For many, 2021 has once again been a year like no other. Volatile, uncertain, emotionally and intellectually challenging. In future years, researchers looking back at how we reacted – the impacts on our societies, our values, the way we interact with each other – will observe the opportunists and the philanthropists, those who sought advantage and those who acted generously to others. But will they mark it as a turning point in human attitudes and behaviors?
It is in times like this that questions of ethics come to the fore – and commercial ethics are a critical element in overall well-being and recovery. There are some who have sought to profit, who have delighted in the disruption and their ability to add to it. I suspect historians will observe this in many of the supply shortages that have occurred. They may well comment also on the actions of the media, so often desperate to sensationalize, to spread alarm and despondency. The role of politicians – and geopolitics in particular – is also certain to come under scrutiny.
But what of the business world in general? Has this shared experience caused us to think and act differently? Will future generations look back and see a turning point, a shift from competition to cooperation, a new spirit of collaboration?
Back in April, at the World Commerce and Contracting Academic Symposium, Ugur Sahin (CEO of BioNTech and developer of the Pfizer vaccine) called on the commercial community to formulate a new model – a model for ‘trust based collaboration’. He drew on the experience of vaccine development, achieved in record time, to explain and extol the commercial framework that had been used to such positive effect.
So can we learn from the experiences of vaccine development? Does this provide us with a fresh perspective on the ethical and practical standards for commercial relationships, or was this just an aberration?
The CFO of Pfizer recently observed that the best deals are often those where there is no deal. In making this comment, he perhaps mirrored Ugur Sahin’s reflection that in a time of crisis, there is no room or place for contracts. Creative action demands a focus on discipline and structure, but not on issues of commercial precision and enforceability. Those come later, once there is sufficient certainty about outcomes. Hence, BioNTech and Pfizer established clear procedures for governance, but contracts came much later.
AstraZeneca and Oxford University followed a similar path, though with commercial principles in some ways more clearly defined. From the outset, they established that any vaccine they produced would be on a non-profit basis. With an average price of $4 (against Pfizer’s $20) and much lower distribution and storage costs, AstraZeneca have arguably contributed far more to the world than any other manufacturer. Their commercial ethos has extended to supporting production at scale in many of the world’s poorest countries, entering contracts and providing a full guidance toolkit to support rapid availability of vaccine. (At this time, the AstraZeneca vaccine is world leader in terms of production).
Yet AstraZeneca also gained headlines for a high profile contractual dispute with the European Commission. It may well be argued that the company was commercially naïve and fell foul of geopolitics, combined with agreeing to an inappropriate form of contract. In spite of all its altruistic endeavour, AstraZeneca has emerged (unfairly, in the view of many) with a mixed reputation – unlike others, who have actually made substantial windfall profits and seen a surging share price.
So what conclusions can we draw on the status of commercial morality and ethics? Might we be able to claim that business has become more socially aware, that the pandemic has perhaps enabled greater momentum for the ESG principles and an increased sense of moral obligation? The evidence for such a change is mixed. The political environment has, if anything, deteriorated. We have yet to see whether business practices have fundamentally altered, whether ‘collaboration’, to the extent it is occurring, is being driven by need, or by principle.
Within the commercial community, there are those who are genuinely inspired and inspiring others with the potential for new and better ways. New technologies enable the sort of transparency, visibility and – in some cases – anonymity that can turn good intent into practical reality. There are heart-warming examples where exploitation is being exposed, where lives and livelihoods truly are improving. In my work at the University of Leeds, I am encouraged and excited by the number of law students who are motivated to tackle injustice and create a fairer, more open society. At WorldCC, we observe growing interest and adoption of relational principles within contracting.
Times of turbulence generate change and changes are without question happening – but many are fragile. My hope for 2022 is that the commercial community raises its voice and promotes the ethical standards and supporting systems that alone can move us along the path to making trust-based collaboration a norm, rather than an exception.
This year’s Talent and Wellbeing Survey tells us that the answer for many is yes – and they enjoy their work. They find it challenging and feel that they are making a valuable contribution to their organization’s goals. A growing proportion also take their professional status seriously and recognize the importance of a formal certification.
But there is a ‘but’ ….
Thirteen percent are unhappy with their role and position and sixteen percent (that’s one in six) plan to leave their current role in the next six months. With 65% seeing the job market as either ‘good’ or ‘excellent’, it appears unlikely that they will have too much difficulty finding an alternative.
What is it that drives people to move? The overwhelming reason is a sense of poor opportunities for career growth and training within their current employer. Indeed, 40% say that developing their career depends on moving.
‘The Great Resignation’
There is nothing in the survey results so far to indicate that there is ‘a great resignation’ among the Contracts and Commercial Management community. The data regarding plans to change job is , if anything, showing a slight decline relative to past years. One reason for this may be that executive management is showing much greater interest and appreciation for the importance of the role. ‘Feeling loved’ has a big impact on retention.
One thing that has been impacted by the pandemic is the extent to which most people want – indeed demand – flexible working. A clear majority say they would not work somewhere that did not offer this and it is the number one thing that they value about their current job – surpassing even salary and compensation.
Into the future
The CCM community appears confident that it is developing the skills needed for the future – although many also show concern over their employer’s limited investment in training. And when evaluating the areas of competence that will be most important, many appear to be at odds with expert predictions. One thing that they do recognize – and even welcome – is the ability to work increasingly with technology. Two-thirds are eager for tools and systems – most likely because they see it addressing the thing they most dislike about their job: the volume of administrative tasks.
The WorldCC Talent and Wellbeing Survey remains open for input and is gathering a wide range of data to assist individuals and employers in better understanding the current state of Contract & Commercial Management. The report (to be issued in January 2022) will provide insight to personal development and wider issues of talent growth, retention and recruitment.
“We just can’t find the right people.”
In conversation after conversation, executives tell me they are struggling to fill posts and retain staff in their commercial teams. One consequence is that salaries are increasing – and benefit packages being re-evaluated. In the United States, I am hearing about 30% being a ‘normal’ level of salary escalation. In the UK, the number seems to be more conservative – perhaps 20%.
Complete the 2021 WorldCC salary survey and test your position here.
But before we all get carried away, it is important to check the details. These increases are far from universal. They apply to people with some critical skills, or perhaps those who exhibit the ability to re-skill, fast. While the basic attributes of good procurement staff, lawyers and contract / commercial managers are in relatively high demand, it is those who bring demonstrable value to the demands of today’s fast-changing markets who command a premium.
So who are those ‘special people’? Certainly those with the know-how to support a shift to digitization are among the elite. Not surprisingly, very few have that experience on their resume. Similarly, people who demonstrate a history of delivering value (versus negotiated savings) are prominent – especially in an environment where Procurement teams are fighting not for cost reductions, but to limit cost increases. Strong, proven supply chain skills are at a premium, especially if they demonstrate an understanding of how to reduce supply risk and develop supplier loyalty.
On the sell-side, value delivery is also high on the agenda, especially when combined with experience of more complex or innovative delivery models – for example, outcome and performance-based agreements. Being able to demonstrate strong client relationship skills is also increasingly a plus.
Ultimately, the big money is going to those who can demonstrate their contribution to rapid change and an ability to cope with market volatility. Commercial capability is under stress in many organizations. They are moving fast to streamline data flows, introduce new contract models, improve cross-functional collaboration and develop more adaptive market relationships – and they need people who can help them get there.
The WorldCC 2021 salary survey is providing insight to these trends and showing us which industries and geographic regions are leading the way. If you want to understand more – or test where you stand in the salary ranks – complete the survey at https://www.worldcc.com/Research-Analytics/Latest-Research/Salary-Survey. Please note that at this time, the survey is focused on a limited set of countries (Australia, Canada, New Zealand, United Kingdom, United States) – others will follow shortly.
In the push for increased speed, adaptability and value, the contracting process is often a stand-out in resisting change. Indeed, the 2021 Benchmark Study from World Commerce and Contracting reveals that average cycle times for contract closure have actually increased over the last two years.
The role of lawyers
Many factors contribute to this apparent inertia. Some studies point the finger squarely at in-house legal teams and their resistance to change. Recent studies by EY are reinforced by thought-leaders such as Mark Cohen, Chair of the Digital Legal Exchange, who exhorts lawyers to truly become part of the business by embracing participation in multi-functional teams. Others highlight that the legal profession’s view of ‘innovation’ would, for others, represent minor incremental improvement.
Unearthing the truth
In a current study, World Commerce and Contracting digs into the question of whether barriers between legal teams and ‘the business’ are breaking down. Traditionally, it is true that many in-house groups tended to behave more like a captive law firm than ‘just another business function’ and there’s little question that where this arm’s-length behavior persists, it impacts the efficiency and effectiveness of the contracting process. But with the advent of new technologies and the growth of Legal Operations, has that changed?
A spotlight on both legal AND business practice
The survey will reveal the views and experiences of both lawyers and non-lawyers in how effectively they work together. Importantly, the results will highlight areas where there may be opportunities for improvement – on both sides. For all the criticisms of legal, there is also plenty of evidence to suggest that the business often engages the legal team too late and provides incomplete or inaccurate information. ‘Team play’ has to work in both directions.
So wherever you sit in the business, share your experiences by participating here. In return, you’ll receive an advance copy of the report and a personal invitation to a webinar where we will discuss the results.
September 1999. The summer intern had left. Alone, staring at a computer screen with a rudimentary website to keep me company. A handful of supporters, no income and just a belief that this was a journey that mattered, that the world would benefit from commercial and contract management becoming recognized disciplines.
It was thus that the journey began. Twenty two years ago, IACCM had its official launch in a small shared office in Armonk, New York. I bought a cake to celebrate. No one came – so I ate it all. I’d had no ambition to develop or run a not-for-profit membership association. It was not part of my life plan. But I knew from 25 years of business experience just how much value business and society could gain from the professionalization of commercial and contract management. And the more push-back I received, the more determined I became.
Now, 22 years on, it is so gratifying that this week I have received hundreds of messages on LinkedIn from friends, colleagues, members and even a few complete strangers acknowledging the journey. I reflect on how I have felt ….. at times exhausted, at moments downhearted, but each day uplifted by the small advances, achievements and those I’ve met along the way. It’s the knowledge of helping someone, of making new discoveries, of looking back and realizing just how far we have travelled, how many places we have been and lives we have touched ……
It’s a journey that never ends. There are always new discoveries to be made, new recruits to train, new methods to promote. But it is no longer a lonely journey, no longer just a few voices seeking to find their audience. With the top consultancies all promoting the discipline, with a fast growing body of academic support, with increasing media attention, the original mission has been fulfilled. Commercial and Contract Management are disciplines and those who adopt them are reaping the rewards.
This month, I step back from being a full-time employee of IACCM (now World Commerce & Contracting). I remain President and continue to contribute to research, training and member engagement, but now in a consulting capacity. My belief and enthusiasm, my wish to serve the CCM community, remain undimmed, but the continuing journey is benefitting from fresher legs, from embarking in new directions and climbing higher peaks.
I have many wonderful memories and there are more to come. Thank you to everyone who has joined me on this journey. You have given it purpose and made it not simply worthwhile, but truly a pleasure.
For many, remuneration has been a bit of a see-saw ride in the last 18 months. From pay cuts to sign-on bonuses, from furlough and job losses to skilled labor shortages ….. market volatility and uncertainty have been as much present in the field of salaries and benefits as they have in broader business turbulence.
So what does this mean to commercial professionals – those in the fields of legal, supply management, procurement, sales contracting and contract management? Have those who experienced cuts seen their salaries restored? Are employers treating ‘work from home’ as a benefit? Is there evidence that labor shortages are reflecting in wage increases?
World Commerce and Contracting is renowned for keeping its members up-to-date with the latest trends and developments – and salary data is no exception. We are seeing growing divergence across industries and, to some extent, between job roles. In some cases, we also see greater opportunity for employees to tailor their package with a more flexible mix of salary and benefits, especially in areas such as home versus office working.
If you want insight to how your pay and conditions compare to others, or to where the best remunerated opportunities lie, participate in the 2021 Salary & Benefits Survey (please note, this year the data is being gathered at a country level and at this time surveys are open for Australia, Canada, New Zealand, the US and the UK).
In a World Commerce & Contracting poll, more than 80% of business executives said that Supplier Relationship Management is an ‘important’ or ‘essential’ discipline. That’s perhaps not surprising, given the continuing headlines about supply chain disruption and shortages. Gaining better insight and control over supply, becoming a priority customer, even better understanding the next threat, are understandable priorities.
But when executives talk about ‘a discipline’, does that immediately translate to a specific role or business function? Is there a readiness – or perceived longer-term need – to invest in building capability?
A readiness to invest
The answer appears to be yes, since a little over 60% of those executives indicate that they either have or are about to expand capability. However, the route to improvement varies. Many associates improved discipline with better integrated technology and more robust data exchange. For them, digitization is key. Yet even those who see this as the way forward recognize the critical role that people will play – whether that’s analysts to make sense of the data, or relationship managers to build increased collaboration with the supply base, or process designers to ensure organizational and systems coherence.
How can we move SRM forward?
With the sense of urgency that these findings imply, why is SRM not more widely recognized and adopted? Several factors appear to be at play:
– for many, the role and purpose of SRM remains poorly defined. Piecemeal SRM or “figuring it out along the way”, is not SRM and certainly does not provide ‘a discipline’.
– as a cross-organizational discipline, attempts to develop SRM capability often fall foul of internal politics; teams lack the skills to define ownership and manage the collaboration.
– very few people have received meaningful training to lead or perform SRM activities;
– in the absence of clarity or training, many see moving into an SRM role as risky. It may look interesting, but where will it lead?
At World Commerce and Contracting, we work with a growing number of groups to make sense of this confusion. We were well positioned to act, having developed a body of knowledge supported by skills assessment and certification standards almost 10 years ago – the first such program in the world, backed by solid research.
The path ahead
Today, we see the SRM discipline evolving to ensure delivery of value and control through the integration of contracts, relationships and governance. The combination of these three elements provides a coherent and consistent mechanism to work with key suppliers for mutual gain. However, while better systems are an important contributor, it is a consistent body of knowledge, drawing on proven methods and techniques, that is proving critical to success. This is true whether or not capability is developed through dedicated personnel, or as an adjunct to existing responsibilities.
Is there an ROI? The answer is clearly yes. Well-managed SRM has been shown to deliver significant cost benefits through improved market control and grasping opportunities for improvement. Today, as the poll of executives revealed, the benefits go further. They are increasingly focused on building strong, open and collaborative relationships, mitigating risks through improved problem-solving and identifying potential for innovation.
In response to the market’s urgent need for low-cost, rapid and highly interactive learning, World Commerce & Contracting have supplemented their self-paced SRM training and certification with a new facilitated program – see details at
Professionals in contract and commercial management care about the ESG principles, with 80% indicating they care ‘a lot’ or ‘a great deal’ about the environment. Concern about social issues is not far behind at 75% and governance comes in with 73%.
That is a snapshot from a short survey conducted by World Commerce & Contracting earlier this month. And while most believe that their organization is equally sincere in its efforts, more than a third are not convinced, with as many as 37% questioning the commitment to environmental issues, with social and governance at 33% and 32% respectively.
Those who responded represent approximately 300 different organizations. It is notable (though perhaps unsurprising) that buy-side engagement is considerably greater than sell-side, with many sell-side participants unsure about how they can contribute or waiting to be asked. Overall, some 53% say they are already engaged in some form of workplace initiative related to ESG and 43% indicating involvement outside work.
The level of personal engagement must lead to some questions over how representative these responses really are. Inevitably, the survey probably had greater appeal to those who care about ESG. However, a significant number indicated their readiness to engage in WorldCC’s ESG working group, contributing to the development of standards and training for CCM practitioners worldwide.
According to a recent article from McKinsey & Company, 93% of business leaders of companies with more than $1 billion in revenue reported “great interest” in introducing a new role to improve negotiating results: that of chief negotiation officer.
In a webinar conducted today, members of World Commerce & Contracting do not appear to agree. “A trouble-maker”, observed one. “They’d need to be super-human”, commented another.
Where executives and today’s commercial negotiators agree is that negotiation is a critical competence and it is often frustratingly difficult, especially when it involves large organizations. Authorities are frequently unclear, stakeholders are narrow-minded or rigid in their thinking, gaining attention to develop plans or make decisions can be tortuous. In fact, negotiation is symptomatic of organizational complexity – and it is hard to see how a Chief Negotiation Officer would fix the multiple challenges that stand in the way of speed and value.
That’s not to say we should simply shrug our shoulders and accept the status-quo. It is clear that improvements can and should be made. Digitization of business processes and consequent integration of data flows will surely help, but that is not enough. Simplification of contracts (to make them easier to understand and discuss) is certainly one step. Moving away from rigid agreement templates to more dynamic clause libraries, with pre-determined fall-backs, will facilitate many simpler negotiations, freeing resources to focus on the more important transactions and relationships. Developing and implementing standard planning methods and techniques brings immediate benefits and supports capture of results, allowing future analysis of what works and what doesn’t.
It can certainly be argued that someone needs to have accountability for developing an organization’s negotiating competence, though this could equally (and perhaps more amicably) be achieved through an executive council of key stakeholders. There is also some attraction in creating a Center of Excellence, though again its role and remit must be carefully defined.
Negotiation is important – and probably too important to be thrust onto the shoulders of one person. What do you think?
At WorldCC’s recent Symposium, BioNtech CEO Ugur Sahin shared an uncomfortable truth. When the need is urgent, there’s no time for contracts. The alliance between BioNtech, Pfizer and Fosun Pharma was founded on ‘trust-based collaboration’ – a strong focus on shared governance and open, honest communication. When the world needs a vaccine, there’s no time for the traditional debates over contract terms.
Fast forward to today and a conversation with ESG guru, John Elkington. “The experts tell us that we have ten years to save the world”, said John, before musing over whether time would expire before the necessary contracts are in place.
Our environment, our social cohesion, our corporate governance all depend on shared commitments and resilient relationships. Contracts should be at the heart of building the networks and the ecosystems that we need to tackle the massive challenges that lie ahead. Yet, as John pointed out, the evolution and development of contract law and contracting practices move at a snail’s pace. So will an inability to design effective commercial mechanisms lead to the downfall of our world?
Commerce re-imagined
Ugur, John and a myriad of others are calling on the commercial community to respond. We must devise new ways to innovate and to accelerate the way that business relationships are formed and managed. As we discovered during the pandemic, it is essential to be flexible, adaptive and creative. Now, that spirit must not only live on, but it must move into overdrive.
That is what makes this year’s WorldCC Summit of such major importance and excitement. The nature and the quality of the speakers, the panels and the topics under debate are unparalleled. The diversity of those attending is precisely what our world needs right now – it is trust-based collaboration in action, as we rise to the shared challenge of making our world a better place.
If you are reading this, please join us, be part of this energized community as we discuss and develop the commercial frameworks, the contracting models and the collaborative relationships that are so critical to our future.
Commitment Matters 