Measurement drives performance and informs leadership of the tax department’s effectiveness. Clear, commonly understood performance measures are important for demonstrating the tax department’s worth and quantifying the value it brings. Metrics can also be used to support the case for investment in new technologies and process efficiencies to derive more value from tax processes.
To measure the performance of their tax function, the five most important metrics used by management of respondent companies are:
These responses appear to be in line with respondents’ priorities within their tax strategy’s scope. Traditional tax department metrics — cash tax savings and management and effective tax rate — were ranked highly by two-thirds of respondents but below the primarily risk- and compliance-oriented metrics that were ranked as the top four. The relatively high rankings for adding value, supporting corporate strategy and business unit satisfaction suggest attention is being paid to how tax functions are interacting with the business and contributing to strategic decision-making.