Navigating the shift to a single P&L

Too often, an organisation's P&L structure undermines its desire for a culture of collaboration. The boundaries and systems around which we organise ourselves both enable and disable how we interact with one another. Over the years, many organisations have developed a complex P&L structure, with individual leaders accountable for their own ‘mini-businesses’ as part of the wider organisation. Whilst these structures help the scaling of businesses and encourage individual accountability and performance, over time, they can create a culture where leaders focus on the success of their own area and team and lose connection to the wider organisation and the sense of shared responsibility for the overall success of the business. 

In recent years, many businesses, including many of our clients, have gone through a complex restructuring to help break down the siloed nature of their organisations. They have worked to implement a single P&L structure that more appropriately aligns with their values and that they hope will help enable better collaboration, something we know we need more of amid the ever-changing market dynamics we’re operating within.

The problem is that devising a better structure is one thing, and implementing it effectively is another. The impact on individuals and the wider cultural implications during this shift should not be underestimated; unfortunately, they often are. This leads to a variety of challenges that are worth paying attention to.

• Loss of Autonomy and Status. Leaders who have been used to having a sense of control over their own budgets and targets may feel an innate threat to their status and decision-making authority. This can lead to resistance, pushback, and reactive emotional responses, causing damage to those around them and the process itself. While logically, many will understand the reason for the shift; we are often not skilled enough to notice irrational attachments and biases and the impact these being upturned can have on our sense of identity.
• Increased Interdependence. When your performance and bonus depend on the success of others, not just your own, and you haven't built strong relationships with those outside your team, it can lead to increased friction between different silos and teams. Particularly when different teams may have varying priorities and strategies, leading to differences of opinion when resources need to be shared. Shifting towards collective responsibility and shared success doesn't happen overnight and can be challenging for organizations with a long history of operating with multiple P&Ls.
• Accountability issues. With a single and shared P&L, it can become more difficult to pinpoint accountability; teams might shift blame when targets are not met, leading to a culture of finger-pointing rather than collaborative problem-solving. 

So, how do you work with these risks and support people through this type of change? It takes time, attention and investment; not just on the practical side, but the cultural aspects too. These are less tangible and easier to avoid, yet as we’ve seen too many times, the damage done if you don’t do this work can be even more costly down the road. It’s important to:

• Provide clear communication and space to share concerns. Bring people in sooner than you might typically think to. Be transparent about the reasons for the shift, the process, and expected challenges and outcomes. You can not rid people of the anxiety they will naturally feel in this type of change, but you can ensure they have been able to input into and share concerns throughout the process, which will go a long way.
• Before you start, focus on strengthening relationships across the business. Before implementing a new structure, create opportunities for people from different teams to get to know one another better. The more people feel connected to each other, the more compassion and willingness they have to consider the needs of others in line with their own. Our peer learning playbook provides guidelines for bringing together multistakeholder groups in a peer learning process for this purpose.
• Develop collaborative skillset with training and support. To support people through this process of change and to adjust to new ways of working, create opportunities for developing collaborative skillfulness. Our Collaboration Compass lists the skills leaders need to develop to increase the quality of their collaboration with others.
• Bring people into discussions about the overall organisational strategy. If people know what they are a part of and where they are going, they are more able to work through periods of difficulty and challenge than if there is heightened uncertainty and confusion. This engagement in strategy also helps to align different teams, promoting a more joined-up approach.
• Adjust as you go; you won’t get it all right. There is no “right” way to approach this change, so continuously monitor the transition's impact on individuals and teams and ask for feedback. If adjustments need to be made, do them thoughtfully and humbly. If the initial change process is expressed and implemented with certainty and steadfastness, it can be much harder to iterate and learn from the challenges as you go.  

More and more organisations are adopting this shift to a single P&L structure. Yet, it’s not something to run head-first into without thinking through the potential underlying attachments people have to how things have been in the past and what these changes might mean for them and their teams going forward.  Ultimately, when done well, you are creating an organisation focussing together on the quality of the product or service, with the client or customer coming first, and not the requirement to meet their personal targets. This makes the clients happy and relieves the stress from the individuals who previously felt the weight of their part of the business by themselves. 

If you are considering going through this type of change or have already started and know you need to provide more support to people in the process, we’re happy to help you think this through.