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Are we a disappearing breed, or just a hidden breed?

January 22, 2010

“Why aren’t there more contract management leadership roles available in the market place (even when the economy has improved)? If anything the need should be greater when the economy is as it is now in much of the world. The role is needed in many companies, yet I am thinking most companies believe that law departments typically cover this responsibility. I believe most law departments do not address this need. What are your thoughts?”

This was a recent question I received from a (clearly frustrated) senior manager from the contract management world. So here are my thoughts – and I would welcome the opinions and experiences of others.

“I agree with your observation (about the lack of openings). I suspect you are to some extent right about the fall-back to law departments. Certainly they are not in themselves adequate to deal with contracting, although we see a growth in more enlightened GCs who take an interest – and responsibility – for overseeing the development of market competitive terms and ensuring that there is a program to develop ‘commercial competence’ across the organization.

 But in many places, that enlightenment has yet to strike; and in others, there are still significant contracts groups. So who leads them? Often, we find it is by appointments from within. I guess one of the key issues for such groups to be effective is the need for people who really understand business process and organization. It is hard to step in to the contracts organization in the top spot without a solid understanding of the specific business and firm relationships with key stakeholders. When there are exceptions to this, it is usually because of the need for dramatic change and reengineering.

 However, as an ancillary observation, I must refer back to a blog I wrote a few weeks ago, highlighting the challenge for our community in producing leaders. Leaders are people with vision and belief, people who want to execute change and who can inspire others to support them. Part of the problem for contract management is that too many senior practitioners are focused on the status-quo, they concentrate on individual deals, not the broader areas of contracting strategy and value. So unfortunately, when the chips are down and cuts are to be made, it doesn’t seem like contract management groups would be a particular loss.

 And without a contract management group, there is no need for  a leadership role.”

 In the end, contracting competence is critical to any company. But there are various ways that the competence can be established – and unless there is evidence that contract management professionals are truly leaders, it may be executed elsewhere.

One Comment
  1. I find it ironic that we are having this debate when both the US Administration and the UK Government in the last 12 months have expressed frustration at the lack of qualified contract managers. The UK National Audit office published a report in April 2009 (see: http://wp.me/pqsHx-1X) indicating that the £300 million wasted annaully in central government IT services contract management was due to a lack of qualified contract management resources.

    The United States government is aiming to hire over 19,000 contract managers to provide better contract management oversight over the next few years.

    We recently came across a major airline that was investing in contract management resources because of a poor financial audit report on risk management. I think we need more CFO’s and senior business management to become more aware of the importance of contract management and the risks and costs of not managing contracts effectively.

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