In the latest Market Insights podcast from the Thomson Reuters Institute, we discuss what the recent “State of the Corporate Tax Department Report” says about how departments are adapting to the current legal environment.
Corporate tax departments continue to face “pressure on talent due to the pandemic,” says Elizabeth Duffy, senior director of client services at the Thomson Reuters Institute. This is compounded by the fact that the tax and accounting world was already facing big problems with how it kept pace with digitalization, she adds.
In Thomson Reuters’ 2022 report on the state of business taxation, 73% of respondents said they expect significant government and regulatory changes in the next two years, an increase of 16 percentage points from last year. While these regulatory impacts can be significant, most corporate tax departments feel unprepared for the changes they need to make to the people, processes and technologies they use.
In the latest podcast available on the Thomson Reuters Institute Market Insights channel, Duffy examines benchmark data from the third annual report, revealing the top concerns of survey respondents, primarily heads of corporate tax departments who represent 21 industries and of which 70% have the title of vice president or director of taxes.
As the podcast indicates, while every industry has seen challenges since the pandemic, these issues in the tax and accounting sector have been particularly acute. Due to an aging talent pool, tax and accounting organizations – whether corporate tax departments or external accounting firms – were already headed for a talent crunch. The pandemic has accelerated the departure of some industry professionals, but among those not in leadership positions, most felt there was no clear path to higher positions. The main reason for this, as illustrated by Duffy, is that most departments feel underfunded, leading to over 60% of respondents saying they don’t have time to work on their development. careers.
A surprise of this year’s report, Duffy notes, was that 30% of women surveyed felt there was a lack of mentorship opportunities, compared to just 7% of men. (The demographics of the respondents were 45% female and 49% male).
Talent issues remain front and center
The American Institute of Certified Public Accountants (AICPA) predicted that by 2020, 75% of tax and accounting professionals would be eligible for retirement. To this end, survey respondents were asked about their current likelihood of leaving their current job. As expected, employees in the 51-plus age group were the most likely to leave over the next 10 years, Duffy explains in the podcast. However, the group at greatest flight risk – people aged 41 to 50 – are those who normally would or should be next in line for leadership positions in their departments.
As the podcast highlights, the top reason many of those considering leaving feel underappreciated, with more than a third (34%) citing this reason, followed by a lack of career progression in the current role, with 27% citing this.
Size matters, in numbers
As Duffy explains, 57% of respondents felt their corporate tax department was under-resourced, up 10% from last year, even though the average headcount in corporate tax departments companies was 32 employees. Interestingly, departments with an average of 22 employees felt they had the right number of people to work with.
As noted in the podcast, a few factors can be inferred from these numbers. First, that employees had the right skills to do the job and are leveraging technology to increase efficiency. When asked which skills were most in-demand, more than 40% of department heads listed tax technology, followed by leadership (to advance their careers).
In addition to all the talent concerns in the report, the podcast delves into how departments are addressing their resource challenges. Most indicated that they are adopting strategies that lead them to “plan to do more with automation and technology”.
“So whether it’s introducing new tools or improving skill sets, they’re also talking about streamlining processes to increase efficiency within their tax departments,” Duffy says.
Transcript of the episode.