4. HUMAN RESOURCE MANAGEMENT AND TAX ADMINISTRATION – 147

Chapter 4

Human resource management and tax administration

This chapter outlines revenue body approaches to aspects of human resources management (HRM), organisational capability and staff performance, and concludes with selected metrics (e.g. age profiles).

TAX ADMINISTRATION 2013: COMPARATIVE INFORMATION ON OECD AND OTHER ADVANCED AND EMERGING ECONOMIES – © OECD 2013

148 – 4. HUMAN RESOURCE MANAGEMENT AND TAX ADMINISTRATION

Key points

Aspects of Human Resources Management Strategy

The vast majority (88%) of revenue bodies reported having a formal HRM strategy, with around the same proportion (90%) having conducted assessments of current and future skills and capability needs, and having plans in place to meet these needs.

Most revenue bodies periodically survey staff on their levels of satisfaction, engagement and motivation. Almost all of these share survey results with staff and most (83%) also consult with staff when considering responses to survey findings.

Staff Recruitment, Appointment and Development

About two thirds of revenue bodies have major changes planned or underway in their policies in one or more of the areas of recruitment, training, performance or rewards; many revenue bodies (42%) have plans for significant changes to policies regarding staff levels or capabilities.

Most revenue bodies have a fair degree of autonomy for the recruitment and appointment of staff, although for many this is limited to within the limits of an overall budget set by government or the MOF; a number of governments have implemented recruitment freezes as part of government policies to cut expenditure.

Most revenue bodies (88%) are able to recruit staff and make appointments based on clearly defined qualification and experience criteria.

Most revenue bodies reported they are undertaking staff development in the areas of commercial awareness (77%), risk management (82%) and financial management (77%). About two thirds (68%) of the 40 revenue bodies that are undertaking staff development in the area of commercial awareness use external networks for this purpose.

Performance Management and Remuneration

All but four revenue bodies (92%) have performance management systems in place, although a fair proportion of these (29%) do not set objectives for each member of staff at the start of the performance period; the vast majority of revenue bodies (92%) review the performance of each staff member at least annually.

Most revenue bodies (79%) have staff remuneration levels tied to wider public sector pay scales, although over two thirds have some flexibility to reward good performance.

Attrition

A majority of revenue bodies (58%) reduced staffing over the last two years while about a third (33%) increased staffing; attrition rates vary considerably, from 0.8% (Israel) to over 18% (Russian Federation) but are concentrated towards the lower end of this range.

Age profiles and educational qualifications

There are significant variations in the age profiles of revenue bodies’ staff when viewed across different geographical groupings, with considerably older workforces seen in Nordic countries, other European countries (e.g. Belgium, Italy, Netherlands, and Portugal) and the United States.

There is a particularly high correlation between those revenue bodies reporting both a relatively high proportion of staff with academic qualifications and a workforce that is predominantly comprised of staff under 50 years of age.

TAX ADMINISTRATION 2013: COMPARATIVE INFORMATION ON OECD AND OTHER ADVANCED AND EMERGING ECONOMIES – © OECD 2013

4. HUMAN RESOURCE MANAGEMENT AND TAX ADMINISTRATION – 149

For all revenue bodies, the costs associated with staff – human resources – are the single largest component of their total costs (often exceeding 80% of total operating costs, as identified in Chapter 5. Staff are also seen by most revenue bodies as the single most important enabler to carry out their basic mandate. Therefore the overall competence, integrity and performance of staff is clearly a critical issue for all revenue bodies.

Recent years has seen a clear trend of revenue bodies reducing the size of their workforces. The rate of these reductions has accelerated partly as a consequence of the impact of the global financial crisis on public expenditures. The budget pressure is not likely to change in any foreseeable future. At the same time revenue bodies often face an environment with a changing risk picture, increasing volumes and complexity, and rising expectations. These factors increase the need for appropriate human resource strategies to support revenue bodies in meeting their current and future challenges.

This chapter highlights some approaches taken by revenue bodies drawing on survey responses, annual reports and other data. The topic was only recently included in the series based on wide interest expressed by revenue bodies seeking to improve their performance in this space. The chapter therefore makes no attempt at making comparisons across time, but instead seeks to present a detailed and accurate picture of the state of play and provide examples and references that may inspire revenue bodies as they assess their current situation and lay out directions for the future. The chapter broadly follows the structure outlined in the HRM chapter in the European Commission’s Fiscal Blueprint (referenced in Chapter 1), which sets out a framework to promote “the development of human resources management strategy, policies, systems and procedures that support the achievement of the tax administration’s objectives and the development of members of staff through structured training and professional development.” The blueprint lays out the key components of a modern and efficient HRM function under the following broad headings:

Strategy: Development of human resource management strategy, policies and systems which fully support the tax administration’s business strategy;

Autonomy: The tax administration is autonomous in making decisions about recruitment, retention, performance management and assessment, promotion, career progression, training and development, transfer, severance, dismissal and retirement;

Policies and practices: Human resource policies and practices that motivate, support and protect employees;

Training and development strategy: A long-term training and development strategy for employees endorsed at top management level;

Structure and systems: An organisational structure and systems to support the delivery of employee training and development needs within the tax administration.

Aspects of HRM Strategy

For this aspect of the information series, revenue bodies were asked a number of questions relating to key elements of their approach to human resources management:

1.Does the revenue body have a formal human resources management strategy/plan?

2.Does it assess current and future staff skills and capability needs, and does it have a plan for filling identified gaps?

TAX ADMINISTRATION 2013: COMPARATIVE INFORMATION ON OECD AND OTHER ADVANCED AND EMERGING ECONOMIES – © OECD 2013

150 – 4. HUMAN RESOURCE MANAGEMENT AND TAX ADMINISTRATION

3.Does it have formal targets for increasing staff capabilities?

4.Does it periodically survey staff on their attitudes, perceptions and workplace satisfaction, and does it assess staff engagement and motivation?

5.Are the results of any such surveys and assessments shared with staff?

6.Is staff consulted in developing and implementing actions plans in response to such survey and assessment findings?

Revenue bodies were also surveyed on whether they were planning major changes in key areas of policy in relation to human resources management: recruitment, training and development, performance management, reward and remuneration, and plans for dealing with anticipated staff or capability increases or reductions. Other issues raised concerned their degree of autonomy and practices of revenue bodies regarding recruitment and appointments; aspects of staff development, performance management, reward and remuneration; and staff metrics covering overall staff numbers, recruitment, attrition, age profile and qualifications.

Survey responses were supplemented by research of publicly-available strategic plans, annual business plans, and annual performance reports of as many revenue bodies as practicable, and other relevant public documents, as well as a small number of unpublished documents provided by revenue bodies to aid this research. The research aimed to: a) gather insights on key elements of revenue bodies’ human resources management practices and priorities; b) highlight selected but by no means all examples of good practice described in revenue body publications, and c) identify opportunities for revenue bodies to consider when reviewing aspects of their human resources management performance.

A summary of responses to the issues raised is provided in Table 4.1. Observations from analysis of responses and related research are set out below:

A vast majority of revenue bodies (88%) reported having a formal HRM strategy or plan covering some if not all of their activities, and many now report against aspects of this in their annual reports, with a broad range of topics covered including:

-Recruitment;

-Staff development skills;

-Leadership and talent management

-Staff satisfaction and engagement;

-Staff achievements;

-Diversity;

-Age profiles and demographics;

-Remuneration and Benefits;

-Staff numbers/turnover rates;

-Issues to be faced.

A large majority of surveyed revenue bodies (90%) have conducted assessments of their current and future skills and capability needs, and have developed plans to fill any gaps in such needs; Box 4.1 sets out some perspectives of one revenue body on its approach in this area and the types of issues receiving attention.

TAX ADMINISTRATION 2013: COMPARATIVE INFORMATION ON OECD AND OTHER ADVANCED AND EMERGING ECONOMIES – © OECD 2013

4. HUMAN RESOURCE MANAGEMENT AND TAX ADMINISTRATION – 151

Table 4.1. Revenue bodies’ human resources management (HRM) strategies

For notes indicated by “/ (number)”, see Notes to Tables section at the end of the chapter, p. 164. Source: CIS survey responses.

TAX ADMINISTRATION 2013: COMPARATIVE INFORMATION ON OECD AND OTHER ADVANCED AND EMERGING ECONOMIES – © OECD 2013

152 – 4. HUMAN RESOURCE MANAGEMENT AND TAX ADMINISTRATION

Box 4.1. New Zealand: Developing our People Capability

A culture of service and excellence

One of the IR for the future priorities is: We retain, develop, and attract high-calibre people with the skills required in the future, enabling a culture of service and excellence.

To build a culture of service and excellence, we need our people to have the right skills and competencies required for the future. Strong leadership is central to delivering our priorities. This year, we introduced leadership expectations to provide our leaders with clarity about what is expected of them. To help embed our leadership expectations and build our desired culture, we are implementing a number of initiatives to empower them. We:

delivered Making it real leadership forums, focusing on what culture means for leadership behaviour and demonstrating our organisational values as set out in IR for the future

included leader expectations in our job expectation templates

aligned our 360° survey tools to the leader expectations and use them to assess leadership development needs

developed an internal coaching model to help leaders demonstrate required behaviour, develop coaching skills and improve performance

refreshed components of our leadership framework to reinforce the leadership expectations.

International research shows that engaged employees are more productive, customer-focused and more likely to stay longer with an organisation. An engaged workforce will help us meet our customers’ needs and improve compliance.

Planning for our future workforce

We are focusing on developing strengths in key areas to ensure that we have the skills for a successful business transformation. They include designing services in collaboration with users, external stakeholder management and gaining product knowledge of the new technology being introduced. We are developing key areas by:

conducting an IT capability assessmentfocusing on project resources

developing and implementing individual developmentplanning tools

strengthening our stakeholder management capability, including introducing a toolkit to support our stakeholder management skills.

This year we have focused on identifying and addressing our future capability requirements. An example of this is our work on the Future Direction of Service Delivery project. We also introduced succession planning at a business unit level to supplement our “critical roles” work at a senior level.

Developing skills and knowledge

To develop high-calibre people now and for the future, we need to provide access to effective and relevant development opportunities. We developed and shared training across priority areas (e.g. debt collection, systems training, senior technical knowledge and networking). We also introduced new learning frameworks for customer-facing roles, which has helped us to identify and plan for skill gaps.

We analysed performance needs to ensure our training aligns with our capability priorities. A wider use of on-the-job training and use of online media has ensured our flexibility in responding to the Canterbury earthquakes, and supporting changes in how we deliver our services.

We also led and collaborated with other government agencies to improve our learning management system. The system allows us to share our training resources with other government agencies and helps align planning development with performance goals.

Source: Reproduced with minor adaption from New Zealand Inland Revenue Annual Report 2011.

TAX ADMINISTRATION 2013: COMPARATIVE INFORMATION ON OECD AND OTHER ADVANCED AND EMERGING ECONOMIES – © OECD 2013