The absence of female leaders in public accounting is well documented, and work/life balance issues are often cited as a significant consideration in turnover decisions for employees (Louise Single, “WEIC 2010 Benchmarking Survey Results,” AICPA, 2010; Mary Bennett, “The Attraction, Retention and Advancement of Women Leaders: Strategies for Organizational Sustainability,” AICPA, 2013). A tax track is often viewed as a more family-friendly, balanced option for female CPAs when compared with an audit track, especially given the reduced expectation of travel. In addition, it is a common assumption that work/life balance is easier to achieve in the corporate environment where one is not juggling the needs of multiple clients. If these assumptions are true, one should see women represented in greater leadership numbers in corporate tax.
The following article provides a closer look at gender issues in corporate tax departments, focusing on how women and men are represented in key internal tax roles. It also analyzes biographical details on these individuals to better understand the training and skills that are necessary to lead today’s corporate tax departments. These issues are particularly relevant at a time when demand for tax managers and tax executives is increasing (“2015 Tax Hiring Outlook: An Employment Survey Analysis of Corporate Tax Hiring Authorities,” TaxTalent, 2015, http://www.taxtalent.com/2015-tax-hiring-outlook).
The role of a tax director in today’s business environment has been described as “punishing and complex” in a profession that is “not getting easier” (Catherine Snowdon, “The New Challenges for a Tax Director,” International Tax Review, vol. 19, no. 8, 2008, pp. 10-12; “2015 Global Tax Market Assessment,” TaxTalent, 2015, p. 6, http://media.taxtalent.com/2015_Global_Tax_Market_Assessment.pdf). Demand for competent tax professionals has outpaced supply in recent years, and with a majority of tax personnel expressing a willingness to change jobs, turnover is expected to increase (TaxTalent, “2015 Tax Hiring Outlook”). Attracting and retaining key tax professionals are therefore critical operational issues, as is preparing the next generation of leaders for opportunities created through retirement and turnover.
Against this backdrop, one might ask if gender differences are a concern for retaining and promoting qualified women in corporate tax leadership. Furthermore, which skills and characteristics are essential to lead corporate tax departments—and do they vary by gender? In an effort to answer these questions, the author gathered publicly available biographical details for key tax personnel (KTP) at 413 profitable companies on the 2010 Standard & Poor’s (S&P) 1500 list, along with related company demographics. KTP represent the highest ranking member of a tax department (usually a vice president, director, or manager) that could be identified through online resources. This analysis is focused on profitable companies, since these companies are expected to devote a greater percentage of resources to tax planning in general and to an internal tax function specifically.
The 413 companies profiled—representing 49 industries—include 177 companies from the S&P 500 (43%), 116 from the S&P MidCap 400 (28%), and 120 from the S&P SmallCap 600 (29%). Big Four firms audit nearly all (95%) of these companies.
Biographical details for KTP at these 413 companies indicate that 310 (75%) are men and the remaining 103 (25%) are women. A 2015 TaxTalent survey found similar results (“2015 Women in Tax Report: A Gender Trend Analysis,” TaxTalent, 2015, http://media.taxtalent.com/2015_Women_in_Tax_Report.pdf). Exhibit 1 compares these results to gender representation across other groups of finance and accounting professionals. The percentage of women leaders in corporate tax departments is higher than that of partners previously reported in public accounting and is also higher than previously reported in CFO, controller, and treasurer positions (Scott Moore, “2013 Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits,” AICPA, 2013, http://bit.ly/1ltdRxM; Alix Stuart, “What Women Want,” CFO, vol. 7, no. 46, 2006, pp. 46–54; Sarah Frier, Carl Hymowitz, “Women CFOs Reach Record Level in U.S. as Top Job Remains Elusive,” Bloomberg, February 2013, http://bloom.bg/1PMCZL9). These findings suggest that the percentage of women leaders in tax positions is higher than that in other accounting leadership positions. Despite this seemingly favorable statistic, women in tax leadership roles, like their accounting and financial counterparts, are underrepresented when considering that women have comprised roughly half of the accounting profession for decades and also account for more than half of entry-level positions in corporate tax departments (Dennis R. Reigle, “Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits,” AICPA, 2009; TaxTalent, “2015 Women in Tax Report: A Gender Trend Analysis”).
Gender Representation, Accounting and Tax Leaders
There were few statistically significant differences noted when companies employing a female KTP were compared to companies employing a male KTP. First, companies employing a female KTP are less capital-intensive, with lower average gross property, plant, and equipment. (A lower percentage of these companies also operate in foreign jurisdictions.) This finding may indicate that women seek out companies without foreign operations to avoid extensive job-related travel requirements that could impact work/life balance; alternatively, this finding might suggest that companies are reluctant to hire women as personnel abroad because of a perceived issue with a woman’s willingness to accept extensive travel requirements. Finally, companies with a female KTP report higher GAAP effective tax rates (ETRs) than those with a male KTP. This result is consistent with gender-based ethics theory, which suggests that women generally take less risk and are less aggressive than men (see James Byrnes, David Miller, and William Schafer, “Gender Differences in Risk Taking: A Meta-Analysis,” Psychological Bulletin, vol. 125, no. 3, 1999, pp. 367–383; Sharon Mason and Peter Mudrack, “Gender and Ethical Orientation: A Test of Gender and Occupational Socialization Theories,” Journal of Business Ethics, vol. 15, no. 6, 1996, pp. 599–604). Exhibit 2summarizes these observations and other company characteristics.
Company Characteristics, by Gender of KTP
Characteristics of Key Tax Personnel
Biographical information analyzed here is voluntarily reported by KTPs; as a result, consistent details are not available for all 413 individuals. Certain characteristics are reported by only a subsample.
Work experience, tenure, and age.
Average work experience for KTPs was 22.9 years (223 KTPs reported), while average tenure with the current company was 7.9 years (304 KTPs reported). Men in the group had been working an average of 24.1 years, with 8.6 of those years at their current company; for women in the group, the averages were 19.4 and 5.8 years respectively. Both of these statistically significant differences suggest that women in key corporate tax positions have less experience overall as well as with their current employers. Age was reported by only a small number of personnel (44 men, 6 women), but men, with an average age of 51.8, were slightly older than women (average, 49.5). This age finding is consistent with that from a broader analysis of individuals in key accounting positions, where males were also older than their female counterparts (Rose Bailey, Denise Dickins, and Audrey Scarlata, “Success in Industry-Based Accounting Careers: A Survey of Contributing Factors,” The CPA Journal, vol. 83, no. 1, 2013, pp. 40–45).
Approximately 45% (187 of 413) of all KTPs reported holding, or having held, professional certification. This percentage was consistent across genders (141 of 310 men; 46 of 103 women). The most common certification was CPA (177 of 413 KTPs), although other forms of accounting and legal certification were reported.
A total of 298 KTPs reported significant details on their educational background. A strong majority of males (158 of 220; 72%) earned a graduate degree such as a MAcc, MTX, MBA, law degree, or a combination. By comparison, smaller majorities of females (47 of 78; 68%) and all individuals (205 of 298; 69%) earned a graduate degree. The difference across male and female KTPs was significant, especially in the distribution of MTX degrees by gender (28% male, 19% female).
Prior work experience.
Of the more than 200 KTPs who reported detailed work experience, approximately 81% (185 of 228) worked previously in public accounting, and 22% (48 of 222) worked for their company’s audit firm. Comparable figures for women were higher than those for men; for example, 89% of female KTPs worked in public accounting, compared with only 78% of male KTPs, a statistically significant difference. Almost 29% of female KTPs worked for their companies’ audit firm, compared to approximately 19% of male KTPs. Compared to certification statistics, the data suggests a significant overlap between KTPs who have worked in public accounting (185 individuals) and those who have held CPA certification at some point in their careers (177). Finally, international tax experience proved valuable for a majority of KTPs (70%), across genders (73% of women; 70% of men). Note that only 185 KTPs provided detail significant enough for analysis in this particular area.
TaxTalent, Inc.’s “2015 Global Tax Market Assessment” outlines a challenging year for corporate tax departments. Having the right resources on hand, especially in leadership roles, is a key consideration for companies preparing to meet those challenges. Baby boomer retirements in 2015 are expected to decrease the existing leadership pool, creating demand for younger generations to assume greater responsibility at their current companies or with new employers. Understanding the skills and training of current tax leaders can help prospective tax leaders better prepare themselves for new responsibilities.
There are few distinguishing characteristics between male and female tax leaders and potential candidates can benefit from understanding what works for either group. Surprisingly, this analysis suggests that only a minority of KTPs hold certification credentials. Education, specific work experience, and networking relationships are more prevalent, and therefore appear more beneficial in career advancement. These key characteristics are reviewed in detail below.
While a higher percentage of men KTPs hold graduate degrees than women KTPs, it is important to note that a majority of all KTPs hold some advanced degree, with MTX and law degrees being the most prevalent (26% and 24%, respectively). These statistics are meaningful for students and inexperienced staff considering their career paths. Graduate school might provide an edge as candidates progress through their careers. For more experienced staff, an MAcc or MTX may not be a logical choice, but they may want to consider whether a professional or executive MBA or a law degree can provide essential skills to aid in advancement. Experienced staff might also want to consider whether corporate leadership programs or other professional development programs strengthen the technical, communication, or managerial skills required to advance.
A significant number of candidates, especially women candidates, earn leadership positions with clients of their former firms. This suggests that strong relationships with a client, and strong performance on an engagement, may give these candidates an advantage over candidates who are simply a name on a resume. Professional organizations are another valuable source of networking, with a majority of candidates maintaining professional memberships with organizations like Tax Executives Institute (TEI). Such organizations provide members with opportunities to network with other tax professionals, to build technical tax knowledge, and to share best practices in the tax area (“Top Reasons to Join TEI,” Tax Executives Institute, http://www.tei.org/membership/Pages/default.aspx). Leadership candidates can strengthen their skills sets with these opportunities while also creating or enhancing business relationships. This type of business networking might elevate a candidate’s professional reputation and may also put her in a position to learn about job openings first. Both of these outcomes can improve a candidate’s chances for securing that next career opportunity.
CPA firm experience is quite prevalent among KTPs, suggesting that positions in public accounting can provide invaluable training through broad exposure to a variety of clients’ procedural and technical issues. Professionals early in their careers should consider public accounting positions as a proven way to build technical knowledge and client service skills. Companies that focus on entry-level hiring of college graduates should evaluate their training and promotion policies to ensure 1) that homegrown candidates are getting broad exposure to technical issues that will prepare them to advance to the company’s leadership positions, and 2) that the company provides opportunity for promotion from within.
To be successful in this challenging environment, leadership candidates—regardless of gender—must have a broader skill set than ever before.
A significant number of companies with foreign operations employ KTPs, and it appears that such firms seek out either male or female KTPs possessing international tax experience. The anticipated demand for experts in the areas of international taxation and transfer pricing suggests that this knowledge base will continue to provide KTP candidates with an advantage over their competition (TaxTalent). Candidates who seek out international opportunities within their companies may be better positioned to move into leadership positions there or with other employers.
One Profession, Many Experiences
As evidenced by this analysis, technical skills and expertise are critical factors to success in corporate tax departments. The focus of the tax department has shifted over time from subject matter experts to tax risk managers liaising with consultants, board members, audit committees, C-level executives, and regulatory agencies (Michael Donohoe, Gary McGill, and Edmund Outslay, “Risky Business: The Prosopography of Corporate Tax Planning,” National Tax Journal, 2014, Vol. 67, No. 4, pp. 851–874). To be successful in this new and challenging environment, leadership candidates—regardless of gender—must have a broader skill set than ever before. Possessing the right combination of technical, communication, and relationship-building skills is a must for corporate tax leaders today. Specifically, the women tax leaders profiled here have leveraged successful business relationships and meaningful job assignments to earn their leadership positions. Results indicate that women leaders are finding opportunities in corporate tax and are represented in higher numbers than their female counterparts in public accounting or in other corporate finance functions.