Christmas comes early for Contract Managers

Last week, Mary Sebelius (Secretary of State for Health & Human Services in the United States) highlighted an urgent need to improve contract management within her department. Indeed, she specifically initiated a program to introduce ‘best practices’.

This is just one of numerous examples this year where top executives or auditors have called out the need for greater competence in contracting. This will come as no surprise to many leaders in contract and commercial management, who have long realised that changing market conditons and new forms of offering demand strengthened capabilities. Whether on buy-side or sell-side, contracts today are more critical instruments in both establishing and managing the right trading relationships and outcomes.

But it would be premature to celebrate, because most existing contract management groups face two distinct challenges.

First, executives are looking to build competency – not to recruit an army of experts. Sure, there ae opportunities for those with true expertise and there is likely to be some short=term expansion of headcount. But the real point with competency is the need to spread understanding of contract management discipline and tools mroe widely across the organization. Thereofre the role for experts will increasingly be to operate as a knowledge and enabling center. Few have yet adjusted to this mission.

Second, the call is for best practices – and how many contract management groups can claim to know what those are? Since very few undertake research or benchmarking, they have no real idea how they compare or what size gap they need to fill. This means they are rarely proactive in approaching senior management with ideas or substantive investment plans. Hence the executives have limited confidence in their exisitng teams. Indeed, as they look to the future, they may see the current staff as part of the problem, not as the answer.

So as Christmas approaches, you should not expect a sudden flurry of gifts. Indeed, if you want to make it onto the list, perhaps now is the time to reach out to IACCM and gather insights on how to establish best practicve competence, maybe even to undertake a capability assessment so that you are able to advise management on the steps that are needed.

That way, you may at least be in the position ot ensure a happy and prosperous New Year!