Avoiding contract crisis: Putting contract management on the “important” list
By: Judy Tucker, business consultant, Blueridge Software, Inc.
I had the luck to be caught up in the early days of the PC industry. Knowing nothing about computers, I stumbled into a fledging software company and soon found myself climbing what passed for a corporate ladder.
Those were heady times, as the power of computing moved from huge machines kept behind locked doors to small boxes sitting on the desks of ordinary people. The growth rate of our young company was insane. I knew there were things I wasn’t getting to, that there were things that as an organization we weren’t getting to, and that some of those things were important.
In the mid-80s, the culture of this young company was not far from the norm. And the world back then made allowances for the flaky behavior of a high-tech startup and its eager (and sometimes questionably qualified) employees. But even in the go-go 80s, neglecting the important but not urgent could have an impact.
In one example, failing to manage contracts had a clearly negative effect.
A company preparing for its initial public offering (IPO) needed to summarize all its material agreements. This organization’s business model was contract-intensive: its agreements were its lifeblood. The company had been focusing on building the all-important top line, which required first obtaining the contracts. And they did a good job. But once an agreement was in place, it fell into limbo.
Identifying the contracts, let alone locating executed copies of the final versions, was a challenge. There was no central repository, not even a record of who had what files.
Dealing with the agreements, once found, was time-consuming. There was no summary of their terms and conditions, effective dates, renewal and expiration dates, or other key information.
In the company’s defense, there were no contract management systems of the kind that are now readily available. If these folks had been able to purchase and implement contract management software, they might have gotten on track with relative ease.
As it was, their contract management was a mess. A mess that called into question both the organization’s capacity to take full advantage of the deals it had negotiated and its ability to live up to its contractual commitments. And this mess, among other factors, significantly delayed the company’s IPO.
Today, the kind of overload that seemed both exciting and novel twenty years ago has become part of the daily grind. I fear that pushing important but not urgent matters into the indefinite someday is the norm. And like the young company’s poor management of its contracts, these issues have a nasty habit of demanding attention in the most unpleasant (and expensive) way at the worst time.
There is no panacea for this problem. With fewer coworkers to share the burden and the evaporation of administrative staff at all but the highest levels, most of us have all we can do to catch our breath. At the same time, the world is no longer amused by companies that behave like easily distracted children. We’re all expected to be grown-ups, and one thing that grown-ups do is look to the future.
So we need to do something about it.
Getting out of the Crisis Trap
I’d like to suggest a kind of corporate New Year’s resolution, timed to coincide with a new calendar year, fiscal year — even quarter. This would be a simple statement of the organization’s determination to identify and do something about the meaningful issues that are being overlooked in the rush of each day’s events.
This resolution is only the first step of course. Keeping it will require creating a process.
The steps might go something like this:
- Identify the matters that don’t rise to the level that commands the attention of the strategic planners but that pose meaningful potential risks and/or opportunities. (Like the company that was forced to postpone its IPO, you may well find that better management of your contracts is one of these issues.)
- Once you have this list, share it within your organization.
- Assign the items on the list to leaders with the maturity to applaud the concept and understand the implications.
- Have each create a project plan that is a blueprint for implementation, not lip service to be stuck in a drawer.
- Follow-up to be sure each project stays on track.
- Invite people to add to the list of important but not urgent issues on an ongoing basis.
- Report successes and reward foresight.
What if you’re not in a position to drive this broad level of change? This approach can work on a departmental level. Just be sure that support for what you’re doing extends well up in the organization. You might even position the effort as a pilot project and sell higher levels of management on your results.
And those results should generate applause.
Dealing with important matters before they become urgent saves time, money, and stress. Successfully creating a process to accomplish this will pay dividends not just the first year but for years to come.