Earning Curve 2017 Tax

Transcription

1 Earning Curve 2017 Tax Looking at Tax Salaries & Rewards through a different lens

2 Earning Curve is a bespoke salary guide created by Barden for the accounting, finance & tax community in Ireland. This issue is specifically focused on reward structures for tax professionals. Our experience has taught us that salaries are not just a product of years PQE and job title, but are heavily influenced by other factors that add context. Key, in terms of context, is the nature of the organisational structure in which a role operates and the fundamental focus of the role itself. The Accountancy Ireland & Barden Career Guide 2017 goes into these facts in more detail. For a full understanding you can download the guide for free here >>> Section 1 introduces Recruitment Economics the Barden perspective on the employment market for tax professionals. The fundamentals of supply and demand apply as readily to the jobs market as it does to any other market. Section 2 looks at salaries within practice across 4 levels of experience. Section 3 outlines salary ranges within the corporate sector up to 5 years of PQE. Section 4 looks at the more complex salary landscape beyond 5 years PQE within the corporate sector and aims to arm you with tools to help understand the variables at play. It stops short of offering vanilla numbers but provides you with the questions you need to answer to properly benchmark a salary with a 3rd party. Section 5 provides some details around benefits and other structures within both practice and industry. Section 6 introduces the Barden Career Model in the context of Tax salaries. Earning Curve offers you a different lens through which to view salaries for tax professionals. For specific salary advice for you or your team please contact Barden. Kate Flanagan Partner - Barden (m) (e) kateflanagan@barden.ie

3 Recruitment Economics - The Barden Perspective Section 1 There was a definite imbalance in the jobs market for Tax professionals in This imbalance is expected to continue well into The imbalance is best illustrated in two ways: demand at different years of experience (Fig.1.1) and demand in different specialisms (Fig. 2.1) Snr Management Management Snr Management Management Snr Management Snr M Management Supply of Talent Pre-Management tly Qualified Qualified Recently Qualified onal Demand for Talent Part Qualified Supply of Talent Recently Qualifi Pre-Management Recently Transac'onal Qualified Demand for Talent FIG 1.1 FIG 1.2 Let the blue triangle (Fig. 1.1) represent the demand for Tax professionals in Ireland. At the base we have the recently qualified roles, moving to pre-management roles, management and then snr management roles. Demand for talent today (as it almost always has)mirrors the structure of a typical tax team, be it in practice or industry. Less roles at the top, less demand at the top. More roles at the base, more demand at the base. Let the grey triangle (Fig. 1.1) represent the supply of talent. Almost completely inverted with demand for talent. Far less supply at the base and far more supply at the top - an imbalance. Over supply and under demand at the senior end and under supply and over demand at the more junior end. This translates into high competition for talent from graduate level to circa the 2/3 yrs PQE level (Fig. 1.2) a candidate driven market resulting in an upward pressure on salaries. Conversely less demand at the senior end resulted in a company driven market and a downward pressure on salaries.

4 Recruitment Economics - The Barden Perspective Section 1 Irrespective of the level of experience, demand and supply are at its highest and lowest respectively for specific tax specialisms. Such specialisms include international taxes, global tax compliance & reporting, tax audits (domestic & international), strategic group tax planning, cross border project management, global VAT compliance. KEY REASONS FOR THE IMBALANCE Specialism Supply Demand FIG 2.1 Specialism 1. Lower graduate intakes to the tax profession in 2009/10/11/12 lead to less qualified tax professionals in 2012/13/14/15/16. This coupled with an increase in the volume and duration of gap years among recently qualified tax professionals, has significantly impacted the availability of talent at this level. 2. Successful retention strategies within the larger firms has enabled many teams retain their recently qualified and pre-management tax advisors. However, this has adversely impacted the availability of talent at this level within industry. 3. The focus on tax has hugely intensified in the past number of years with a swathe of global tax changes coming from the EU and OECD. As a result, new specialisms have developed which require new still sets and expertise skill sets and expertise which are still developing amongst Irish tax advisors. It will take another few years for the right level of expertise to match the demand for such specialisms. 4. There has been a general pick up in employment in Ireland that is undeniable. But more senior people typically cost more. Very senior people are almost capex for a business. In uncertain times, companies hold off making significant investment. Hence companies and firms are less likely to invest in more senior tax professionals. 5. The market for Senior Tax Professionals in the corporate sector is two-fold. On the one hand, increased FDI has led to an increase in new positions for senior tax professionals. On the other hand, the uncertainty within the markets has led to a play safe sentiment felt by senior management levels within industry. Rather than look for new opportunities, senior tax professionals are remaining in their current roles and as such replacement positions have slowed down significantly.

5 Tax Professionals Practice Section 2 *Big 4/Top 5 Top 10/ Top 20 Training Recently Qualified Tax Semi Senior/ Specialist 28-36K 25-32K Tax Senior/Consultant 36-45K 32-42K Recently Qualified - 2 years PQE Tax Senior 43-52K 37-48K Tax Assistant Manager 52-60K 45-56K 2-5 years PQE Tax Consultant Associate 55-65K 50-60K Tax Manager Snr Tax Associate 60-72K 55-65K Tax Senior Manager Associate Director 72-85K 60-70K 5+ Years PQE Tax Consultant 70K+ Tax Director 85K+ 75K+ Salaried Partner 120K+ 90K+ *Big 4/Top 5 refers to Big 4 accounting firms, top tier legal firms and the larger of the top 10 accounting firms

6 Tax Professionals Industry Recently Qualified -1 year PQE Tax Accountant Vat Analyst Vat Accountant Tax Analyst Transfer Pricing Specialist Employment Tax Senior 2-3 years PQE Group Tax Analyst Tax Accountant/Senior Tax Accountant Vat Accountant 3-5 years PQE Vat Manager Senior Tax Accountant Transfer Pricing Manager Global Mobility Employment Tax Manager Tax Compliance Manager Tax Reporting/Accounting Manager Tax Projects Manager Associate Tax Director MNC Plc SSC 50-60K 37-45K 50-60K 35-45K 55-60K 50-55K 60-70K 60-65K 60-70K 75-85K 65-75K 75-90K 65-75K 70-75K 70-80K 75-85K 80-90K Section 3 Large Indigenous 40-50K 30-40K 40-50K 30-40K 55-65K 50-60K 60-70K 55-65K 60-70K

7 Senior Tax Professionals 5 years PQE and beyond Section 4 Beyond 5 years PQE the landscape changes significantly/job titles vary significantly and salaries vary significantly. Context becomes a key determining factor. Job title becomes less relevant. To understand what salary and package is appropriate to you or the role you are looking to hire, you must begin by asking yourself the following questions: How many tax heads am I responsible for? How many regions am I responsible for? Irish only, European, Asia Pac, global etc How many people am I responsible for? Stand alone, local team, international teams Where are the decisions made? Where are the tax planning ideas implentated and carried out? How much reliance is put on the external advisors/budget to use advisors? How big is my business in terms of people, revenue and geographical reach? What is the future tax strategy for the business and where is the groups HQ likely to be positioned? The answers to the above questions will differentiate one tax manager from another, one head of tax from the next etc. and help you to understand where your role sits in the context of the wider environment. Armed with the answers to these questions you then need to ask a specialist tax recruiter the following questions: How much would I have to pay if I were to recruit for my role externally? This approach will ensure that you get an accurate, objective opinion on the value of your role and will arm you with the right language for your annual review. You can also use this approach to benchmark salaries for people on your team.

8 Tax Professionals Benefits Section 5 BASIC SALARY IS ONLY THE BEGINNING IT IS ALL ABOUT TOTAL COMPENSATION: Total compensation = Base + Other Peripherals ( the package ). Basic salary is only a starting point. Other peripherals can include a bonus, healthcare, defined contribution pension, car allowance, share options/rsu s and less obvious elements such as subsidised canteen, gym membership, annual leave, subs and health checks. Salary negotiations should always look at total compensation rather than at base salary in isolation. In general, larger more structured companies and firms will have more peripheral's in place than smaller companies. Case study 1: Tax Manager Big 4 practice Case Study 2: Group Tax Manager Industry Bonus 20% * Bonus 15% * Pension contribution 5% * Car allowance on average 9k* Personal Health Insurance Cover * Pension contribution 6% - 10%* Life Assurance Personal/Family Health Insurance Cover * Management allowance worth circa 1k * Life Assurance Holiday allowance 25 days * Stock options/long term incentive plans * Professional subscriptions covered (AITI/ACA) Holiday allowance 25 days * Phone/Laptop Professional subscriptions covered (AITI/ACA) *These benefits are all discretionary and vary between firm to firm. Phone/Laptop *These benefits are all discretionary and vary between companies. Also, worth noting bonus pools within industry can vary substantially and for EXTRINSIC V S INTRINSIC REWARD: more key roles can reach up to 50%. Extrinsic reward refers to total compensation monetary reward. Intrinsic reward is a little more complex and does not have a monetary value. Examples of intrinsic rewards include 1) A feeling of purpose 2) Satisfaction at a job well done 3) Feeling valued in your role 4) Feeling you are part of something 5) A feeling of work/life balance 6) Opportunity for progression. Today, for many, extrinsic reward is viewed as hygiene factor expected to be in place, absence demotivates, presence does not motivate (for long). Intrinsic reward is where companies are differentiating themselves attracting better people and retaining better people. Intrinsic reward is where the war for talent will be waged in 2017.

9 The Barden Career Model Section 6 The Barden Career Model is a robust, strategic career tool designed specifically for accounting and tax professionals. The model can be used to understand the context of your experience, how this reflects on the external market and, critically how you should be compensated for the value of your time. The following, basic principles apply in the model: Step 1: Let the centre of your circle represent the company and role in which you will be perceived to add the most value and hence you will be compensated most for the value of your time (paid more!). Perceived is key this is not just about you. It is about how a hiring manager will look at your experience compared to the other guy. FAR NEAR LEARNING TRADING VARIABLES LIKELIHOOD Step 2: Your near environment contains companies/firms and roles that have something in common with your centre. For example, if your client portfolio consists of primarily multinational groups within the pharmaceutical sector, then a global pharmaceutical company would be in your near environment. Likewise with expertise in corporate tax compliance and reporting or advising on tax restructuring or managing tax audits, with financial services companies, with SMEs vs large companies and so on. This is not a purely linear process and you need to use your imagination to populate your near environment. Your far environment contains companies and roles that have less in common with your centre. Step 3: You model has two lines your access curve and your learning curve. Your access curve represents the perception of your ability to do a job compared to the other person (which is pretty much the same as your chances of getting that job). Your access curve begins to dip as you move away from your centre. Your learning curve represents the perception of the amount of learning there will be for you in a given job (how much a company will need to invest in your to get a return). Your learning curve begins to ascend as you move away from your centre. Your salary and the Barden Model: the closer to your centre is a role is the more you should be paid and the less you will learn. The further from the centre a role is the less you should be paid and the more you will learn. By properly using the Barden Career Model you will be able to look your salary (and the salary of your team) though a very different lens. For more on this and other strategic tools to assess your tax career click here >>>> to download your free copy of the Accountancy Ireland & Barden Career Guide 2017.

10 For bespoke salary insights based on your centre/context please contact: Kate Flanagan Tax Partner Ireland (e) (m) (t) Dublin Block 4, Harcourt, Harcourt Centre, Dublin 2 Cork Phoenix House, Monahan Road, Cork