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Tax transformation: Plan and invest in the tax department of the future

Second in a three-part series examining hiring and retention challenges affecting tax compliance and how leading organizations are responding.

Three questions to ask

    • How are today’s labor market and economic challenges impacting the need for talent in today’s tax department?
    • How are organizations addressing the challenges of hiring, training and retaining the right people with the right skills in a rapidly shifting tax landscape?
    • What steps can leading organizations take to establish themselves as attractive employers for tax compliance professionals? 

    Should you transform for now, or for what’s next?


    Perspectives on improving tax compliance readiness in the tax function


    Faced with increasing tax complexity, new data and technology requirements, and challenges finding and retaining talent, companies now more than ever need to be thinking about updating their corporate tax compliance functions. In this series, we examine an evolving tax compliance environment that rewards agility, new skill sets and the ability to do more with less. In each article, we examine different factors affecting today’s tax departments and provide insights on how they can transform and thrive in the tax compliance landscape of today and tomorrow. In our first article, we focused on regulatory, legislative and market complexities affecting tax compliance. This second article in the series focuses on hiring and retention challenges affecting tax compliance and how leading organizations are responding.


    Challenges affecting tax professionals 


    Today’s tax environment is dynamic, and companies’ tax compliance departments need to be able to adapt accordingly. For tax compliance and reporting professionals, that means tax technical knowledge, attention to detail and an ability to calculate complex tax rules, while still important, are no longer enough to satisfy the job requirements. Today’s tax function is multidisciplinary and analytical, and in our globally interconnected economy, employees need a broad range of skills to respond to increased data sharing, new regulatory and reporting demands, intensifying scrutiny of tax matters and greater use of technology in data management. 


    Many organizations are struggling to find, hire, train and retain the right people with the right skill sets. According to the EY 2022 Tax and Finance Operations Survey, almost a quarter of respondents said the biggest barrier to delivering their tax and finance function’s purpose and vision was an inability to hire and retain the required talent.¹   Companies that do not address evolving talent issues are at risk of falling behind in a rapidly shifting tax landscape. Those that proactively address these challenges, by contrast, will be better positioned for resilience and success. 


    Labor market for tax professionals


    Among the characteristics of the current labor market for tax compliance professionals are:

    • A work environment shaped by COVID-19, high inflation, and political and social tensions
    • The ongoing effects of the “Great Resignation,” as large numbers of workers reassess their career and life goals amid strong labor demand and low unemployment
    • Rising labor costs and a need for companies to do more with less
    • The need for new skill sets, including analytical and technology skills, leadership and management skills, cultural awareness and a global mindset²
    • Declining numbers of undergraduate and graduate accounting degree completions³ at the same time that demand for accountants and auditors is projected to rise⁴

    What we are seeing


    Employment trends


    Pandemic stress, labor market trends and hybrid work have upended prior pay and career expectations, and the balance of power has shifted from employer to employee across many sectors and industries.


    “It’s more of a ‘Great Rethink’ than a ‘Great Resignation,’” explains Tamra Chandler, EY Americas Talent Management Lead. “Many people are asking themselves whether their organization’s purpose resonates with them and whether they are gaining valuable skills and inspiration from their current jobs. If the answer is ‘no,’ they may decide to pursue other opportunities.” 


    According to the EY 2021 Work Reimagined Employee Survey:

    • Nine  in ten respondents want flexibility in where and when they work
    • Given the choice, more than half of employee respondents (54%) would choose flexibility in when they work, and 40% want flexibility in where they work
    • The roles most likely to move jobs include managers/leaders and those with technology/finance roles

    Organizations need to balance these evolving trends in workforce preferences and workplace culture with their own strategic business objectives, which can be challenging, especially in economically turbulent times. We continue to see turmoil in the talent market as employees seek opportunities for pay increases, career advancement, enhanced flexibility and overall well-being programs.


    Within the tax compliance function, tax technical knowledge is still important. But so are strategic leadership skills, a global mindset, nimbleness and flexibility, data management and analytical skills. According to the EY 2022 Tax and Finance Operations Survey, 95% of respondents stated technical competencies need to be augmented with process, data and technology skills. 


    At the same time, economic uncertainty is creating resource constraints for companies. Some 87% of respondents to the EY 2022 Tax and Finance Operations Survey said they plan to reduce the cost of their tax and finance function. At a time when employers have increasing resource and budget constraints and there is broad economic uncertainty, employers must find ways to differentiate themselves to attract and retain top talent.  


    Actions to consider


    What leading companies are doing to attract tax compliance professionals


    There are several steps companies can take to establish themselves as attractive employers for tax compliance professionals. These steps broadly fall under the categories of planning, sourcing and investing in talent:


    Planning for their tax function

    Sourcing talent

    Investing in developing the tax compliance team


    Now is the time for companies to create a roadmap for their tax compliance function for the near and longer term. Assessing the skills in current teams, thinking about those that will be needed in the future and determining if there are gaps can help leaders engage in a meaningful way in the quest for talent and keep the tax compliance function performing smoothly in the years ahead.


    Today’s dynamic tax environment shaped by fallout from the pandemic, high inflation, rising labor costs, strong labor demand, low unemployment, and the need to do more with less, makes finding and retaining talent more challenging than ever. Factor-in increasing complexity in tax compliance, driven by political and economic uncertainties heightened by increasing regulatory requirements, the need for today’s tax professional to develop new skills is critical.  Tax departments that can create a roadmap to engage in a meaningful way in the quest for talent will be better positioned to ensure their tax compliance function will perform smoothly in the future..

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