Do you see corporate tax leaders as strategists or tacticians? According to BDO, those who operate in the former mode can unlock considerable value.
BDO’s new survey of corporate tax leaders builds on the firm’s 2023 report, in which it defined “tax strategists” as managers who play a large role in setting overall business strategy and driving business performance.
“Tax tacticians,” on the other hand, while also making substantial contributions, tend to have a more limited scope of influence, according to BDO. In the new survey, just 57% of the managers that BDO identified as tacticians reported that they are regularly consulted on business decisions. That compared with 90% of strategists.
The survey, conducted in February, polled 180 senior tax leaders at companies with revenues ranging from $250 million to $3 billion, reflecting BDO’s typical clientele of midsized organizations.
Respondents included CFOs and chief tax officers, most of whom were categorized as strategists; and tax directors and “tax executives,” all of whom were identified as tacticians.
BDO observed that fewer respondents actually qualified as tax strategists in this year’s survey, compared to last year’s. It “implies that strategic approaches to tax are developing mostly among the senior ranks,” BDO wrote in its report, “likely due to those leaders’ experience, credibility and relationships with other functions in the C-suite.”
A key distinguishing feature of tax strategists is a greater willingness to invest in the business, according to the research. More strategists than tacticians said they plan to increase budgets over the following 12 months for recruiting and retaining talent, upskilling/training programs and outsourcing/co-sourcing.
That differentiation may be rooted partly in tacticians having less say over budgets than strategists. “When tax leaders are unable to invest in resources like these, it can create an environment where they are too embroiled in reactive tasks to focus on strategy and planning, leading to greater exposure to tax risk,” BDO wrote.
Tax strategists are, of course, far more likely than tacticians to be involved in strategic, value-driving matters such as supply chain, geographic expansion, cybersecurity and product/service development. However, even strategists are becoming more strategically involved.
To transition from tacticians to strategists, tax leaders should consider how to bolster communications with key organizational leaders, so they can build trust and advocate for resources, said Matthew Becker, BDO’s national managing principal of tax. They also should be sure to involve the entire tax team in strategic efforts, to foster a culture of collaboration, innovation and growth within the tax function, he added.
One thing tax strategists and tacticians see the same way is how their companies measure the performance of the tax function. “Traditional metrics like effective tax rate and tax filing accuracy are still important for tax leaders but do not reflect the full scope of the tax function,” BDO wrote.
