By Pablo Cilotta, International Senior Legal Counsel & Head of Contract Management - EMEA & Latin America
Today, organizations need in-house legal & contract managers who can deliver results and keep the business out of trouble. New pressures on the role mean anyone coming into the contract management (CM) profession needs to have much more than just the technical knowledge needed to prevent or solve problems.
The CM role should be therefore multi-disciplined and performed by someone with cross-domain, cross-functional expertise who can successfully work within a diverse environment. A summary of what it takes to be a CM professional today is set out in this article published on “Contracting Excellence”, IACCM’s newsletter. In addition, an article covering this topic, written in Spanish is available here: “El rol del Gerente de Contratos”
High value role much more than compliance
High value contract management is becoming much more than just compliance. It is also about ethics, integrity and management of regulatory risk. A fair balance between compliance and innovation is needed.
The traditional CM role has changed very little over past years. In the Ibero-American countries (including Spain, Portugal, Central and South America) it is often seen as just an administrative function, carrying out tasks such as billing, payment and the recording and filing of contractual documents. There is very little focus on the proactive, value-add approach that the position really requires.
CM roles are performed there by project management, procurement, sales, sales operations etc. Contract support (drafting and negotiation) remains in the jurisdiction of lawyers if the organization requires in-house support, or finance if not. However, the field is now emerging in these countries as a fast-growing and complex discipline.
The strategic CM role is much broader. Rather than dealing with tactical day-to-day operations it takes a deeper dive into implementation of corporate strategies and business generation. It ensures that contracting policies and procedures are being followed and complied with.
New skills that follow the contract lifecycle
The following are the professional attributes today's strategic CM needs to have throughout the various stages of the contract lifecycle:
- In the initial stage of the contract management process, the CM should know about alignment with business strategy, probability of success, nature of the contractual relationship, background with the other company.
- In the development stage, clarity on scope and goals, experience in negotiation, potential risks and internal alignment.
- In the contract implementation and delivery stage, the CM should know who is responsible for implementation and delivery, and have domain about accurate interpretation, contract change procedure, performance review, communication and notifications regarding the deal.
- In the completion stage: rolling contract renewal with previous consent, lessons learned, compliance requirements and exit plan, termination.
Competencies: CM competencies can be summarized as follows:
- Drafting, analysis, negotiation and interpretation of all types of agreements: sales and purchasing contracts, sub-contracts, licensing agreements, agents, resellers, distribution, joint marketing, services, consulting, marketing agreements etc; NDA and master agreements.
- Public contracting with federal, state and local governments.
- Reviewing terms and conditions proposed by customers and partners.
- Interacting as the point of contact for final clients on contractual matters, company employees, ensuring timely review and approval of the contractual terms and conditions; and customer attorneys (negotiating directly with them).
- Keeping contractual records and documentation.
- Training and providing guidance on contract matters to project managers in contracting practices and procedures.
- Designing and implementing contracting procedures.
- Monitoring compliance by company employees with established procedures. Competitive terms, ensuring company products and services are offered with appropriate, competitive terms and conditions.
- Post-signature actions. Ensuring that signed contracts are communicated to all relevant parties. Interpretation to support implementation. Change management process .Contract close-out, extension or renewal.
Strategic role increasingly valued
Best practice for a CM role means taking holistic responsibility for the entire contracting process, including 'pre' and 'post' award stages. It means setting up policies that support market needs and business strategies. In the light of these new trends, the strategic role is not only more interesting and attractive, but also a lifecycle discipline, increasingly valued by senior management and respected by other areas of the organization.
As a direct result of economic pressures the split between traditional and strategic roles may fade over time. The attractiveness of the strategic one may be matched by decline of the old administrative function, which may be automated or transferred to other internal groups such as sales, procurement or project management.
I really believe this won´t happen, at least in the short term, where the field is still in the early stages of development. I am referring to our Spanish and Portuguese-speaking countries where CM is beginning to emerge as a recognized profession. This is particularly so if the organization concerned is a subsidiary of a multinational based in Northern and Central Europe or the US and does not have enough authority to make strategic decisions.
The traditional role in Ibero-America has not yet reached the level found in continental Europe, the UK and the United States. But focus on the strategic role will increase and organizations will place greater emphasis on it - the change is happening.
For further information, please contact Pablo Cilotta on email@example.com