Taxes make up one of the most complex areas of accounting, as, unlike other departments, tax professionals must stay abreast of both the regulatory and legal landscapes in combination with accounting standards. Company structures are changing, too, with the advent of globalization in the 1990s leading many organizations toward expanding their footprints abroad.
While globalization is advantageous for growing company market shares and improving local economies, it’s made the jobs of tax leaders much more complex. Today’s tax professionals handle many tasks aside from simply preparing annual returns. Some specialize in foreign direct and indirect taxes, while others concentrate on transfer pricing or tax audits.
Every company has different needs when it comes to taxes. Smaller organizations that operate in single jurisdictions may find a tax generalist to be perfectly adequate for handling their tax needs, while other organizations may need much more specialized knowledge.
The primary responsibility of a tax manager is to ensure their teams have what it takes to support the organization’s needs and prepare entry-level workers for future, more prominent roles. With that being said, here are a few tips for effective tax leadership in an ever-evolving landscape:
As a tax manager, you may work 50 or 60-hour weeks, and exceeding that amount means performance takes a nosedive, and your relationships suffer. That means you can’t rely solely on yourself to address the tax needs of your business. The key to effective tax leadership is a solid, qualified team.
The size of your team will vary depending on organizational needs. Enterprise-level companies often rely on sizable in-house teams and various outside professionals to handle their responsibilities, but small and mid-level companies can require the same level of support, especially if they have a physical presence outside their state or in other countries.
It pays to hire skilled tax professionals or individuals who can handle specific responsibilities, but you’ll need to fully understand the needs of your business and hire the right people for each role. If you have a full tax team and don’t need any new hires, ensure your existing team members perform at their highest ability.
In addition, it’s common for organizations to misalign their team members in roles that don’t take advantage of their strengths. For instance, you might have a skilled employee experienced in transfer pricing, but they may be working on state tax returns instead. These misalignments can lead to job dissatisfaction and lower productivity rates among team members.
If you’re a new leader within your organization, get to know everyone on the team. Become familiar with their strengths, weaknesses, and decision-making process to ensure you’re in a better position to understand where your team is lacking, and then build from there. As you grow more confident in your tax team’s abilities, you can delegate some of your more complex tasks to them, improving your team’s efficiency and knowledge.
At some point, tax managers will need to hire new people to take on open roles. Existing team members may decide to leave, or the organization’s tax needs may grow. Effective tax leaders must properly plan to hire the right people to fill open roles.
It’s crucial that tax managers look for individuals with varied experience. They shouldn’t attempt to hire people with the same traits and qualities as themselves. Instead, they’ll want to look for individuals with different skill sets who can add new value to the organization.
For example, if the manager exhibits a strong aptitude for strategy but needs help in executing it, they’re smart to look for execution-oriented team members. Such an employee could handle the planning and details of the manager’s strategy. It would be a mistake to hire another visionary employee.
Similarly, you must ensure that your new hires work well together. One of the best ways to judge a candidate’s fit within the department is by requiring each new applicant to go through interviews with various team members in the department, not just hiring managers. Multiple interviews can help you determine whether the person is likely to collaborate well or not.
It’s advisable to aim for continuity within tax departments. Tax departments often face legal challenges and audits several years after filing tax returns. If the people who led the tax initiative quit, new individuals may have difficulty understanding their reasoning at the time or answering the questions of tax officials.
As companies and tax legislation change, it’s critical to ensure your team remains up to date in their knowledge. Local, state, national, and international tax laws are constantly being revised, so you’ll need to have the proper processes in place to keep everyone informed.
Employee development will look different according to your employee’s responsibilities. For instance, someone who handles indirect taxes will have a different skill set than someone familiar with transfer pricing. Generalists may have a variety of skills that make them good leaders, but they are likely not the right practitioners for handling specialty assignments, such as the tax provision in a foreign country.
Most tax professionals aim to minimize tax liability for their organizations. To accomplish that, they often need to work in gray areas and defend their actions if the company comes under a tax audit.
There’s also a balance they must maintain between taking on too much risk and too little. An organization that doesn’t assume any tax risk isn’t fulfilling its purpose. They’ll likely pay more taxes than is reasonable, making them less competitive with other organizations. Conversely, a company that assumes too much risk may open itself to unnecessary legal problems.
Taxes are one of the more specialized departments in most organizations. Every team member has unique responsibilities, and some may be pretty intricate. Therefore, to run your tax department efficiently, you’ll need to ensure the team has access to the resources they need and are in roles that emphasize their strengths. You’ll also want team members that collaborate well together. A well-structured tax department will optimize your company’s tax processes in today’s evolving economic landscape.
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