Goal setting and performance measures - by tax professionals in Fortune 500 companies

Tax Executive, The, Nov, 1998 by Barry P. Arlinghaus

Table VI shows the number of respondents by the point at which the tax department becomes involved in the decision-making process. Respondents were asked to indicate on a scale of 1 (idea stage) to 7 (after transaction completed) at what point the tax department generally participates in the decision-making process.

Table VI Point at Which Tax Department Becomes Involved in Decision-Making Process

1 = Idea Stage   7 = After Transaction Completed

Decision-Point   Respondents   Percentage

      1              30           15.9
      2              60           31.7
      3              59           31.2
      4              23           12.2
      5              11            5.8
      6               6            3.2
      7               0            0.0
                    189          100.0

The Senior Tax Person's Perception of Senior Management's View

Senior tax persons were asked about their perceptions of senior management's view of the tax department. Such information provides a context for the discussion of goal setting and performance measures.

Respondents were asked to indicate which of four statements best describes their perception of senior management's attitude toward the tax department. The statements range from senior management viewing tax as primarily a compliance function to considering the tax department as an integral part of the company's business team. One hundred and ninety tax executives responded to this question. Table VII summarizes the responses. The majority -- 68 percent -- responded that they thought senior management either viewed the tax department as an integral part of the company's business team or, at a minimum, that planning is its primary function.

Table VII
Senior Management's Attitude Toward Tax

Attitude Toward Tax                    Respondents   Percentage

The tax department's primary
function is compliance.
It is a cost center.                       14            7.4

Although compliance is a
primary function of the tax
department, planning is
equally important.                         46           24.2

The primary function of the
tax department is planning.
Compliance is a necessary,
but secondary function.                    50           26.3

The tax department is an integral
part of the company's
business team. It is a profit center
for the company.                           80           42.1
                                          190          100.0

Tax executives were also asked to indicate the extent to which they believed senior management agrees or disagrees with six statements about tax management. Not surprisingly, more than 90 percent of respondents agreed or strongly agreed that senior management's attitude towards tax depends largely on the communication and networking abilities of tax personnel to make the results understandable to management. The responses are provided in Table VIII.

Table VIII Senior Management's Attitude Toward Tax Depends Largely on the Communication and Networking Abilities of Senior Tax Personnel to Make Results Understandable