internal needs.
~Tony
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