5 Characteristics a Senior Executive Must Possess to Assume P & L Responsibility


Profit and Loss (P & L) responsibility is one of the most important responsibilities of any executive position. Having P & L responsibility involves monitoring the net income after expenses for a department or entire organization, with direct influence on how company resources are allocated. Those with P & L responsibility often give final approval for new projects and are required to find ways to cut budget expenditure and ensure every program is generating a positive ROI.

p&l_responsibilityConsidering ROI management and heavy cost-cutting has become increasingly important with the current economic downturn, having experience of managing P & L is something that is actively searched for by executive recruiters when qualifying executive job candidates. So what are the main characteristics of a senior executive who takes control of this function?

1. ‘The buck stops here’ mentality.
Senior executives with P & L responsibility must have complete ownership of the business unit’s successes and failures. This includes a strong command of every program and item contributing to profits or expenses, taking final responsibility for any profits or losses achieved. For example, when the CEO of Delta, Gerard Grinstein, gave up stock options offered during Delta’s period of Bankruptcy he displayed personal responsibility for the entire organization’s performance.

2. Confidence and determination that he or she can influence events.
P & L responsibility goes far beyond reporting current finances or being responsible for profits or loss. Executives must take steps to improve P & L statements, and in order for a senior executive to be successful, they must be extremely confident in their ability to work with a variety of departments and teams to identify savings and opportunities. Those who see their organization as tied to market or external forces should not assume P & L responsibility.

3. Team leadership skills – taking the team with you, providing inspiration.
P & L responsibility goes hand in hand with leadership - executives must communicate the actualities of the P & L statement and ensure every employee is invested in positively influencing the financial situation of the organization.

4. Willingness to listen to others and encouragement of creative ideas, regardless of source.
Senior executives must discover new ways of generating income, especially as traditional income streams are affected by economic downturns or technological advances. In order to implement new income-generating streams, he or she must source new ideas from all levels in the organization and be open to external advisers or consultants. An innovative outlook is essential to maintain a healthy P & L statement.

5. Humility to admit mistakes, sharing of achievements.
Senior executives with P & L responsibility are often required to communicate P & L statements to owners, shareholders and the entire organization, justifying expenditures and explaining profit levels. Mistakes should be openly discussed, followed by suggested next steps and potential solutions. Hiding any information or problems leads to isolation from key thought leaders, and ultimately distrust (and possible dismissal). On the other hand, achievements need to be clearly communicated, attributing success to those involved.

P & L responsibility is highly regarded in executive recruitment.
This is particularly true for P & L experience in multi-million / billion dollar organizations. Therefore you must be able to communicate in interviews and through your executive resume or CV exactly how holding this function demonstrates your business and personal attributes. Holding P & L responsibility is a demonstrable extension of your overall leadership skills. Too many executives add P & L experience to their resume/CV without successfully translating this experience into core attributes. When discussing your resume or CV with an executive recruiter or hiring manager, ensure you clearly communicate the importance of P & L experience by using specific examples from your executive career.


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This article is succinct and poignant. I truly enjoyed the read and wish I had read it fifteen years ago. The ideas are timeless and they inspire a would-be executive to embrace the role of leader. Thank you.

Excellent information. Recently made application to an executive position - I'll be studying this advice with a very serious attitude. Hope to read other articles along these lines.

I love it. Keep it simple. Failures are attempts to improve a process or situation we must embrace. Growth and revolutionary change takes place when we hit those walls. It forces us to think beyond and understand the issues deeply. Encourage with positive re-enforcement to keep the cycle moving forward at all levels.

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