It’s hard to pick up a business publication today without seeing an article about corporate tax strategies and the controversies often associated with them. Tax issues are front and center, which has led to a significant shift in the responsibilities of Chief Tax Officers (CTOs). CTOs are increasingly called upon to offer strategic support to the CFO, the Board of Directors, and investor and public relations departments. For some CTOs, especially in large multinational corporations where tax departments have grown considerably, continuing to fulfill all of their operational leadership responsibilities has become untenable. This, in addition to other factors, has led to the creation of a new role—the Tax Chief Operating Officer (COO).
While the specific duties of Tax COOs vary from one organization to another, innovative tax departments are seizing the opportunity to implement this senior leadership role to spearhead the critical operational aspects of a global tax function. This paves the path for critical collaboration between departments, efficient spending, retention of top performers and attraction of high-achieving resources.
Our initial examination into Tax COOs suggests that one benefit of the new position is highly valued: increased tax department engagement by matching employees with their strengths. Why? Because Tax COOs help tax practitioners focus on their strengths and vice versa. For example, identifying the optimal non-tax department resource to answer questions and/or to obtain critical data can be time consuming, daunting, and sometimes frustrating. One of the Tax COO’s responsibilities is to serve as a senior-level and central liaison to departments outside of tax. Specifically, the Tax COO identifies the proper non-tax resources, convinces those individuals that the tax department’s needs are a priority, and finally holds those non-tax resources accountable to deliver what is expected. The Tax COO’s management of these activities helps tax department technical experts focus on their strengths. This not only helps with retention of top performers, but also with attracting high-achieving resources.
While serving as the senior-level liaison to non-tax departments is an important role of a Tax COO, there are many other leadership responsibilities that bring value to the overall corporate tax department. Will the Tax COO position become widespread in multinational corporations in the coming years? Based on the experiences of companies that have chosen to go this route, it is a move well worth considering.