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
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.