New documentation requirements. Aggressive filing deadlines. Tax transparency disclosures. Hawkish scrutiny. A global tax overhaul. Modern tax departments are under tremendous pressure when it comes to navigating today's tangled web of global tax compliance — and they're facing these challenges compromised by shrinking budgets and reduced headcount.
In a recent survey conducted by Exactera, more than 53% of tax executives said that low headcount and tight budget constraints will have the greatest impact on their ability to meet compliance requirements in 2024. But given that strategic tax planning has such a significant impact on a company's bottom line, it's unlikely that investors, shareholders, or regulators will break out the sympathy violins anytime soon.
There are many reasons corporate tax departments are suffering from understaffing — a rollercoaster economy, post-pandemic resets, supply-chain disruptions, the aftermath of the Great Resignation — and yet tax managers are still up against tight deadlines and pages and pages of meaty reports. Even for corporate number-crunchers, it can seem like an impossible equation to solve. The good news is that by following these five proven management tips, strategic tax managers can lead dwindling teams to meet compliance requirements — and turn their tax departments into value-add parts of the organization.
1. Prioritize ruthlessly:
Admit it: What you need to do and what you'd like to do are probably two different things. Times of cutbacks and short staffing call for a triage approach to the daily grind. What are your team's immediate goals? Complicated transfer pricing reports? The corporate tax return? R&D interviews?
Once you evaluate your top priorities, evaluate your team, and assign the appropriate performers to tackle them. Let a greener staff member assist a seasoned tax executive — with data entry, for example — so she can concentrate on more of the complex work. Focus each staff member on specific goals that align with their strengths — spreading your team too thin will only serve to turn high achievers into poor performers. Or, worse — you'll have a staff that works primarily on their resumes.
2. Grow your staff
High performers are always motivated by growth and learning — and a short-staffed department provides myriad opportunities to branch out. Now's a good time to seek out individual strengths and assign responsibilities to staff beyond their original job descriptions.
Can the executive conducting R&D interviews also collaborate with operations to ensure the business structure aligns with tax strategy? Can the manager overseeing property taxes also handle sales tax reports? Is there a tax generalist who can take on documentation for an additional jurisdiction? Cross-training can be a way to recognize talent, diversify roles, and keep things interesting — and it's an excellent way to ensure that staff members feel like instead of running in place, they're moving forward.
3. Partner up
Small tax departments are often made up of generalists because they don't have the resources to add expertise in just one area. Yet given the aggressive audit landscape and uncertain economy, it's more important than ever to button up compliance — and claim every tax credit you've earned. Experts can help.
Partnering with consultants brings expertise in house and adds value to the tax department and the business overall. Tax specialists tend to deliver immediate results: uncovering activities that result in additional R&D tax credits, identifying operational structures that lead to costly tax dollars, and finding missed deductions and other cost-saving opportunities. They also alleviate the burden on already stressed departments, educate staff, and free up team members to focus on strategic projects. When you consider that technology-based consultants are often so cost-effective, it makes the decision a no-brainer.
4. Embrace technology
Whether it's data entry or the risk of miscalculations, tackling tax reports manually means you're constantly vulnerable to error. And when you're overburdened and understaffed, mistakes are practically a given. Enlisting tax software, however, minimizes the chance of inaccuracies in a variety of ways — automating the imports and exports of lengthy account numbers and expenses from one document to the next, reconciling book accounts to tax, and identifying data inconsistencies, to name a few — and it creates efficiencies that can be lifesavers for overwhelmed staffs.
Tax technology can automatically track country-specific tax laws, be it qualifications for R&D tax incentives, transfer pricing compliance rules, or relevant deductions, so your team can focus on strategic work, not mundane research. Even better, it can maintain consistent information between finance and tax for the entire MNE group.
5. Be the manager you wish you had
Being a good manager goes a long way — so, practice the commonsense basics you learned in business school: Communicate with your team and ask for ideas. Your staff is in the trenches, so if there are problems, they're likely to have the best solutions. Show employees you have confidence in their abilities by empowering them to make decisions while keeping you in the loop. Value their time as much as you do your own and limit meetings, both in terms of frequency and duration.
Streamline where you can — create shared documents instead of going back and forth via email and reduce needless rounds of approvals (times might be tight, but how many managers need to sign off on remote workdays, really?). Make a big deal out of small wins. Understaffed departments are known to suffer from low morale. By being a leader who recognizes staff for meeting deadlines or completing robust reports, you may just turn a waning tax department into a slick tax team.
