First-class coach

I applied for an internal vacancy I felt confident I had the skills to do well. Although I was interviewed, I didn't get the job, apparently because I haven't had experience of managing profit and loss.

by Miranda Kennett
Last Updated: 31 Aug 2010

I don't see any way of acquiring this experience in my existing organisation. Should I leave?

A: Having 'responsibility for profit and loss (P&L)' sounds a fairly straightforward role but in some organisations it's a complex one and not just a question of understanding the balance sheet. If the business is going through a bad patch, P&L responsibility might involve taking tough decisions and following them through: stopping projects, losing staff, selling assets.

If the enterprise is doing quite well but needs investment to grow, the responsibility might include negotiating with stakeholders to allow a temporary fall in profits in order to build up the resources that will allow expansion and lead to future profitability. And even if the business is flourishing, the role demands decisions on how much of the profits should be shared with employees, how much is reinvested in the business and how much returned to shareholders.

These different scenarios require a range of skills from the role-holder - for example, vision and strategic understanding, persuasion and negotiating skills, and the ability to communicate effectively with a range of audiences, as well as a good understanding of the financial levers.

I asked Neil Jones, managing director of Carat UK, a media planning and buying company, what was the biggest stretch for him in assuming responsibility for P&L 18 months ago. 'I had understood the top-line figures, but I needed to go deeper. This is quite a complex business and I had to get into the granularity.'

In his view, if you don't understand which levers to pull to make the most of all aspects of the business (not just the bottom line), you are not in a position to optimise operations. 'That's why so many FTSE-100 companies are run by ex-finance directors,' he adds.

Strong commercial acumen, a keen eye for detail and a passion to get behind the broader picture are his criteria for success in managing P&L and the business.

If you can, find out which parts of P&L management you are judged to fall short on. If it's purely a question of familiarity with financial data, a short training course on finance for non-financial managers will help you get a grip on fixed costs, assets, depreciation and cashflow. But if other qualities are mentioned, you'll be in a better position to tell whether other jobs with your current employer would give you the learning opportunity you need.

My guess is that your organisation will feel an obligation to you as an unsuccessful internal candidate, especially if they want to keep you. So, if you position yourself as keen to learn and to acquire the necessary skills, you may well find your boss or the HR manager to be helpful. You may not need to change jobs: by adding in new activities, you could gain vital experience.

You could try shadowing someone with this role at key moments of financial reporting. One of my clients regularly gets her high-potential managers to attend divisional board meetings so that they get real-life exposure to financial decision-making. Another in a similar position to you has thoroughly involved himself in this year's budgeting process - not just taking last year's figures and adding x%, but conducting thorough scenario planning and developing strategic thinking. As a result, he is much better informed about the issues behind the figures, and his deeper understanding is beginning to impress the people to whom he reports.

If these are not options for you, find a friendly finance person and spend time together going through the annual reports of your organisation and its competitors to understand the different ways firms tackle profit, debt and investment.

Your efforts will help you to decide whether there's more to learn in your current organisation or whether you need to go elsewhere for enlightenment. The attitude of your employer will also inform your decision.

If you choose to move on, be sure your CV makes the most of any relevant experience. If you made an area more profitable, turned a loss into a profit, found ways to save money or took tough decisions and carried them out humanely, it's worth mentioning these achievements.

ยท Miranda Kennett is an independent coach. If you have an issue you'd like her to cover, e-mail: miranda@firstclasscoach.co.uk.

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