An average global 1000 corporation maintains over 40,000 active contracts, all growing in number and complexity by the day. Managing such a large number of contracts, all contributing to keeping an organization’s business afloat, is one of the biggest and most important responsibilities of contract managers. And to carry out this job efficiently without oversight, contract managers need to develop and hone certain important skills. These skills will not only empower the contract managers to gain sight of the bigger picture but will also help them efficiently manage contracts, which directly impact business relationships, performance, financials, and reputation.
6 Essential Skills for Contract Managers
Considering the high stakes that come attached to contracts and contract managers, here are 6 essential and highly recommended skills that every contract manager should rightly own and develop:
1. Be highly collaborative
Every department of an organization signs contracts daily, may it be for procuring an item, outsourcing a job, or selling/ licensing the company’s products/services. Contract managers being the chief point of contact and liaison, they need to make sure they are highly collaborative, approachable and can maintain professional relationships across departments and ranks. Apart from internal relationships, contract managers also need to manage and co-ordinate with external stakeholders and vendors involved in any particular contract, to ensure contracts are signed accurately without delays.
2.Have an in-depth business understanding
To be able to manage any task effectively, having in-depth knowledge and understanding of the task, in this case, contracts are of utmost importance. Contract managers need to continuously stay on top of changes to clauses, templates, and risks associated with non-compliance. To ensure accurate knowledge sharing with non-legal stakeholders involved in the contract signing, the contract manager’s agility to adapt to the changes, both organizational and regulatory takes the front-seat. And with the latest technology, comes agility.
3. Be technologically sound
A contract manager’s ability to understand and adapt technology will drive excellence in contract processes. With the ability to push for technological advancements, contract managers can ensure constant improvement to processes and administrative tasks. They can keep the teams motivated by bringing about change, reducing manual labor by introducing automation and digitization and keeping their department at par with other departments in the organization.
4. Analyze KPIs effectively
Digitizing contracts makes all key information in them more accessible and readable. Artificial intelligence-enabled CLM solutions to make configuring milestones and metrics easy and share important insights gathered from historic and current data. With so much data at one’s fingertips, contract managers need to be able to read, understand and break down the available information. They should be equipped to analyze insights and key performance indicators, to be able to work towards improving performance basis them. Understanding and analyzing KPIs and taking immediate action to rectify or improve them is how contract managers can turn contracts into profitable documents.
5. Have an innovative mindset
Contract management is one department where innovation is not given as much importance as in other departments. This department largely operates on manual processes, where a lot of time is spent in doing administrative tasks that can be easily automated. With innovation, contract management can speed up business and operations of other departments dependent on legal teams, by centralizing, integrating and automating processes. To keep up with innovations that the industry demands and to improve accuracy, speed, and workflows of the department, a contract manager needs to embrace technology and keep the department equipped to handle the increasing responsibilities and complex tasks coming it’s a way.
6. Effectively manage risk and resolve conflicts
A good contract is the one with the least amount of risks attached to it. To ensure this, contract managers need to effectively identify and manage over-all risks, from clause level to vendor level. They need to be quick in making decisions to prevent risky business dealings and keep the company immune to any contractual risks it’s exposed to.
Another factor that comes into play while dealing with contracts is conflicts. When obligations and risk management don’t go as per plan, conflicts can arise from both parties. Conflicts if not handled right, could lead to legal battles often costing companies a lot of money and reputational loss. Contract managers should be able to study and understand the nature of conflict and find a middle ground that could suit both parties. They should be enabled to handle the matter professionally and with transparency and visibility in order to avoid further disputes and nurture the relationship.
The role of contracts is evolving, and with it, the role of a contract manager. Above, we have discussed a few of the most essential skills a contract manager needs to develop to keep up with the ever-evolving, ever-demanding and ever-challenging role of contract lifecycle management.