Tax departments are heading for a generational shift in leadership. Tax leaders should welcome it and adjust their talent and technology strategies to smooth the way.
“What earned current tax executives their spot atop the function won’t necessarily cut it for future tax leaders,” notes Michael Bernard, chief tax officer for transactional tax at Vertex, in a Tax Executive article. It’s a huge shift, one that brings to mind an old tune from British rock group The Who – Michael writes that the song “announced the arrival of a new generation whose values differed markedly from those of its predecessors.”
Tax leaders who’ve been in the industry for 20 years or more traditionally earned their positions through a broad range of skills – delivering a low effective tax rate, working well with the audit committee and finance leaders, effective tax planning and the like – but a comprehensive command of tax technologies probably wasn’t high on their list of accomplishments. The upcoming generation of tax executives will need deeper skills in the tech dimension. Michael delves into the reasons why that’s so, including the rising data demands around compliance, the changing expectations of boards and audit committees and the shifting role of the IT function.
The article describes five transformative steps tax leaders should consider:
- Develop a tax technology playbook. This document should lay out your tax technology vision, plan, budget and challenges to be addressed, as well as IT systems that feed into the tax data repository.
- Hire more tax technologists. You don’t necessarily need people who are fluent in Java or Python; instead, look for tax experts with experience in ERP, systems implementation, SQL, data analytics, basic coding or software from tax technology vendors.
- Enlist internal audit (IA) as collaborators. IA can help you make the business case, and its recommendations are generally adopted.
- Partner with IT. You’ll want to ensure that the tax department’s goals align with the company’s overall finance/IT strategy, which the CIO oversees.
- Invest in and implement tax technology carefully. Michael outlines the three essential drivers of success for any technology solution: time, scope and money.
These recommendations can help you get ready to “meet the new boss” – but he or she won’t be “the same as the old boss.” If you recognize that reference to another old song from The Who, you need to read Michael’s article. And if you don’t recognize it – you definitely need to read his article!
Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information.