Question: Is Flexible Staffing the Best Option for Your Firm?
Answer: Tax directors often request my input into how to structure their departments around their most valuable and limited resource—people. My response is always nuanced, cautioning that the answer is highly dependent on a defined core mission and the intended role for tax in the organization.
What type of tax department will be the best partner to the business and will best support business decision making? Is tax viewed as a strategic partner with the business, influencing commercial decisions upfront, or will it sweep things into place after commercial decisions have been made? Will tax maintain certain core competencies internally, such as support for compliance functions, or does the vision for tax focus more on planning and tactical support? Will tax have the resources to do both functions well?
What the business needs, desires, or is willing to fund in defining tax’s role can create many variations in how a tax department is structured. The answers to these questions will, in many respects, dictate the staffing challenges your department will face as it competes for talent. A tax department’s work is defined by the interplay of collaboration, budget, and resources. The best-laid plans can be upended by any of these factors, the least predictable and most frustrating of which often is resources—attracting and retaining the caliber of talent that can transform and uplift the tax function.
The Overtaxed Tax Function
Tax departments are no strangers to resource and staffing challenges. Today’s corporate tax director faces unprecedented pressures: recent major legislative and regulatory developments, increased enforcement, heightened press scrutiny, greater stakeholder involvement, and more focus on financial statements and internal controls. Tax directors have to meet these new demands, often with little guidance and few resources.
As a result, the tax function is perpetually too understaffed and inward-looking to collaborate effectively with other functions within the organization and to stay focused on supporting business decision making. This dynamic is developing at a time when tax directors are being asked to better align tax planning with firms’ business planning. C-suite executives often express the desire to see tax far more engaged in the nonroutine, strategic aspects of the business.
Such demands, when coupled with the evolving tax reporting environment, are forcing a profound reassessment of how tax departments do business. Amid such formidable challenges lies an opportunity for both the company and the tax director to gain a competitive advantage by moving toward a flexible and responsive tax department that is closely aligned with the goals and business strategies of the company.
The Shortage Is Real
Talent is now recognized as a key to organizational success, a focal point for discussion and planning at the board and senior management levels. Tax leaders must embrace and articulate this concept as it relates to the specific challenges of hiring tax talent. Communicate the message that building an excellent tax team opens opportunities for “getting to the table” and supporting your organization’s strategic and operational needs.
When tax directors have the opportunity to hire additional tax people, they are often faced with a sobering reality. Constraints on headcounts may give rise to very ambitious job requirements that are difficult to locate within one individual. As the candidate flow decreases over time, tax directors begin to rethink the role or wonder whether they must adjust expectations.
That there is a shortage of tax talent isn’t merely a feeling; real dynamics are in play that are taking a toll on the profession:
- The demand for accounting professionals is expected to grow faster than the average for all occupations, with an anticipated thirteen percent growth rate through 2022, according to the Bureau of Labor Statistics.
- The increased demand for accounting professionals comes at a time when the supply is shrinking, with an estimated 10,000 baby boomers retiring in the United States every day.
- The American Institute of Certified Public Accountants has noted that, by 2020, seventy-five percent of its membership will be eligible to retire.
Although more young people are entering the profession, the younger generation has expectations that differ fundamentally from those of previous generations. Young professionals feel empowered and have different work values, with the confidence to readily make job changes. These factors suggest that employers who wish to motivate these employees must reevaluate rewards and incentives, reconfigure elements of organizational design, and offer lifestyle benefits.
The Cost of the Empty Chair
After composing a thoughtful, comprehensive job description, debating salary parameters with human resources, and forwarding the final product to the internal recruiter to work his or her magic, many tax directors are dismayed that locating the perfect candidate drags on longer than they had hoped. As the weeks and months pass, we may need to reexamine our expectations. Are they too high?
The costs of a vacancy in an already stretched tax department can be steep. Other members of the department are likely covering the additional work, and their patience may run thin over time. If you have promised employees work-life balance, this could be a deal-breaker. Tasks may be overlooked, deadlines missed, and the backlog may accumulate. Whoever authorized your job posting may begin to wonder just how desperately you need to hire someone—after all, you’ve managed this long without that new person.
Control the Controllable
The combination of increased regulatory scrutiny and the tight labor market for tax talent means that the most effective tax departments are reinventing how they do business.
Many successful tax departments are built on a model that keeps a core group of high performers focused on value-added work and being highly visible within their organizations, while bringing in project-based extra manpower for more routine tasks. Temporary roles give companies the flexibility to manage their workforce and provide access to a different pool of talent.
Tapping into these experienced resources can help tax directors refocus their attention on the most important deliverables for their departments and ensure that they are retaining and growing their best talent. Flex staffing can offer welcome relief for a stretched department and an opportunity to offload mundane tasks so your staff can focus on more strategic initiatives impacting the group. Whether it is a software implementation, determining the impact of a new regulation on the business, or advising on a potential acquisition, the ability to redirect these projects to your internal tax staff rather than outsourcing them can be a powerful training and retention tool. And while flex staffing may seem like an unusual practice area for a national tax firm such as True Partners Consulting, the current marketplace makes a very compelling case for why this business is a great fit for our clients.
The staffing industry has been growing faster than the economy because of flexibility. An increasing number of highly sought-after tax subject-matter experts have left the Big Four or industry to become independent professionals. Many tax professionals today seek flexibility and more entrepreneurial freedom and would rather engage in their work on a per-project freelance basis than be inextricably linked to one company as a full-time employee.
The Cost-Benefit Analysis
If there is a vacancy in your tax group, interim assistance will nearly always cost more than full-time salaried employees. However, this premium may be money well spent. Does the investment mitigate some of the risks of an open role and send the message to your staff that you recognize and are making the effort to address the additional workload? Would your staff welcome the additional help? If so, engage them in composing job requirements, screening candidates, and making the selection. Your leadership in this exercise will make employees feel appreciated and empowered.
The reality is that professional tax consultants will typically have a level of experience that far exceeds the experience requirements of the role they are filling. Experienced consultants are accustomed to getting up to speed very quickly in a variety of settings, so they can begin adding value on day one. Because many clients don’t want to invest the time to train someone who will not be a long-term contributor to the group, with professional consultants this ramp-up time can be minimal, with the investment paying dividends quickly.
Similarly, if your tax department relies too much on one individual or is deficient in specific skill sets, an interim solution such as flex staffing can provide flexibility and access to talent and the ability to manage your workforce more dynamically and responsively. Talent shortages may, for starters, result in internal control deficiencies but can also create stagnant tax groups where people do not evolve technically or personally. These forces can keep the group from focusing on a more strategic mission that ultimately will be far more rewarding to the entire tax team.
In the face of formidable staffing challenges, leadership and an evolving vision will be crucial not only to safeguarding tax’s many fiduciary responsibilities but also to creating a responsive and dynamic tax team that elevates tax’s profile as a business partner.
Nancy Barrett is managing director of True Partners Consulting LLC in Boston.
