Pat Cullen was elected Managing Partner of Deloitte earlier this year and took up office in June. Mr Cullen is a former President of the Irish Taxation Institute and a Fellow of the Institute of Chartered Accountants in Ireland. Taking advantage of his expertise, Accountancy Ireland began the interview with a couple of tax questions:
Can you begin by talking a little about how companies can use tax planning to create competitive advantage?
For companies, tax is a cost to be managed in the same manner as any other expense. In 2006 tax was listed as the no. 1 cause of material weaknesses for US. Account filers receiving an adverse audit opinion. Failings in tax accounting was by far the largest contributing factor to these tax material weaknesses. Poor management of tax risk may, therefore, lead to unexpected losses in a business and consequently to a company’s investors. Just as important it can be a risk to the reputation of an organisation. Proper management of tax costs can create operational efficiencies thus improving the bottom line.
As a further example, for financial institutions significant amounts of time and money are spent building customer loyalty and trust. For such institutions, managing operational taxes such as VAT, levies etc., can be particularly challenging, but non¬compliance can trigger financial costs in the form of substantial fines and penalties and poor management of this risk can damage an institution’s reputation and customer relationships. These are examples of how good management of a company’s tax can create or enhance competitive advantage.
The proposed harmonisation of Europe’s corporate tax base will certainly have implications for Ireland. Will this be detrimental?
Ireland as a member of the EU has always supported the European Union in any initiatives seeking to improve the competitiveness of the European Union as an economic zone. The concept of a common corporate tax base is being supported in Europe on the basis that it would make company taxation less complex and reduce the costs of business. However, there is no evidence to support the fact that this would be the inevitable outcome. For example, VAT has been a harmonised system within the EU since 1976 and even now there are continual cases arising at the ECJ seeking to clarify the VAT rules. Our view is that a common corporate tax base is likely to only increase uncertainty for companies in deciding for instance how profits would be allocated across member states. We believe that Ireland and indeed each EU country must be left free to manage their own economies and managing corporate tax policy is an integral part of that management.
What will you miss most about tax in your new role as Managing Partner?
Taxation is driven very much by the solving of problems and I will miss the daily interaction with clients in trying to come up with solutions which address particular business needs and issues, while at the same time minimising their tax cost and the daily interaction with my tax colleagues in working together as a team in order to come up with solutions to complex problems. I will also miss the constant challenge of working in an area which was continually changing either as a result of new case law or constant changes in legislation. Notwithstanding the fact that I will miss these aspects of my former role, I am looking forward to the new challenges ahead.
Which service areas do you expect to grow under your leadership?
Deloitte has had great success over the last few years and has experienced rapid growth. Despite this, I still see signficiant opportunities arising across the firm. Uniquely among the Big Four, Deloitte has retained a strong consulting arm and this allows us to present a distinctive offering to clients.
As a firm we will be looking for balanced growth across all four of our key service lines, audit, tax, consulting and financial advisory services and our overall target will be to grow faster than our main competitors. In addition to growing each of our main service lines we would also see a significant opportunity in growing our overall presence in the financial services sector of the marketplace.
How does Deloitte in Ireland relate to Deloitte internationally?
Deloitte internationally is an association of independent member firms in each country which work very closely together. We have very strong relationships within the international network and we work very closely with the international firm across a whole series of areas. These would include targeting clients on a joint basis, working together on international recruitment initiatives and participating in training on an international basis. As a firm, being a member of Deloitte internationally brings us a depth of experience which means that invariably no matter what issue arises in a client of the Irish firm we can bring our international expertise to bear on that issue. The multi¬disciplinary nature of the Deloitte firm enables us to present a unique Deloitte offering in the marketplace.
What makes Deloitte attractive to employees?
We are very proud that Deloitte is the only professional services firm which has been ranked in the top 50 best places to work in Ireland list for five successive years. At this stage we feel that it is part of the DNA of Deloitte that ‘it is a great place to work’. We have worked very hard over the years to build up this reputation. It is not something that happens over night.
In the human resources area, we have developed policies to support the well-being of our people. Our ‘STEPS’ programme offers a range of initiatives designed to reflect the balance of priorities in people’s lives. Some examples of these include a compressed working week during the summer, wedding leave, and extended paternity leave for new fathers.
Our latest initiative is a half day for parents and grandparents on the all important first day of school.
We also offer emergency childcare services and a phased return to work after maternity leave. We have a flexible working day option in place and are currently planning the launch of an official home working policy later this year. On an overall basis there is a commitment to facilitating the needs of our employees and this is a key element of our recruitment and retention policies.
Our ‘Equilibrium’ programme offers courses, classes and initiatives on site for people to avail of and this has also proved extremely popular. The programme is constantly changing and offers everything from yoga and digital photography courses, to fitness classes and salsa dancing. The idea behind this is to help support our people in maintaining a healthy work/life balance.
Career progression is important to staff and we are delighted that this year 121 people have been promoted internally within the firm. In addition to providing comprehensive support for those studying for professional qualifications, we also actively encourage people to engage in further study and offer financial support and study leave to enable them to do so.
We also work very hard on our internal communications and continually seek to ensure that our people are kept abreast of all developments within the firm.
How helpful are these initiatives in terms of recruitment?
We have found that being voted in the top 50 employers for five years running has been very important in terms of recruitment. It is a key area of focus for prospective employees and with regard to our recruitment of graduates. It has also been a key differentiator in the marketplace. We find that by virtue of our sustained performance in this area many of our prospective candidates have already heard that we are a great employer and this recommendation from existing employees is invaluable. We are also delighted that this year we will be recruiting in excess of 200 graduates compared to less than 100 three years ago.
You recently appointed seven new Partners. What do you think are the important skills and personal traits for young Chartered Accountants with aspirations to become Partners?
We certainly have excellent opportunities for young Chartered Accountants and over the last five years, we have appointed almost 20 new Partners, which is a huge proportion out of our existing complement of 45 Partners. This has brought energy and vibrancy to the firm which is delivering for us in terms of wining in the marketplace. In terms of the important skills and traits for new Partners, it is obviously taken as read that they will bring strong technical skills in their own area of expertise. In addition we would expect that they would have very strong communication skills in relating both internally in the firm and also in the marketplace.
Another key attribute that we look for is leadership. It is important that our prospective Partners are seen as role models for our younger people and that they also have key skills in developing the talent of those who work with them. We expect them to be good team players and to be capable of connecting with clients and staff at both an intellectual and an emotional level. As individuals they should understand how they impact at a personal level on those with whom they come in contact.
The issue of training of Chartered Accountants is always on the agenda of accountancy firms. What are your main concerns about training and how does Deloitte address the challenge?
At Deloitte we believe continual training is of vital importance. We take the training and development of our people very seriously and provide learning programmes at every stage in a person’s career. From induction programmes and technical learning programmes to management and leadership development programmes, we ensure that people at all levels are adequately supported.
We have also just recently completed work on our new Deloitte Academy. This is a purpose built, flexible learning academy which allows learning programmes to be delivered on site in a high spec environment which is custom built and conducive to effective learning.
The Academy can cater for over 200 people in a flexible room layout. This initiative has proved hugely popular already with up to 70% of the available capacity of the Academy booked out for the next three months.
In the past year we have also created the role of talent manager within the firm. The talent manager actively works with our people to ensure that they develop to their full potential and is also responsible for developing initiatives that will help in the retention of our key people.
What are your priorities for your term as Managing Partner and have you introduced any new initiatives so far?
As Managing Partner, I have a whole range of priorities to deliver on behalf of the firm but many of these can be rolled into two key areas. Firstly, my priority is to continue to develop and grow the firm as we have done over the past number of years to ensure that we are in a position to create opportunities to allow our quality people to progress with the firm. Secondly, a key priority is to maintain our position as employer of choice in the marketplace so that we can continue to recruit the very best people in the profession and, therefore, provide the highest quality service to our clients.
In terms of initiatives so far I am particularly delighted with the launch of the Deloitte Academy which underlines our deep commitment to learning and people development and secondly the introduction of a new Partner development programme specifically targeted at ensuring that when new Partners are appointed we can offer them a seamless transition into their new role.
You can hear more of the interview here.