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How Much Is A Contract Manager Worth?

July 16, 2013

When I was a very young child, I remember my father used to drive me crazy by asking me “How long is a piece of string?” I was sure that I would eventually guess the right answer.

I was reminded of this by a note from an IACCM member who asked me ‘How much do contract managers in Europe get paid?’ While the answers are not as variable or indeterminate as the question about string, they are certainly very broad.

The question was prompted because this manager is having to participate in a company-wide review of salaries and benefits.  He is headquartered in the United States, though his staff are worldwide – and his company uses Towers Watson for data gathering. That proves a real problem, because Towers Watson have still not acknowledged the existence of contract and commercial management. The only similar category they offer is that of Contract Administrator, which they designate as a form of legal support. The role and its contribution are defined accordingly. Not surprisingly, this designation yields the type of salary and benefit levels that would attract very few contract or commercial managers.

Earlier this week, I wrote about the relative dominance of the legal profession in the US and the dangers this has for good contracting. This incident reflects the same problem – a perception that anything with the word ‘contract’ must somehow be subservient to lawyers. A review of the many job roles covered by Towers Watson places contracts personnel in the category ‘Legal Support’ and defines them in the following way: “Provides support for a variety of law-related activities that do not require a law degree, including legal or factual research, contract administration, document preparation and analysis, citation checking, and trial preparation”. The role is sandwiched between ‘Paralegal’ and ‘Legal Secretary’.

Managers of contract management groups face an increasing problem in determining appropriate compensation for their teams. The dominance of firms such as Towers Watson means that many HR departments will not accept data from any other source, yet when the data they receive is inaccurate and fails to reflect the job being benchmarked, it results in massive internal battles. Because companies only accept this ‘impartial’ data, it becomes increasingly difficult for organizations like IACCM to collect data of its own – because there is little perceived benefit for companies to participate in surveys.

It seems to me that we need a concerted push by the contracts and commercial community to demand better recognition and understanding of the job role, its contribution and the associated salary levels. Through this blog, we have already done much to define typical job roles and to motivate practitioners to think hard about their potential contribution. This work continues – indeed, we have another webinar on the topic running this week. But if we truly wish to challenge the Towers Watson data, it seems to me that functional heads need to contribute current salary information to a worldwide survey that would once and for all establish the point that Contract and Commercial Managers exist and that they are not fairly or accurately represented by a role of ‘Contract Administration’.

Only then will we be able to answer the question ‘How much is a Contract Manager worth?’

  1. Pas Carnevale permalink

    Good article Tim. Some observations:

    1. The role and responsibilities of Contract Managers (CM) can vary greatly which suggests there should be a reasonably wide salary range. For example in some companies the CM may report to the Legal Counsel or other Senior Exec and may have constrained autonomy in negotiating outcomes. Also the responsibility for signing contract related correspondence with the customer and finalising and executing Contract Variations may be also limited. Clearly where the CM has these responsibilities their remuneration deserves to be higher.

    2. Lawyers (especially outside lawyers) are adept at semantics, opposing, and tend to play the “power” card. A good CM looks to explore the reasons behind the other party’s position as a means of understanding that party’s contraints and developing alternate solutions consistent with that party’s constraints. Having a lawyer responsible for contract management is likely to result in more iterations of the contract documents, delays and probably a sub optimal outcome.

  2. Pas Carnevale permalink

    One last thing, perhaps there would be merit in the IACCM seeking to engage with Industry Associations, and individual corporations to spruik the benefits of employing a CM rather than a lawyer to handle the contracts management funtions (which extend beyond the lawyers main skill set of interepreting and drafting legal terms) so that the job role is much better understood, together with the benefits (including cost reductions and happier customers) to be derived, hopefully leading to an increased demand for CMs. Of course the side benefit is increased demand is higher prices (salaries).

    • Pas
      Both of your comments are correct with regard to value.

      At IACCM, we work tirelessly to promote the contribution of contract and commercial expertise to business results. As I hope you know, we are the first to translate this to hard numbers and facts. We provide the community with wide ranging support that includes the research and the training needed to support increased status (and salaries). Whenever possible, we engage with executive audiences to promote the value of contract and commercial management.

      What we cannot do is force the practitioner community to make use of this evidence and tools. Relatively few are willing to undertake the personal endeavor to take this data to top management and earn their increased status. Perhaps they lack confidence; perhaps they are comfortable in what they are doing. But in the end, this lack of action speaks for itself – and confirms that many practitioners will remain consigned to relatively low-level operational tasks.

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