In our latest “insights” publication, we are considering the topic of adaptation. BEPS 2.0, the impact of COVID-19 measures and the need for digital transformation as authorities increase their use of new technologies as they seek more significant levels of transparency are some challenges the tax professional faces today. To navigate such hurdles, the profession must evolve to ensure they are aligned with what is expected from the tax function.
How have advancements in technology influenced what is required from the tax professional?
What can the tax professional do to ensure they (and the function) remain relevant, and what qualities must they exhibit?
As the professional evolves, how are we re-addressing our view on the skills required to support our plans to build a resilient function which can partner with the business?
EVOLVING SKILLSET
Historically a thorough understanding of the tax code, regulations and case law formed the foundation of the tax professionals’ skill set. Today, what’s expected from the professional and the supplementary skills required to be effective have evolved. Whilst the core technical experience remains key, an appreciation and an interest in technology and data analytics, process improvement & project management skills, a broad understanding of the business, and enhanced soft skills have all emerged as equally important.
MINDSET
The tax function is hugely susceptible to technological advancements, given the requirement for utilising large volumes of data. Technology and data analytics and their impact on the function continually evolve; an interest and a proactive mindset are vital for the professional to ensure they remain abreast of such changes.
I recently read an article by Geoff Peck of PawPaw Taxology titled “How far are you on your digital transformation journey?” highlighting a critical point, “business process automation is not digital transformation”. Whilst the former can lead to efficiencies, the latter, I quote, “Transformation questions every part of that ecosystem, ransacks it, and then rebuilds it according to the new rules of digital tax”. If the function is to ultimately reach its objective of becoming digitally enabled, professionals must increase their understanding of, and their experience with, the tools available today.
ADAPTATION
Today’s focus extends far beyond tax planning. With functions under increased pressure to operate more efficiently at a time where pressure on both cost and headcount has never been more severe, the need for adaptation is clear. Problem-solving, project management and change management skills have all emerged as crucial components of the modern-day professionals’ skill set.
Adaptation is key, tax professionals must ensure they up- skill and develop where required to ensure they remain both relevant & competitive.”
BUSINESS ACUMEN
The emergence of new technologies and data analytics has and will continue to free up time for professionals, allowing their attention to switch to gaining a more in-depth understanding of the overall business. Once equipped with such knowledge, a closer alignment with key stakeholders outside of tax is possible, helping to position the function and the professional as a true “business partner”.
The modern-day professional faces a raft of new challenges; new legislative and regulatory developments (and their impact on risk management), and emerging analytics, whilst ensuring tax is connected with broader finance transformation initiatives, are some of the hurdles which must be overcome. No longer will an in-depth knowledge of the tax code be enough. Knowledge of the broader business will continue to play a vital role in the professional’s “tool-kit”.
An in-depth knowledge of the organisation is vital to ensuring the tax strategy is built around the broader business strategy”.
CRITICAL & CREATIVE THINKING
Cognitive competence (for many, regarded as critical and creative thinking skills which facilitate effective problem-solving and decision-making) is a vital skill for the evolving professional. Numerous papers and articles have highlighted the importance of such skills at a leadership level. However, I believe these must not be overlooked at all grades of an organisation.
Of course, the balance between the professionals’ technical and leadership responsibilities will shift as they progress in their careers. However, those who offer a diverse perspective, supported by high- intellect and able to influence confidently and credibly, must be supported regardless of their position within the function. We must nurture individuals who can influence, lead and develop those around them. This is especially important as the tax function continues to experience increased visibility across the organisation.
Such professionals will be well-positioned to understand the complexities of tax, with an appreciation for how the function and the broader business influence one another. They will be well equipped to adapt to change, with an ability to communicate the benefits that the tax function brings to an organisation.
COMMUNICATION
Highly specialised and historically poorly understood, the tax function has since positioned itself as an integral part of today’s boardroom discussions, particularly around tax governance, transparency and brand protection.
Professional, transparent and effective communication has never been so vital; the ability to communicate the seemingly complex into the simple. It may not come as a surprise that a large number of organizational problems occur as a result of poor communication. Perfecting such a skill is a critical component of professional success.
Strong communicators possess a heightened sense of situational and contextual awareness and have mastered the ability to transmit their message in a way that speaks to their audience’s emotions. The effective communicator focuses not solely on the message but also on meeting the needs and expectations of those they are communicating with. They can read an audience by sensing their attitude, mood, values and concerns. Adapting one’s approach when required is a much sought-after skill. Tax professionals must prioritise such a skill if the function is to deliver on its objectives ultimately.
EMOTIONAL & MORAL INTELLIGENCE
The importance of EI within a business context is well documented (see a former Insights article titled “A sense of humility, a path to effective leadership”). During times of increased risk, both organisational and reputational, one’s ability to engage, empower and lead is vital. One’s moral intelligence, i.e. integrity and humility, are also questioned. Exhibiting such qualities is critical when engaging and enhancing relations with key stakeholders.
An ability to listen, forge relations and support the business is what’s needed from todays tax professional”.
KEY COMPETENCIES
When considering the above, it is clear that professionals must focus their efforts on framing their experience and skills correctly, aligning with several key competencies, namely (i) Influence (C-Suite interaction and promoting a business case for change), (ii) Delivery (organisational strategy and risk management) and (iii) Relationship building (cross-functional partnerships). The interviewer’s approach will flex depending on the technical brief and the grade of the position; however, ensuring you have a selection of examples detailing your experiences across such competencies (where appropriate) is vital.
TALENT IDENTIFICATION
I am often asked how, as leaders, we identify the individuals who can help the tax function and the business successfully navigate the challenges that lie ahead. As the professional’s skill set adapts, so must our approach to talent identification.
Such a debate often hinges on the grade in question. A solid technical foundation remains the foundation for any tax professional. Therefore, traditional sources remain, with university accounting/economics courses and specific tax programmes being the customary pools for new talent. Emerging sources have looked towards graduates in IT who can fill the role of a dedicated tax technologist. For the more experienced, the additional risk management, project management and soft skills must be evident.
Tax technical skills must be prioritised (and by no means fall secondary to the topics mentioned above); however, regardless of level, we must also focus our efforts on identifying those who can adapt quickly and exhibit the qualities discussed in this article.
Whilst there is no “one-size fits all” approach, the technical brief, the grade, the chosen operating model and thus the overall structure of the tax department will significantly influence what skills we ultimately prioritise at the interview.
SUMMARY
Following the events of 2020, much uncertainty remains. What is clear is the need for the tax professional to evolve to ensure they stay relevant and for the tax function to ultimately support the business during such periods of instability.
Whilst more progressive tax departments are embracing digital upskilling and retooling, it is clear that the professional who offers purely a technical perspective is outdated and unsustainable. Tax professionals at all levels must adapt.
Knowledge of tax rules and regulations must remain; however, a learning mindset must be embraced at all levels when understanding new technological advancements. The professional must also take an interest in the broader business whilst looking to develop further such skills as cognitive competence, communication and emotional/moral intelligence. Doing so will enable them to effectively adapt to change, positioning themselves as a vital function member in their bid to support the business.