Tax + Trust: Understanding The New Expectation for Business

June 22, 2021, 8:00 AM

Trust is, and always will be, at the center of every personal and professional relationship. So not surprisingly, trust has always been important in business, and that’s unlikely to change. With the spotlight on societal issues, the long road to recovering from the Covid-19 pandemic, and increased challenges in our communities, we’re seeing a shift in the expectations around trust in business: What we can (and should) expect from leaders is changing.

Organizations can no longer solely rely on building trust with clients and teams. They now have the immense responsibility of gaining confidence from all stakeholders—society overall. Edelman’s 2021 Trust Barometer found that for the first time, business is the most trusted institution in the world, overtaking NGOs, government and media! 86% of survey participants expect CEOs to publicly speak out on one or more social challenges, and 68% think that CEOs should step in when the government does not fix societal problems. This is a huge responsibility for the business community, and PwC is doubling down.

Last week, the firm unveiled The New Equation, a global strategy to better serve clients as they work to build trust and deliver sustained business outcomes. It speaks to two of the most critical needs that businesses face today—the need to successfully respond to and change in the face of major shifts in the world, like Covid-19, climate change, increased use of technology, and the need to build trust at a time when it’s more fragile and complicated than ever.

For tax specifically, considering the many policy changes on the horizon, earning and maintaining trust has major implications for our profession. There are the business issues: Increased taxes and a reduced bottom line can mean fewer jobs, lessened ability to compete internationally, and less money for investment and growth. And then there are the societal considerations: Tax dollars are used for altruistic purposes like education and healthcare. If taxes go up drastically, personal finances could take a hit. There is a lot at stake—and people want to get it right.

Here’s how I plan to approach what’s ahead, and how I will work with my clients to approach this heightened expectation around trust.

Use Authenticity

To build trust, people need to know who we are, what we value and what makes us tick. There’s little to lose in being human and honest with others. That said, there will be some people throughout our careers where we have a trusting relationship, but the authenticity isn’t there, and that’s okay—transactional relationships can and do work.

My recommendation? Always put the client, the person, first. Ask how they are, and don’t forget about who they are beyond work. We’ve all been through a lot over the last year, and a seemingly simple question can go a long way. And don’t hesitate to have tough conversations. We sometimes find ourselves in the position to serve hard truths to clients, not tell them what they want to hear. While your clients might be unhappy or disappointed with you today, this type of candor can set you up better in the long run. Your clients will value your integrity and honesty.

Take Care of Your People and Communities

Yes, the notion that businesses need to be trustworthy is here to stay, but the degree this has extended to society overall is new. It’s not just about business priorities anymore, but also a focus on people and community. From the past year, we’ve learned that listening to customers, clients, and people within our businesses and communities will be pivotal to continuing to build this trust.

Since the start of Covid-19, organizations have been providers of critical information around the health and safety of their people. I experienced this first-hand as Market Managing Partner of PwC’s New York offices at the start of the pandemic. Communications were deeply personal to our people, because it wasn’t just about them as employees: It was their safety, their families, their neighborhoods.

Businesses will need to get to the heart of what their community issues are so that they can take care of their employees AND give back to their communities. It means being responsive, transparent and empathetic to build trust. We need to take the tough lessons we have learned throughout the pandemic and carry them through to the future.

Stay Informed to Earn A Seat at the Table

At PwC, we help clients solve important problems. In this competitive marketplace, they look to us for honest, data-led insights, and trust we’re bringing our strongest skills and knowledge forward. We as tax professionals need to stay knowledgeable of the evolving legislative environment so we can build trust by having key information. A question I consistently get asked is “what should I do to plan ahead?” I’ve found that oftentimes, an effective way to plan for the future is to learn from the past.

One of my recommendations to clients right now is encouraging them to remember what they did after the Tax Cuts and Jobs Act of 2017. How did you extract pertinent information for your teams and clients? What kind of training did you create? What were the main questions clients had, and how did you anticipate them? We’re looking at legislative change beyond that scale and need to be ready.

Having insight and staying informed can build trust. We need to take ownership of learning and invest the time to understand what’s happening around potential legislation and the impact it can have.

Don’t Be Afraid to Disrupt Your Business as the World Changes

The world is changing at a pace unlike anything we’ve seen before. Demands are high, from our clients, our partners and our people—and they should be! We need to listen, really listen, to all of our stakeholder groups, even if it means pivoting our business model. What our clients need tomorrow connects back to how we build trust today.

Making those changes, showing that we care and are listening, can ultimately deliver increased trust and sustained outcomes, allowing us to simplify, move faster and better serve our clients and people. Business model changes are bold moves, but ultimately, first movers can have a huge advantage in leading the professional services industry at large.

The Path Ahead: Be Brave and Stay Principled

As partners and leaders at PwC, we say that we have two responsibilities—serving our clients responsibly and taking care of our people. That hasn’t changed. But the expectations for how we serve clients responsibly and take care of our people and communities has changed. And while some of these societal and new business issues are easier to address than others, it’s on us, as leaders, to be brave and stay principled. How the tax profession chooses to embrace the heightened need for trust will likely determine how we’re perceived as individual businesses and as an industry—let’s prove that we’re up to the responsibility.

This column doesn’t necessarily reflect the opinion of The Bureau of National Affairs Inc. or its owners.

Author Information

Kathryn Kaminsky is Vice-Chair & Trust Solutions Co-Leader at PwC.

Bloomberg Tax Insights articles are written by experienced practitioners, academics, and policy experts discussing developments and current issues in taxation. To contribute, please contact us at TaxInsights@bloombergindustry.com.

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