The business benefits of investing in contract management skills
Some organisations only realise the importance of investing in contract management when it’s too late. They may have lost income or assets, wound up in court or wasted years fulfilling a contract that was entirely overlooked. Sometimes, they’ve felt the pain of experiencing all three scenarios at once!
Many organisations handball contracts around and assign responsibility in an ad hoc manner, or focus their attention only on high-risk contracts without realising that issues arising from lower risk and indirect contracts can be just as financially draining and disruptive.
Investing in staff training and time allocation for proactive contract management is the best way to ensure contracts don’t cost you money and sour relationships through neglect. When you consider that not managing contracts can cost around 9 per cent of your annual revenue, it starts to make sense.
Sure, you may be able to afford to make mistakes during times of plenty, but those same mistakes can create hardship when things slow down. If you manage your contracts proactively, you can weather any storm.
Organisations that have well-resourced, trained staff managing their contracts are not necessarily large companies – they are simply the ones that see the value. So how can you empower proactive contract management in your business?
1. Find champions at the executive level
When you don’t pay attention to a contract, you have no leverage to fix it should an issue arise. Without proactive contract management, staff can waste hours trying to understand who has been involved in a contract and how a problem came about – and they often have to start from scratch. Executive staff are typically more aware of the costs incurred by contract leakage and mismanagement and can raise the need for investing in training and support at a senior level.
2. Block in time for training and staff engagement
Once you have a champion in your organisation, time needs to be allocated for training so that when someone is assigned a task, they have the tools and knowledge to complete it correctly and on time. Make this scheduled time non-negotiable. This way, all departments will understand the importance of investing in contract management training and the positive impact these skills will have on the organisation.
3. Recognise that staff will need help – and offer it
Don’t underestimate the value of investing in a physical contract management course to teach staff the basics: how a contract comes together, the key people involved, variations and payments, and what can go wrong. Enabling staff to acquire new skills is the most important way to build a culture of proactive contract management in the workplace – saving you time and money in the long run and ensuring relationships with suppliers run smoothly.
4. Involve more staff in managing your contracts
Send your reminders, deliverables and tasks out to more than one team member. This ensures a greater chance for learning and allows staff to step in and mentor their colleagues without taking over the management of a contract. If more people are aware of what needs to happen with a contract, staff should be more likely to confer and it’s less likely that tasks will be overlooked.
Tania Scott, Account Manager – Queensland, Open Windows