How to Accurately Analyze a P & L Statement

By David Lund Hospitality & Leadership Expert, The Hotel Financial Coach | January 07, 2018

Anyone can look at the P & L statement and see that one number is higher than another. Anyone can see the variance between the budget and actual for an expense line or departmental result. It does not take a rocket scientist to see the discrepancy between this year’s result and last year’s. It also does not take an accountant to see the variance between the actual and forecast results and do something about it. 

Seeing the variance is one thing. Doing something about it is quite another. Most leaders will do nothing about it unless they are specifically told to do so. Most leaders will not naturally go there. Why is this the case?

Consider this:

• Leaders typically see that variance as someone else’s responsibility. Maybe accounting or some other magical entity will swoop in and make everything all right. Someone or something will come in and sprinkle some fairy dust on things and clean this mess up.

• Leaders are too busy to bother with the numbers and what is the point anyway? They are just numbers someone else created that really do not have anything much to do with leaders and their performance.

These are the problems and they really are masking the career opportunity you're looking for. These attitudes are problems because the messes do not fix themselves. The messes will only ever be corrected if there is a joint effort. The problems reflected in the variances on the financials run deep. Is it the budget or forecast that is inaccurate? Is it the actual spend that is wrong because of timing or changes in the business needs? Are there items that are miscoded due to errors in the data or source documents. Is the alignment of the expenses correct to the budget and forecast plan? All of this is like a big pile of cow dung and it usually reeks just about as bad.

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Coming up in March 2018...

Human Resources: Value Creation

Businesses must evolve to stay competitive and this is also true of employment positions within those organizations. In the hotel industry, for example, the role that HR professionals perform continues to broaden and expand. Today, they are generally responsible for five key areas - government compliance; payroll and benefits; employee acquisition and retention; training and development; and organizational structure and culture. In this enlarged capacity, HR professionals are no longer seen as part of an administrative cost center, but rather as a member of the leadership team that creates strategic value within their organization. HR professionals help to define company policies and plans; enact and enforce systems of accountability; and utilize definable metrics to measure and justify outcomes. Of course, there are always new issues for HR professionals to address. Though seemingly safe for the moment, will the Affordable Care Act ultimately be repealed and replaced and, if so, what will the ramifications be? There are issues pertaining to Millennials in the workforce and women in leadership roles, as well as determining the appropriate use of social media within the organization. There are new onboarding processes and e-learning training platforms to evaluate, in addition to keeping abreast of political issues like the minimum wage hike movement, or the re-evaluation of overtime rules. Finally, there are genuine immigration and deportation issues that affect HR professionals, especially if they are located in Dreamer Cities, or employ a workforce that could be adversely impacted by federal government policies. The March Hotel Business Review will take a look at some of the issues, strategies and techniques that HR professionals are employing to create and sustain value in their organization.