more-arw search

Q&A Forum

Do you share your P&L?

This comment was made by James Scott on another topic but raised a question for me. "The primary problem is that employees have no "skin in the game" to really watch what they spend and then to provide the necessary data in expense reports (i.e. receipts and other info to code into the GL). And reconciling the monthly statement often forces Finance to track down that info. We have had good success helping customers automate this to provide much better efficiency and control for Finance". Last year we started sharing each Store Manager with their stores P&L and I was curious if anyone else does this?

Answers

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

Sharing the unit P&L to people that control and manage business units is not only a must but CRITICAL.

To add more value to the P&L (aside from the numbers) sharing, I would even recommend adding BENCHMARKING (comparisons between similar units) of critical numbers to the analysis portion of the P&L to aid the unit managers. You can also look at ranking (percentile rank). This adds a certain level of competition. I have seen some companies use this tack to promote cost reductions on targetted areas of operational cost. Think "Biggest Loser" or iterations of it (i.e not dollar amounts but percentage reductions).

In pursuit of cost savings or good business practices, be mindful of efforts/practices that a business manager employs in his unit to post "good" numbers and be sure to tell every business unit so that the benefit will be company wide. A business manager's "secret sauce" should be a company wide "secret sauce".

The one drawback from my experience is the bickering when it comes to shared costs charged to their unit.

Sharing the P&L to units bigger than the business unit (ie division or company wide) is a cultural and open information choice (made by the CEO or Board) which has it's pros and cons.

Topic Expert
Regis Quirin
Title: Director of Finance
Company: Gibney Anthony & Flaherty LLP
LinkedIn Profile
(Director of Finance, Gibney Anthony & Flaherty LLP) |

The theory of sharing p&l’s to show managers how they impact the bottom-line is a good one. What matters is how you do it. Do you share GAAP P&L’s, Management Reports, KPI’s? This approach is easier if your company is a large public institution, whose financials are published widely. More than likely if you share the company economics of a small or medium-size entity, you are actually sharing the personal economics of the owners, as they are closely linked.

It just takes a little fore thought. What is your plan? What are your objectives? Do you plan to convene meetings with the responsible managers to understand why they exceeded or fell short of the plan?

Topic Expert
Stuart Bilbrough
Title: Chief Financial Officer
Company: Radius Residential Care Limited
(Chief Financial Officer, Radius Residential Care Limited) |

Like Emerson, we share our P&L's between business unit owners through benchmarking. This has enabled best practice revenue generation and cost management ideas to be shared. Of course this only works when business units are the same - for Radius Care this is rest homes through New Zealand. This may be a challenge for an organisation with quite different business units.

Anonymous User
Title: CFO
Company: Local Government Agency
(CFO, Local Government Agency) |

Tying incentives to bottom line performance, even if it is as simple as requiring that unit performance is within budget allowing for explained and approved variances, can be quite effective at improving efficiencies. Doing this requires sharing bottom line information.

Topic Expert
Christie Jahn
Title: CFO
Company: Prime Investments & Development
(CFO, Prime Investments & Development) |

Great suggestion Anon! We created a bonus program tied to Net Income a couple of years ago in an attempt to get all areas of the business thinking like an owner and working together to be cognizant of expenses and revenue relation.

Jerry jorgensen
Title: Director, Finance and Accounting
Company: Jo-Kell
(Director, Finance and Accounting, Jo-Kell) |

I find this topic very interesting and relevant. Some years ago I worked for a company owned by one gentleman. No one outside of him and the accounting folks were allowed to see any financial information, not even the VP of store operations. We operated retail stores and the only information shared with store management was sales. Managers did not see expenses, were not held accountable for expenses and were not compensated on store performance, just sales.

The business was sold and a new CEO hired and one of the first things that was done was to sent out Store Operating Statements reporting to the store managers not only the sales, but the gross profit, expenses and net store income. We also allocated all of the corporate office expenses so that the sum of the stores equaled the total company income.

The good managers would review the statements each month and ask questions. The not so good managers would not.

So we began to do a spreadsheet by region listing the stores side by side which allowed for comparison of Revenue, Gross Margin and expenses. Each month we had a conference call with the Regional manager and the Store managers to discuss the stores' performance and talk about significant variances among the stores.

As a result, the store managers began to take more ownership of there stores and take steps to improve the financial performance of their store. Some of the managers began to think like business owners and looked for ways to improve their operation.

Topic Expert
Christie Jahn
Title: CFO
Company: Prime Investments & Development
(CFO, Prime Investments & Development) |

Jerry,

When you had the conference call monthly with the regional manager and SM was geographical location mentioned as a reason why one store may have outperformed another store?

4862 views
Topics
Products and Companies

Get Free Membership

By signing up, you will receive emails from Proformative regarding Proformative programs, events, community news and activity. You can withdraw your consent at any time. Contact Us.

Business Exchange

Browse the Business Exchange to find information, resources and peer reviews to help you select the right solution for your business.

Learn more

Contribute to Community

If you’re interested in learning more about contributing to your Proformative community, we have many ways for you to get involved. Please email content@proformative.com to learn more about becoming a speaker or contributing to the blogs/Q&A Forum.