by Mark M. Feffer

Not only is it a challenging time to manage a tax department, it's a challenging time to manage tax-department employees.

Workloads are increasing. The sputtering economy has kept compensation levels stagnant. Corporate budgets are tight, so headcounts are frozen. But at the end of the day, you can't get your work done without people - and talented people, at that.

"Tax people have a lot invested in their careers. For many, they do it because they like it," observed ChevronTexaco's Sandy Macfarlane during a panel discussion on developing and retaining tax department staff. "People want to feel like all their extra work's appreciated. They want executives to know what the tax department does and the contributions it makes."

A segment of the KPMG/Clorox Tax Best Practices Share Forum's exploration of "Managing Tax Departments Today," the panel was led by Kathleen Jennings, president of ET Search, considered a premier firm in the area of recruiting tax executives. To set the stage, Jennings sketched a number of trends impacting the workplace in both the short and long terms. The workforce is aging, for one thing: By 2024, the population aged 45 to 64 will have grown 34 percent, while the number of people aged 18 to 44 will have risen just 4 percent. What those numbers forecast is a generally shrinking workforce.

At the same time, the attraction of careers in tax and accounting is waning. When she asked how many had children considering a career in tax, Jennings was met by laughter from the Share Forum's participants. Developments at "the Enrons, the Tycos, and "other companies I probably shouldn't mention," have cast the professions in a less-than-flattering light, Jennings said. "Twenty five years ago, it wasn't uncommon for me to talk to people who said, 'I'm a CPA, my father was a CPA. I don't hear that anymore.'"

Facing these and other trends - including increasing workloads, new challenges from auditors and pressure from management to meet them - tax executives would be best served by refocusing their thinking. Rather than emphasize recruiting, Jennings said, "I'd put my emphasis on retention." That means recognizing premium performers and keeping them happy. "Those are the people who are going to help you reduce your effective tax rate," she pointed out. "You're not going to do it with people who aren't producing well. You're not going to do it with people who are underperforming - you're going to do it with people who are over performing."

What's the best way to retain staff? The panelists agreed the answer lay not in money, but in growth. "To me, retention and education go together," said Elise McClure of Starbucks Coffee Company. "What people seem to be looking for is opportunity to learn new things, to advance and to be appreciated." The fact that her department (now with 30 people, 26 in tax and four in Customs) has grown steadily "makes the battle easier," she said. "We can offer a lot of opportunity for people to take on new responsibility."

ChevonTexaco's Macfarlane agreed that "people are interested in learning new things." While his department hasn't been growing recently, "we do have the advantage of size, so we can offer different tax experiences." He suggested rotating staff through new opportunities, for example in international versus domestic tax, or audits versus tax planning. In addition, he stressed having "a real communications process" with your employees. "You might find their goals and your goals don't match," he said.

McClure believes managers must pay attention to more than an employee's technical skills. "If they can't communicate with people, and they can't do presentations, and they can't supervise and manage others, then they're not going to be very successful in the long run," she observed. "We ask, how do we develop people both technically and non-technically, and how do we find them opportunities to use their growing skills so they can do new things, learn new things and be challenged?"

While McClure likes to think her retention efforts have been successful, she pointed out, "If we haven't lost anybody for X amount of time, I'd guess nobody else has either." Often, she said, "You feel like you're doing the right thing, but sometimes you don't know until someone leaves and they say you're not doing a good job."

As evidenced by one question from the audience, educating Human Resources departments about the value of the tax staff is often a challenge. This is especially true, Jennings believes, because HR departments often use inaccurate tools to set compensation. McClure said a successful strategy for her has been to call other corporations in the Seattle area to learn the pay scales for their tax staffs. "They'll usually tell you," she said.

When asked by another audience member how he balanced his desire to rotate people with the fact some areas are more popular than others, or some staffers might not be ready to tackle a new role, Macfarlane said that in his experience, "people that are quick studies, with good judgment, tend to be the people you approach with tough projects and opportunities." He acknowledged that sometimes developing such people "requires management to take some short term pain." The payoff, he said, "is when things change, you have people who can come to grips with new things."

Written for KPMG

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