the nations largest executive search firm at the time. In 1982, when VIP Corporation divested itself during the height of the oil and gas recession, she then embarked upon a solo career which resulted in the incorporation of ET Search.
Kathleen Jennings has a long list of multinational Fortune 500 clients and international law and consulting firms which retain her to conduct searches all over the world. She was retained by Arthur Andersen in the 1980’s to assist them in staffing many of their first US tax practices overseas; she was retained by General Motors to bring the very first US tax executive in China in the early 1990’s; and she continues to retained by numerous multinational’s because she has a proven track record of stellar performances for clients around the world. Kathleen has successfully completed searches for clients with operations in the US, Canada, Europe, Eastern Europe, Asia, Australia and Latin America during her thirty year career. She is the only tax recruiter in the world with a proven record of retained search for tax professionals in many more than forty countries globally.
Kathleen received her BS Degree in World Studies from Eisenhower College, now a division of Rochester Institute of Technology, Rochester, New York in 1978. She has been a speaker before several trade organizations including numerous speaking engagements for Tax Executives Institute in the United States, Spain and Singapore.

1) Tax departments feel more resource constrained than ever before because they are dealing with complex tax laws in multiple domestic and foreign jurisdictions. Sarbanes Oxley, FIN 48, FAS109 and other new tax laws have created more stress on today’s tax departments. At the same time, a CFO demands more sophisticated information from their tax department which requires highly technical tax knowledge and substantially more time to produce it.

Insiders View: New tax rules and regulations put pressure on the CFO to require more from their tax departments and the current expectation is to do more work with less people. For example, it is important to have tax professionals with the qualifications required to do the backup documentation for FAS109 or FIN48. If you do not have the proper documentation then you could be facing an accounting dispute that results in a qualified opinion. The tax laws are even more complicated today so the need for technically qualified tax professionals has increased exponentially. A corporate tax department requires these resources to better serve the needs of the CFO and the overall financial management of the company. Having said that, one of the world’s most distinguished consulting firms specializing in re-engineering companies advises clients to make certain that they have solid resources in the legal, finance and tax groups ~first.


2) Lead tax executives are under constant pressure to lower the effective tax rate for their organizations. However, lead tax executives will privately state that CFO’s are often unwilling to allow the tax department to take new legal tax planning positions because the CFO’s perceive them as risks or they are focused on other areas of tax. Insiders View:

Time and time again, I listen to technically gifted senior tax executives who have the abilities to be change agents for their organizations, yet their perfectly legal and highly effective tax planning ideas are held back and never implemented. Today, the CFO is under more pressure than ever before to ensure the financial statements are accurate or face penalties that will affect the stock. Therefore, many CFO’s are risk averse to effective tax planning even if it could save millions of tax dollars for investor’s years down the road. One nationally known tax executive I spoke to recently stated “How can you even do the planning when you barely have enough time and resources to do all of the compliance activities?”


3) Lead tax executives want to be included in corporate transaction before the deal takes place; they do not want to be given the transaction after the deal is done. In some cases, lead tax executives may be given the corporate transaction to review in the last hour/day before close. Lead tax executives cringe when management brings them the deal long after the transaction has been completed; and then expect the tax executive to fix the tax problem that they now have based upon the way they structured the transaction.

Insiders View: Over the years, I have privately observed tax executives frustration with their management teams because they were excluded from the business transaction early on in the deal. Many tax problems would have been avoided if the management team brought the tax executives in on the deal at the front end of the deal, not at the end of the deal. Those companies who do bring the tax department in on the front end of the corporate transactions will have the lowest effective tax rates.


4) Lead tax executives in an organization want to report directly to the CFO. The lead tax executive’s biggest concern is the information flow between the tax department and the CFO.

Insiders View: You can be guaranteed that a large population of tax executives will not come forward to interview with your company unless the tax department reports to the CFO. One of the primary reasons for this is that lead tax executives know that in order to do effective tax planning for the company, you need to be able to partner directly with the CFO. The lead tax executive requires an unobstructed relationship with the CFO in order to explain to them high value impact tax planning initiatives. You need to be aware that every company you encounter with a low effective tax rate, more than likely, has a great partnership between the CFO and the tax department.


5) The CFO who outsources the tax function of a company will soon learn that the company’s knowledge walks out the door with an outsourced tax function. Many tax executives have privately shared with me their experience of outsourcing, companies who fail to bring the tax records in-house end up paying for it with higher outsourcing fees and a higher tax rate.

Insiders View: Over the years, many lead tax executives privately disclosed to me the importance of bringing the tax department back in-house so they have more accurate historical records. A lead tax executive privately told me.” If you have not lived the experience, you will not fully understand it!” Another tax executive reminded me that the first tax department ever outsourced in this country was Montgomery Ward and they ended up paying in outsourcing fees three times the annual cost of the tax function than when they had it all in-house. Now if that is not an eye opener, imagine your entire tax compliance function being outsourced to another service provider in another country in a foreign language. Imagine trying to locate company records given this new formula! Imagine training your outsourced staff every year about the finances of the company, especially when the staff is changing year to year. Imagine your outsourced staff doing the same job over and over again because it may not have been documented properly by the last person, yet you may be billed for the same work again. These are the challenges you face in outsourcing your tax function.


6) Lead tax executives feel anxious when a new CFO arrives to the company! The first thing the lead tax executive thinks about is how the new CFO will value the tax department. When the tax function is considered a high value department to the company they stay, when it is not they want to leave.Insiders View:

The number one reason tax executives leave one organization for another is because the CFO does not value the tax function as a major contributor to the profitability of the company. It is important for the new CFO to sit down with their lead tax executive and discuss how they can work together to support the company business goals. The CFO who places a strong emphasis on the tax function of an organization will be in a much better position to work with the tax group to lower the effective tax rate.


7) A CFO who hires a new lead tax executive without introducing them to their direct reports, prior to the first day they start with the company, relinquishes a great opportunity for team building in the tax organization.Insiders View:

There are companies who will hire a senior tax executive in an organization and have them start at the company without a proper introduction to their new tax team. The introduction of the new tax department leader, to the tax department reporting to them, is important to the success of the corporate tax organization. There have been many instances over the years where tax professionals called me to start looking for a new company because they came to work one day only to discover there is a new person in an office building heading up the tax function. This lack of a proper introduction to the company’s new head of the tax department only serves to make the rest of the team feel like outsiders.
The right way to build a great corporate tax team is to involve the team (at a minimum managers and directors) in the process by giving the tax department the opportunity to meet their new boss before they arrive for the first day of work. You may not be able to involve the tax department during the interview process for reasons of privacy but you need to make the tax team feel included before the new lead tax executive’s first day of work.

Your comments regarding the Seven Secrets Every CFO Should Know ~ About Their Tax Department will be greatly appreciated.
Kitty@etsearch.com

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