In times of crisis, it’s necessary to switch to survival mode — doing what needs to be done to support your organization and its people through a difficult period.
The Thomson Reuters Institute surveyed more than 50 Chief Tax Officers and their teams in early April after the COVID-19 pandemic began, with the results indicating that the relative preparedness — and subsequent resoluteness — of corporate tax departments is strongly linked to levels of proactivity prior to the current situation.
Those that had moved to more sophisticated, modern, and tested ways of handling work processes prior to the crisis will ultimately find it easier to adapt, the pulse survey showed. Indeed, these organizations demonstrated that by pushing this agenda earlier, they had remote access to the necessary technology systems when the coronavirus crisis hit, including the data and information they need now to operate. Furthermore — and crucially for long-term planning — they are not finding themselves in the costly position of having to scramble for investment in technology or training during uncertain economic times.
For other less proactive tax departments, hiring tech experts and investing in technology has been repeatedly pushed down the priority list in recent years — and not always because there wasn’t the money, capacity, or skills to invest. For some, there was simply a lack of appetite for change.
At this extreme, departments which had lacked the ambition, investment, or skillsets to modernize their processes now face the shorter term operational difficulties of drastically altered working patterns, along with the long-term challenges of playing catch-up in an environment dominated by budget and recruitment freezes.
Technology on hold?
Our Thomson Reuters Institute survey revealed that 68% of corporate tax departments are most likely placing any new technology projects on hold, moving them down the priority list, or cancelling them altogether. A previous survey in February (before the COVID-19 lockdown) had new technology as the second-highest priority for tax departments. In our mid-pandemic survey, however, new technology had dropped to the eighth highest priority.
You can view the full 2020 Corporate Tax Departments Survey here.
Hindsight is a wonderful thing, of course, but the current crisis should remind any business professional that unforeseen events can and will happen — again and again. Those departments showing proactivity before crises arise are the ones which will adapt fastest and quickly return their focus to the long-term priorities facing their departments, such as cost and liability reduction, process and efficiency improvements, technological initiatives, or developing and modernizing the skillsets of their teams.
A silver lining to any crisis, of course, is that departments are forced to adapt, and thus may emerge more resilient and in better shape to deal with further crises — whatever shape those may take. This may be as simple as a mindset shift, with a greater willingness, ambition, or pressing need to explore process changes or technological solutions.
To an extent, this situation provides the “burning platform” that some departments told us they needed pre-pandemic to develop a strong business case for technology investment and enable their department to digitalize as much as possible, leaving it more resilient to future challenges — as well as closer to where the more proactive departments already find themselves.
Finally, departments that can drive process improvements through adopting new technology can then free up their people to spend more of their time delivering higher-value advice to the enterprise — a requirement of increasing importance as business leaders seek commercial guidance from their tax teams to negotiate the new environment, minimize liabilities, and remain compliant. This too may put proactive tax departments in a stronger and more valued position within their organizations going forward.