International Tax Review: Why are multinationals looking for a different set of skills from their tax directors?
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Cagla Bekbolet sees tax as a function going through a generational change |
Cagla Bekbolet: The business environment has changed significantly. Companies by and large are looking for growth in different places and therefore they've become much more truly multinational as opposed to domiciled in one core market with some operations elsewhere. And that brings different layers of complexity and you see the implications of that complexity in multiple functions including tax.
ITR: One of the main complexities that is emerging from the trend of companies becoming truly multinational concerns the question of where taxes are due and the controversy over the perception that companies are not paying their fair share of tax. How do you think this relates to new requirements for tax directors?
CB: There's been a real push towards improved disclosure. Certain sectors are spearheading the way in this, for example oil and gas, mining and minerals – where there is a heavy emerging markets angle and where there's almost a licence-to-operate issue. Vis a vis government stakeholders, there's been more of a push for further disclosure. And we see some of these companies taking a leading role in this. That's added additional pressure and a different tone to the role of the tax director.
ITR: What particular skills do you think the modern tax director now requires?
CB: Previously, most tax directors if you look at their backgrounds on paper, have come out of Big 4 training and gone into a corporate track where they've progressed up the technical ladder. They're experts on the governance and reporting side, but an emerging skillset is the planning and the business partnering side. The latter two skills are becoming more important right now.
A lot of business decisions go hand-in-hand with tax decisions both before and after. Therefore there is more impetus on tax directors to be closer to the business, and understanding and being able to inform the business debate a lot earlier than they used to. There's a much greater emphasis on the interpersonal side and the commercial understanding of the business.
Often when companies change tax directors it's because they want to bring a different tone to the department. And a different tone to how the tax function relates to the business. Those can be great proxies as to how the individual would act in an intercompany setting as well.
ITR: Do you think they should have an awareness of reputational issues?
CB: Absolutely. It's more prevalent in some industries than others. But in the licence-to-operate industries, reputational issues are very important right now. When we're taking the briefs, we do talk often about the corporate affairs team being one of the internal key stakeholders, while that didn't used to feature before.
ITR: Are there any specific tax directors in the market you could point to as possessing these core skills?
CB: I wouldn't point to any specific individuals, but I would say certain sectors are more advanced. In addition to the ones I've already mentioned, the pharmaceutical industry is particularly advanced in this because of intellectual property, which adds a whole new layer of complexity, and some of the more multinational consumer companies because of the nature of the supply chain that has become completely globally integrated. The nature of the businesses is putting pressure on the tax department and so the tax functions are really rising up to the challenge.
ITR: When you are sourcing people for these roles, are you finding a shortage of people in the market who possess the necessary new skills?
CB: Yes. Tax as a function is going through a generational change. Making a generalisation, there are quite a lot of tax directors who've been in the same company and role for a long time because it's so technically focused. The new breed of tax directors in the market are individuals who've seen different companies and different markets and they bring a fresh air and a new perspective.
When you do a global tax director search, unfortunately you're not awash with lots of options.
More and more companies are coming to us looking for tax directors with these new skills. The intersection of experience of having led global tax departments and having the interpersonal skills we've been talking about is quite narrow. So the supply is very limited. But the demand for these types of people is increasing.
A lot of companies are saying what they've had has been very fit for purpose, but they're in a new reality so they need a step change, they need something that's very different. And if the same person has been leading the team for 10 years, the chances are the layer below is embedded in the same kind of behaviours and mindset. Therefore most companies tend to look outside for their new head of tax rather than inside.
So the really good tax directors fit for this modern reality sell like hot cakes.
CURRICULUM VITAE
A.N. Tax Director
International team management: I have worked in international markets, not just in the headquarters, but running an international team in different countries.
Central role in a complex business: I have spent time working on reporting and governance and as a business partner. I have been involved in the day-to-day running of the business combined with a very technical role in the centre.
Experience in multiple sectors: I have worked in a number of different companies in different sectors, proving my ability to be successful in multiple organisations.
Stakeholder management: I have the albility to form and inform a debate externally and internally, at board level, with other functions, and with my team.
Visible external roles: I frequently talk to the press, speak at conferences and advise on policy. Having something to say that is appealing and relevant is important in my external roles and shows my ability to galvanise debate on new topics. Getting traction among my peers and among the public community shows my ability to get traction internally around the board table and across the functions of the business.
ITR: Where do you go about finding such a precious commodity?
CB: We as a firm have the advantage of being global. With a lot of these multinationals, you have to think a bit laterally – not just in their domicile, but where the balance of their operations is, the three or four markets where they pay the most tax, where their stakeholders are located. Even if it's a UK plc, you may want to think about Asia or the US. We are very well equipped to be able to do that for our clients.
In addition, we can help by challenging our clients over suitable candidates for the head of tax – for instance by encouraging them to consider a number two for the role. In this situation we could use proprietary assessment tools both to provide greater insight into a candidate's future potential and to help with their integration.
There's always the temptation to look in the Big 4, but that has mixed success. Some of those individuals like being partners in a Big 4 firm. Even if they have the motivation to look at an in-house role, not all of them are equipped to do it in terms of leadership and the ability to galvanise an organisation. You have to test for that skillset. It's not a given because that's not the environment they've been in. A few of the senior partners in the Big 4 have said to me they're becoming very specialised in the niche areas like indirect tax as they progress in their career. So it's very difficult to see how they could suddenly become much broader to be the leader of a function that has to look at all areas of tax at a more strategic level, rather than just a technical level. The way the Big 4 is developing its talent sometimes makes it harder for them to become appealing candidates for in-house roles.
ITR: Do you think tax should become more of a boardroom concern?
CB: It is a boardroom concern. It touches on audit, strategy, risk. I can't think of any multinational that doesn't have tax at the top of their agenda right now.
ITR: Is this something that has happened in the last couple of years with so many scandals in the press?
CB: It's definitely become more visible in the boardroom, but it's hard to say. Some industries, because of the existing pressures on them, would have put it on their agenda a lot earlier, and some are probably just followers. If you look at the news, a lot of these businesses have intellectual property issues, being in technology, and they're relatively new as global corporates, so their sophistication in the boardroom is advancing.
ITR: In what way should tax directors be working with other departments in a company, such as CSR (corporate social responsibility)?
CB: There's more pressure on them to be better communicators; better at influencing rather than just controlling or reporting and to have that executive presence if they get pulled into debates among the board.
Tax is very topical right now. It links into everything from the business to reputation. It's on the boardroom agenda. This current generation of tax directors have more of a sense of grooming the next generation around the broader skillset than just the technical expertise. That's the biggest mindset change we've seen in the last five years.
