are companies using their tax savings to solve long-term challenges?

Well, the results are in. After much fanfare, bold promises and heated debates, it’s becoming clear who is benefiting from the recent $1.5 trillion tax cut: corporations and their shareholders.

Contrary to the many pledges to use the tax savings towards worker bonuses and pay raises, most corporations are investing that money in stock buybacks — to the tune of 60 percent to shareholders, compared to 15 percent to employees.

Who can blame them? After all, everyone wants to satisfy their bosses, and corporations are no different in their desire to make their stockholders happy.

are short-term gains shortsighted?

How to allocate the windfall from tax savings is obviously a difficult and complicated decision. It’s also a great problem to have. The reality is, no matter how and where the money is used, it’s a boon for business. In fact, in a recent study by Tatum in partnership with the CFO Leadership Council, 61 percent of respondents said that U.S. tax reform will be favorable or very favorable for their organizations.

The $1.5 trillion dollar question is, do companies invest in measures that produce a short-term benefit, or break with old habits and invest in initiatives to solve long-term challenges?

a peek through the looking glass

When thinking about solving long-term challenges, the immediate and most significant problem is the lack of skilled, qualified talent. No one knows this better than CFOs, who have been struggling to keep seats filled and ensure their organizations stay ahead of technological advancements. Indeed, according to the recent AICPA 2018 Economic Outlook Survey, 43 percent of CFOs, controllers and other CPA executives indicate they currently have too few employees.

And with the advent of artificial intelligence (AI) and big data, the gap between technological advancements and the availability of skilled workers to leverage them is only widening.

For instance, 59 percent of organizations expect to increase positions requiring data analysis skills over the next five years. And which department do you think is most in need of those skills? As every CFO will have guessed, the answer is accounting and finance.

investing in human capital

The reality is that companies need to ramp up investments in their human capital to solve the skill crisis. Salary and wages need to be competitive to attract talent; incentives, benefits and bonuses need to be boosted to retain talent; and investments in upskilling, training and development must be made in order to keep workers equipped with the skills needed in the digital age.

Perhaps not surprisingly, two of the most admired and well-known brands have done just that: Boeing announced it will spend $100 million on workforce development, training and education. Meanwhile, Disney is investing $50 million to cover tuition payments for its hourly employees. While these announcements may have made less fanfare than expected, they may produce big results in the future. Stay tuned.

about tatum, a randstad company

A well-established and trusted executive consulting services firm, Tatum helps companies confront challenges arising at any stage of the business life cycle. We frequently serve as trusted advisers to the office of the CFO or CIO and address complex issues not easily solved from within the organization. We provide senior-level interim and project consultants in addition to highly regarded executive search services. Tatum is an operating company of Randstad. To learn more about Tatum, visit www.tatum-us.com