Following on from Part One of our series on what makes a great contract manager, we’re now into the nitty gritty.
So what are the vital functional skills required to be successful in a contract management role?
Nine Key Functional Skills for effective Contract Managers
1. Effective communication.
Getting the desired message across to an audience has been a problem for humanity since the dawn of time. The consequences of ineffective grunting and gesturing back then could range from harmless to catastrophic.
Despite the inherent intelligence of our species and our development of complex language, the consequences have barely changed.
The ability to prepare and deliver clear, concise and coherent verbal and written communications to organisational stakeholders, senior management, suppliers and others is probably the most important skill the effective Contracts Manager needs.
For many, this skill does not come naturally and can become a barrier to career progression.
However, this can be readily addressed since there has likely been more material produced and training given about communication than any other subject in modern times. Here’s a quick list of recommended books on the subject.
2. Fluency in legalese.
The language of contracts, known as legalese, is based on common words from the local spoken language but often expressed in a manner that the layman can find difficult to understand.
The occasional Latin phrase may be used as a shorthand to express certain legal terms or principles in countries with a history of Roman law.
Legalese is typically written by lawyers for lawyers, following precedents established by judicial review over hundreds of years.
The ability to read, understand, translate and occasionally write legalese is another vital skill you’ll need to succeed.
A course in contract law may be useful but takes some commitment. Guidance from an experienced Contracts Manager or lawyer, combined with constant exposure to contracts is the more common way to achieve the fluency required.
3. Stakeholder engagement.
The Contracts Manager will often have to work with, influence and rely on many people from many different business functions.
Stakeholder engagement is the practice of:
- Identifying all the key individuals likely to be needed for a particular contract,
- Explaining the rationale for and scope of their involvement,
- Dealing with resistance to involvement or intentions,
- Planning and agreeing why, when and for how long they and/or their delegates may be needed,
- Describing the established processes that need to be followed, and
- Providing regular feedback about progress and notifications about approaching commitments.
The ability to improve communication between parties with different agendas, establish common goals, reach a consensus about what needs to be done and why, foster a sense of team membership and inclusivity, and reduce wasted time will also help contract managers in their role.
4. Project management.
Initiating, negotiating, implementing, managing and renewing contracts are activities that need to be planned and overseen to obtain the desired outcomes.
Project management is the highly evolved discipline used to achieve these outcomes and it is equally as applicable for CLM as for an IT or engineering project.
A typical Contracts Manager's workload needs to be managed in a disciplined and organised way to be effective. Managing contracts using project management principles is a great way to stay on top of the workload and to be able to report progress.
To help you get started, here's a great list of free project management resources.
5. Negotiation.
Daily life is filled with informal negotiations about who's going to do what, why and when. The parties to these negotiations can include family, friends, work colleagues, team members, complete strangers and so on.
Each side typically establishes its position on a matter and sets limits on how far from that position it is prepared to move, either in advance or on the fly.
Formal contract negotiations follow the same principles but differ in terms of scope, scale, complexity, flexibility, tactics, risk and reward.
The ability to understand the other side's point of view, recognise and counter the tactics being used, establish concessionary limits not to be exceeded and determine the implications of an opposing position is a key skill the effective Contracts Manager needs.
You can read our article on negotiating with vendors to give you a grounding in this area if it’s new to you.
Constant involvement in contract negotiations and mentoring by an experienced person is a practical way to develop negotiating expertise.
6. Relationship management.
Things usually get done better when people are able to work together.
The care and effort put into establishing relationships between people leads to trust, which can:
- Create strong alliances and respect for others,
- Increase motivation and confidence,
- Minimise friction and uncertainty, and
- Speed up problem solving and decision making.
The ability to understand people's motivations and agendas, manage and meet their expectations, instil a sense of unity and common purpose, and deliver on promises made are the areas to focus on.
7. Risk management.
Risk is everywhere. There is potential for contract-related risk at every CLM stage, ranging from poor internal practices to the effects of a geo-political disturbance on the other side of the world.
As a Contracts Manager you’ll need the ability to:
- Identify and estimate the likelihood and impact of contract-related risk,
- Establish mitigation methods aligned to the organisation's general approach to risk, and
- Track the ongoing relevance and effectiveness of those mitigations
- Use a contract management solution where appropriate to automate risk mitigation
Close study of how the organisation approaches risk in terms of policies and practices, and any guidelines prepared by Legal / Internal Audit / Governance, Risk and Compliance teams is essential. Mentoring by experienced Contracts Managers is also extremely helpful.
8. Contract summarisation.
Sometimes know as “Gisting”, the process of summarising contracts is one you should aim to be adept at.
For most people, contracts are so unintelligible they may as well be written in Latin.
Because there can be many stakeholders for a particular contract, the Contracts Manager or the lawyers can be repeatedly asked for an interpretation of one clause or another, which will often lead to further questions.
Even though this work is important, it wastes the time of those doing the interpretation and those waiting for it. The simple solution is to prepare a plain language summary of the contract's key features following execution, sufficient to satisfy most requests from stakeholders.
This approach sees the larger interpretation effort performed only once, provides stakeholders with a workable measure of contract knowledge, and saves everybody's time.
Here, it’s important to develop the ability to locate the features of a contract that are important to stakeholders, translate them from legalese to plain language, and produce an easy-to-read summary of those features in a standardised format.
It will take practice but will ultimately be a massive timesaver.
9. Contract development.
Most suppliers and a growing number of their customers have prepared contracts covering their respective provision or acquisition of goods and / or services, containing their preferred terms and conditions.
There are times however when a bespoke contract needs to be developed, say due to the specificity of an organisation's requirements.
An example might be the outsourcing of certain aspects of the IT function. A candidate supplier's standard outsourcing contract or a legal firm's equivalent boilerplate contract may be useful as a starting point.
The ability to derive contract terms needed to cover a common situation with unique elements, requirements, risks, performance or compliance requirements is a very useful skill for a Contracts Manager to have.
Close liaison with internal or external lawyers about clauses necessary to support specific requirements and their precise preferred wording is a simple way of gaining contract development skills.
These nine skills aren’t an exhaustive list but if you’re nailing these ones then you won’t be going far wrong in your role.
For more guidance on effective contract management you can download our free 38-page ebook covering all stages of the contract lifecycle.
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