How to Build a High-Performing Contract Management Team for Your Business

Whether you're about to commence your journey to Contract Lifecycle Management (CLM) or are well on the way with a contract tracking system, you need to have confidence that the people selected to manage your contracts have, or have the ability to obtain, the right combination of capabilities and levels of proficiency to make that journey a success.

We’ve talked in a previous article about the three crucial pillars to business success being People, Process and Technology. 

Here, we’ll focus on the people pillar, and specifically on building a team suitable for running a contract management function.

Evaluating the capabilities of your people before you start allows you to establish how prepared you really are to implement CLM with any chance of success, and gives you a roadmap of how to get to where you need to be.

Even if you’re some way down the track with building or running your CLM function, it’s still well worth the effort to conduct an assessment.

Your progress along the roadmap can easily stall due to the daily pressure to get through the workload, because qualified people have left and been replaced by less experienced people, or for a variety of other reasons.

Unless quickly addressed, you run the risk of your department going backwards.

In our articles about what makes a great Contracts Manager, we revealed the range of capabilities in terms of personal characteristics, knowledge and skills that is required to achieve effective CLM. These are summarised below to refresh your memory.

The lists are not exhaustive but a good foundation for a meaningful assessment of CLM capabilities.

Key personal characteristics

1. Adaptable: a positive mindset plus an ability to discard what has been done, regardless of the effort involved, and quickly change direction
2. Attention to detail: to spot errors, omissions, inconsistencies, ambiguous language and undefined terms in all forms of documents
3. Collaborative: a willingness to help and engage with the many people involved with a contract
4. Command of the language the contracts are written in: to derive intent, understand nuance, express concepts clearly
5. Good listener: to actually hear what has been said and not said, and respond to people in a way which shows they've been heard
6. Organised: to deal with the known workload and allow for the unknown and unexpected
7. Problem solver: to anticipate issues and institute preventative measures and/or deal with unanticipated issues, instituting remedial and preventative measures
8. Self-motivated: a natural inclination to just get on with the job, autonomously or as directed
9. Thorough: to ensure that nothing slips through the cracks, that all applicable avenues have been explored and points of view considered

Key functional skills

1. Contract development: derive contract terms needed to cover a common situation with unique elements, requirements, risks, performance or compliance requirements
2. Contract summarisation: locate the features of a contract that are important to stakeholders, translate them from legalese to plain language, and produce an easy-to-read summary of those features in a standardised format
3. Effective communication: prepare and deliver clear, concise and coherent verbal and written communications to organisational stakeholders, senior management, suppliers and others
4. Fluency in legalese: the ability to read, understand, translate and occasionally write in the language of contracts
5. Negotiation: establish your position on a matter and establish concessionary limits not to be exceeded, understand the other side's point of view and determine its implications, recognise and counter the tactics being used by the other side, reach a consensus decision
6. Project management: plan, arrange and manage CLM workload in a disciplined and organised way using project management principles via a contract management plan
7. Relationship management: understand people's motivations and agendas, manage and meet their expectations, instil a sense of unity and common purpose, and deliver on promises made
8. Risk management: understand how your organisation approaches risk in terms of policies, practices and any internal guidelines, identify and estimate the likelihood and impact of contract-related risk, establish mitigation methods, and track the ongoing relevance and effectiveness of those mitigations
9. Stakeholder engagement: work with, influence and rely on people from many different business functions with different agendas, establish common goals, reach a consensus about what needs to be done and why, foster a sense of team membership and inclusivity, and reduce wasted time.

Critical knowledge

1. Contract lifecycle management: a general understanding of CLM, its stages and common activities, the individual steps in each activity and how a contract management tool can help
2. Contract types and terminology: familiarity with the kinds of terminology and clauses commonly encountered in the organisation's usual contract types
3. Performance measurement: understanding of methods available for measuring contract performance in several areas and how to interpret the numbers
4. The regulatory environment: familiarity with the main regulatory topics applicable to your business under the governing law agreed to in at least each key contract
5. Your organisation’s business: what it does and where, the current business environment, strategic suppliers / customers and the most critical contracts
6. Your organisation's policies and practices: covering staff behaviour, general procurement, CLM decision rights and delegated authority levels.

What's required for an assessment?

In How to prepare your business for CLM Part 1, we described the precursor activities for successful CLM in general. To be able to conduct a capabilities assessment, you need to have completed the following precursor activities:

• Determined the CLM functions that will be handled by each CLM team member
• Identified the people who will be in the CLM team
• Established the combination of personal capabilities and minimum proficiency levels that are desired for each CLM role

These activities will likely need to be repeated as CLM evolves over time.

What does the assessment involve?

The assessment should be conducted by the CLM function leadership or by those tasked with building the function on behalf of the business, involving:

• Establishing a view on each CLM team member's relevant strengths and weaknesses, using a variety of techniques such as observations, interviews and / or questionnaires. Input may be obtained from each CLM team member, their managers, peers or subordinates as needed
• Grading the actual proficiency levels exhibited by each CLM team member
• Determining the level of fit between desired and actual proficiency levels

Grading approach

Each specific capability assessed should receive one of the following grades:

• None
• Low
• Medium
• High

Fit between desired and actual proficiency levels will be automatically set to one of these grades.

Assessment outcomes

Any weaknesses in these capabilities may be addressed through research, training and mentoring. While this approach might work with latent personal characteristics that are not fully developed due to lack of opportunity, that may not be the case for other characteristics that just don't figure strongly in a person's makeup.

Ideally, the combined personal characteristics and skills of all the CM team members will provide a medium to high team rating across all areas.

It's reasonable to expect this to happen over time rather than early in the CLM journey.

Useful template

We've created a bespoke Excel CLM Capabilities Assessment Template to allow you to record the minimum level of proficiency or expertise required for each specific capability, on a per person basis for up to six people, plus a grading of their level of proficiency or expertise. You can download this file using the following link:

The assessment template automatically calculates the level of fit of the grading against the minimum requirement for each capability, set of capabilities and overall, for each person.

Any fit that is less than optimal identifies where training or guidance is needed for the individual concerned. Too many sub-optimal gradings for any individual may indicate a lack of readiness for the intended role.

The assessment template also consolidates all the individual results into a team view.

Summary

Regular assessment of your CLM team's capabilities will let you track progress to your ultimate CLM destination, identify any potential impediments to that progress, and reveal opportunities to improve the capabilities of the CLM team members and the effectiveness of the CLM team.

For advice on supporting your Contract Management Team with the best technology, contact Gatekeeper today.