Keys to managing change within corporate tax departments
Change management tips for technology, organizational restructuring, company-wide initiatives, and more.
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In corporate tax departments, change comes in many forms.
There is incremental change–small adjustments to everyday activities that may be important, but don’t necessarily affect the organization’s overall direction or culture.
And then, there is transformational change–big, bold initiatives that deeply influence a company’s operations, processes, and culture.
This blog will look at the main drivers of change in a business, successful strategies of change management to implement in your corporate tax department, and how leaders can address resistance to technological transformation.
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Key drivers of organizational change
Regardless of which type of change a tax department is experiencing, corporate tax leaders need to find ways to maximize the potential of organizational and technological change. The result can be confusion and chaos. The most dramatic shifts a corporate tax department is likely to experience are driven by four main factors:
Technology upgrades:
- The technological journey from legacy computer systems to cloud-based ERPs and automated tax engines is among the most complex and all-encompassing transformations a company can undergo.Efficiency initiatives:
- The quest for more efficient workflows and processes involves trying new approaches and altering how people work.Organizational restructuring:
- Internal restructuring does not always involve the tax department directly, but when it does, the impact can be substantial–on workflows, processes, communication, data retrieval, staffing, timelines. Everything, potentially. Mergers/leadership:
- Any time there is a significant change of leadership–either at the organizational or departmental level, or through M&A activity–there will be a necessary period of disruption and adjustment.Proactive change management: 5 strategies for success
In general, there are two ways of responding to imminent change:
proactively or reactively.Unfortunately, if corporate tax department leaders are responding to change reactively, it often (though not always) means they have failed to anticipate and plan rather than create a deliberate, forward-looking change-management strategy. Whenever possible, proactive change management is preferable, because it minimizes the risk of errors and misjudgments, and maximizes the chances that the coming changes will yield positive results.
Proactive change management requires more work in advance, however, and–depending on the nature of the changes–involves more moving parts.
For example, if a company’s technological journey has reached the point where it needs to shift to a cloud-based ERP architecture with an automated tax engine, the change-management strategy guiding this transition should include several key components.
1. A strong vision, backed by leadership
Nothing promotes success like a strong leader with a clear vision–a project champion who can
communicate why the new technology is necessary, how the organization/department will benefit from it, and how the new system will support the organization’s larger business strategy and goals.2. Transparent communication
Establishing open channels of communication between all stakeholders is essential, not only to address potential concerns and roadblocks, but to encourage buy-in and motivate staff to embrace both the need for technological change and the process behind it.
3. Analysis and assessment
Adapting to new systems inevitably involves changes to familiar processes and workflows. An analysis of the department’s strengths and weaknesses, along with a comprehensive assessment of its needs, can help identify areas that need improvement. This analysis can also prepare department personnel for the impact new tech systems will have on their daily lives.
4. Resource allocation
When partnering with third parties, some internal resources will need to be diverted to facilitate communication, execute the project plan, and help troubleshoot any technical or logistical issues that may arise. Some work reallocations may be required to give internal staff time and bandwidth to handle these responsibilities.
5. Training
The introduction of new technology and changes to workflows and processes may require additional training. However, training staff to effectively use and get the most out of the new technology is also the best way to ensure that the system performs up to its potential and the
expected rewards and ROI are realized.
Buy-in and morale: Addressing resistance to rapid change
Apart from the practical aspects of a project’s execution, effective change management also involves addressing the psychological elephants in the room–that is, the sources of fear, skepticism, and resistance that are common responses to rapid change. Buy-in is critical to the success of any major technological transition, so it must be cultivated and encouraged.
The following are some effective ways corporate tax leaders can encourage buy-in, instill confidence in the organization’s decision-making, and boost overall morale.
Address common fears
The introduction of new technology–to automate certain tax functions, for example– often creates fear that some people will lose their jobs, or that their skills will soon become outdated. To address these common anxieties, managers should communicate:
Why the new technology is being implemented
- How the new technology will improve the department’s performance
- What opportunities the new technology is expected to generate (e.g., better strategic intelligence, deeper data analysis)
- How certain jobs will evolve (and hopefully improve) once the system is operational
- What specific new job skills and capabilities the technology will enable–
- skills current employees can easily acquire and leverage to advance their careersShow rather than tell
Verbal explanations only go so far when it comes to persuasion. Instead of telling your team about the new capabilities and tools that will be available soon, assign a team to identify ways that the new technology can:
Reduce the pressure on certain tax deadlines
- Create better processes and workflows
- Empower the tax department to provide valuable strategic information to leadership
- Enable dynamic scenario modeling and supply chain analysis
- Identify any tax over/underpayments that could be leaking revenue
- Generate clean, reliable data
- 10101010101010101010101010 Recognize that change is always a moving target. Be as honest as you can, but also be realistic.
For example, everyone in the business community is trying to determine how Generative Artificial intelligence (GenAI) will impact their industry and how they can use it to their benefit. Tax departments are certainly part of this conversation, because machine learning, automation, and other advanced technologies have already had a significant impact on tax and accounting, and no one expects technology to stop advancing.
Still, it should be remembered that the proper role of technology is to
support
tax professionals in their work, not make their work irrelevant. And because technological change is inevitable, the proper role of tax leaders is to prepare their departments for any potential disruptions, harness the positive power of technological change, and cultivate a culture of adaptive resilience to help smooth the road ahead.
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