To be effective in any role, you need a wide range of interpersonal and technical skills, supported by a broad base of relevant subject matter knowledge and certain innate personal characteristics.
Contract manager roles are no different and in this pair of articles we outline the key traits, skills and areas of interest needed to be successful in contract management.
Whether you're new to the field or an experienced hand, here you'll find helpful information to break the industry down. We also have a number of resources specifically for Contract Managers:
Recession Planning And Preparation For Contract Managers
The Role of Contract Managers in Mergers, Acquisitions and Divestments
High Level Expectations
To be effective in Contract Lifecycle Management (CLM) specifically, the Contracts Manager must be able to work:
- for, with or through various groups of internal and external people,
- in accordance with internal policies and practices and external laws and regulations,
- across many different products, services and possibly languages,
- using contracts containing both standardised and unique elements and risks.
Like most occupations, there is no 'right' set of personal characteristics required for undertaking CLM. That said, there are certain attributes likely to make you more effective in the role.
However, the nature of the role is not so specialist that key attributes can’t be developed and improved over time.
Formal education and training can provide a foundational level of skills and knowledge, with expertise increasing as a result of on-the-job exposure and mentoring.
This first article covers some of the most important personal attributes and knowledge needed by the effective Contracts Manager.
The second part covers some of the essential functional skills that can help a Contracts Manager to thrive.
Key Personal Characteristics for Effective Contract Management
Strong attention to detail
Often listed as a key skill in many different roles, but never more important than in contract management.
For example, significant problems can arise from simple things like:
- The punctuation in a sentence, the addition or omission of a word, or the capitalisation or not of a particular word
- The total for a set of numbers is incorrect
- The length of time between two dates is wrong
- Two contract clauses contradict each other, or reference is made to a non-existent clause
- A contract doesn't cover a certain situation when a supplier agreed that it would
As the old saying goes, the devil is in the detail, so the effective Contracts Manager's ability to spot such errors, omissions, inconsistencies, ambiguous language and undefined terms is crucial.
Closely aligned with strong attention to detail, being thorough helps to ensure that nothing slips through the cracks, that all applicable avenues have been explored and points of view considered.
A superficial or cursory review has its place, but the payback from being thorough is well worth the effort for the effective Contracts Manager.
Both the supplier and internal stakeholders in a contract will have things to say about the content and operation of it.
The effective Contracts Manager's ability to listen closely to what is said and not said, and respond to people in a way which shows they've been heard is important.
Considering the wide range of people who can be involved in CLM activities, this attribute is a key element in establishing smooth and inclusive working relationships.
Closely aligned with being a good listener, a collaborative mindset indicates a willingness to help and engage with the many people involved in any particular contract – especially if they are in different geographical locations.
The effective Contracts Manager has to rely on stakeholder staff to provide feedback on supplier performance and background for contract amendments among other things, so a good supportive relationship with these people, and the supplier's staff, is essential.
The workload can be considerable depending on the number of existing contracts to be managed, and the usually random arrival rate of new contracts.
Getting overwhelmed by the sheer volume of work is debilitating and stressful. An ability to organise the known workload and allow for the unknown is crucial for remaining productive.
The ability to deal with rapid and possibly unplanned change, large and small, good and bad, is paramount.
Change is simply a fact of life requiring a positive mindset plus an ability to discard what has been done, regardless of the effort involved, and quickly change direction.
It also provides opportunities for creativity, for doing things differently and possibly more effectively.
If it can go wrong, it will. When it does, it will be at the worst possible time.
These and other variations of Murphy's Law have been proven time and again.
Proactive problem-solving tries to anticipate issues and institute preventative measures, even in unexpected circumstances. Reactive problem-solving deals with unanticipated issues, instituting remedial and preventative measures.
Aligned with the effective Contracts Manager's adaptability and supported by critical thinking and creativity, a problem-solving mindset is necessary for dealing effectively with the unexpected, often with incomplete knowledge.
For quite a while now, the push has been on across the board to do more with the same or less.
People who are naturally inclined to just get on with the job, are organised and adaptable, are well-placed to deliver against the more stringent targets.
For the effective Contracts Manager, being internally motivated and comfortable with autonomy is vital.
Critical Knowledge for Effective Contract Management
Contract lifecycle management
The activities commonly performed in CLM are outlined in Gatekeeper's Complete Guide to Contract Lifecycle Management.
Additional activities may be needed to manage contracts:
- From certain suppliers,
- For certain types of goods and services,
- Containing certain obligations,
- Susceptible to certain risks,
- Operating in certain countries or legal jurisdictions, or
- Exceeding certain spend limits or timeframes
The effective Contracts Manager needs an excellent general understanding of CLM, its stages and common activities, and must be able to figure out the individual steps required in each case. The should also have an up-to-date awareness of specialist solutions that could streamline their efforts.
The Organisation’s Business
In order to maximise alignment between organisational goals and the contracting strategies used, the effective Contracts Manager needs a solid understanding of:
- The organisation and its major business operations, key market areas and the current business environment,
- Strategic suppliers and customers, and
- Where applicable, the most critical contracts.
They should also understand the operations and business drivers of the organisation's Procurement and Sales teams (if they have them), to determine the optimum way CLM services should be delivered to support these functions.
The organisation's policies and practices
Every organisation needs to have a set of policies and practices that specify how its staff should behave in prescribed situations, such as a code of conduct, drugs and alcohol use, ethical behaviour, confidentiality etc.
Apart from such general matters, the effective Contracts Manager needs strong familiarity with any specific policies and practices such as:
- The general procurement policy,
- Contract governance and contract management,
- Decision rights concerning CLM activities and changes to preferred contract terms,
- Delegations of authority for approval and signing of contracts and amendments.
The regulatory environment
More and more laws, rules and strictures govern the way business gets conducted. This is enough of a challenge in an organisation's domestic environment, but it gets more complex when the organisation has operations and dealings in other countries or Europe (see our article on GDPR).
A good Contracts Manager needs to obtain a thorough understanding of the key regulatory topics applicable to their organisation under the governing law agreed to in each contract, such as data protection, import /export restrictions, anti-bribery, taxation etc.
The fundamentals can be obtained from the Legal team or other Contracts Managers, and specific guidance should be requested from appropriate specialists as necessary.
Contract types and terminology
While there is almost no limit to what a contract can cover, other than it should not be illegal, contracts are usually about:
- Buying or selling,
- Loaning or borrowing,
- Leasing or renting,
- Granting or denying,
- Partnering or proxying,
- Doing, or not doing, something.
Most contracts will contain some common standardised terminology.
Over time it will pay to become familiar with the kinds of terminology and clauses you encounter consistently. This will reduce the time to review and help to quickly identify areas that might need revision or legal input.
As we’ve mentioned before, studies have shown that, on average, 50% of negotiated savings fail to materialise over the life of a contract.
This is primarily because of insufficient oversight and monitoring.
Determination of how well a contract delivers the expected outcomes is based on measurement of performance over several key areas:
- The supplier's service delivery performance can be measured against agreed Key Performance Indicators, Service Level Agreements, benchmarking and user satisfaction surveys.
- Each party's compliance with contractual obligations can be regularly checked
- Achievement of desired contract outcomes can be measured by calculating value for money and the level of benefits realisation.
- The effectiveness of the CLM processes can be assessed by measuring and comparing process times, levels of issues and disputes and user satisfaction levels.
The effective Contracts Manager needs a detailed understanding of the methods available for measuring performance and, more simply, to be comfortable with numbers.
Hopefully, you now have a better understanding of the key characteristics and areas of knowledge you’ll need to be successful as a Contract Manager.
If you’re already employed as a Contract Manager, then this will likely be very familiar for you.
In the second article, we concentrate on the key functional skills you’ll need to be successful in contract management.