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Setting Objectives For Contracts / Commercial Teams

November 15, 2010

The IACCM Message Board generates many interesting questions and replies. One that recently caught my eye – being a perennial question – related to the goals and objectives for contracts / commercial staff.

The original query asked: “I am looking to reset the objectives of my senior commercial team members. They are the main commercial points of contact for £30m-£60m consultancy businesses and have small teams (3-8 employees) reporting to them. I would be interested to know what objectives have been put in place by IACCM members for similar type roles and responsibilites.” A subsequent clarification confirmed the scope of role of the group – pricing, negotiation, post-award oversight / change, partnering agreements / marketing agreements and working with the supply management team to undertake required sub-contracting.

It may seem surprising, but I often find that groups design their goals and objectives in isolation from the declared corporate goals or strategies. We are so focused on our internal view of our role and value that we fail to relate it to the outside world – in particular, the perspectives of what matters to our executives. As a result, we struggle to directly relate our work and output to the things they care about.

As an example, I went to the website of the company from which this question emerged and made the following comments:

“The key point is to ensure alignment with declared company goals and strategies. The commercial team should be able to point at ways it is directly contributing to executive priorities.

For example, most commercial groups tend to focus on ways they will contribute to profitability and risk management. But these, while critical, can be rather nebulous. We need to translate them into specific aspects of contribution. In reading your company’s business goals and strategies (from your website), a number of characteristics jump out at me as things you might include:

– key words are ‘trusted’, ‘global’, ‘integrity’, ‘teamwork” and ‘care’: what aspects of commercial behavior and performance might demonstrate these qualities? I would see teamwork and integrity as items of specific responsibility for commercial; I would suggest that demonstrated understanding of global markets and trading terms might be another for major contribution.

– strategic attributes: the list includes excellence, safety, responsiveness, listening, openness and continuous improvement. Most of these characteristics are fundamental to the way that contracts are negotiated and the governance procedures within them.

So you might want to brainstorm the types of specific objective that would demonstrate how commercial is delivering against these characteristics. That could include things like reduced cycle times; increased / sustained satisfaction of user groups with the commercial process; reduction in claims / disputes; evidence of continuous improvement in updated commerial policies, practices, procedures and terms.

I hope these ideas are helpful. Often a brainstorm around the desired characteristics and ‘what can we do to contribute to them’ may yield some good collective ideas – with resulting buy-in. I’ll be happy to discuss with you, if that would assist.”

I know that many others have struggled with this problem of objectives and I hope a few may contribute their ideas to this important topic.

(IACCM recently published an updated series of benchmarking results which include the most commonly used performance measures.)

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