Each year, 14% of all Americans hire H&R Block to file their tax returns.
This means 86% don’t.
So, CFO and executive vice president Frank J. Controneo thinks Block has figured out a way to sign up many of the people who don’t use his services. And in the process, the company can finally solve a problem that has perennially haunted the tax preparation giant—How to make money in the three fiscal quarters when individuals don’t typically file their tax returns.
On Sept. 27, responding to calls from a variety of employers—many of them dot-coms and startups—Block introduced H&R Block Employer Solutions as way to meet “a range of different employees’ needs,” says David Byers, Block’s chief marketing officer and a senior vice president.
Under the program, employers would offer Block’s tax preparation service as an employee benefit. The hope is that once employees sign up for Block’s tax service, they will then use many of its other services, such as financial consulting, discount brokerage and mortgage services.
Cotroneo, 42, who moved to Block in February from the same post at Mastercard, where he spent 11 years, thinks marketing the tax preparation- related services through employers would be an especially effective method of reaching a large number of potential customers at once. And that’s especially true during a tight employment environment, when companies are desperate to hold onto employees.
Parlaying Retention Worries
In fact, as a member of Block’s management team, he is heavily involved in making employee- retention decisions, brooding about “brain drain.” Noting his own recent switch from Purchase, N.Y.- based Mastercard to Block, based in Kansas City, Mo., he notes ironically that “employee retention is a very difficult thing.”
The company, which employs 10,000 regular full-time workers through its subsidiaries, saw an influx of seasonal employees—mostly tax preparers–during its frenetic tax season (Jan. 2 through April 30) that swelled its employment rolls to 103,000. Block offices prepared about 16.3 million individual returns, or about 14 percent of the U.S. total, according to an Internal Revenue Service estimate for 1998 cited by Block in its 10-K.
In its basic form, the program gives employers promotional and employee- enrollment materials tailored to their firms. At tax time, Block preparers would put together the tax returns of enrolled employees. After their tax forms are filed, employees are ripe customers for added mortgage and financial services, the Block theory goes.
Block is marketing the benefit to the Fortune 50 and the Fortune 100 Best Places To Work, with the effort directed toward one-on-one meetings with human resources directors, according to Byers, who expects the first contract with an employer to be inked imminently.
What kinds of employees would most appreciate tax-preparation benefits?
Richard Federico, work/life practice leader for The Segal Co., a New York City-based benefit consulting firm, thinks that “young people right out of college, who have never had to file a tax return, [would] find it very valuable.”