Your contract management strategy should define the goals of your organization’s approach to contract management as well as the solution for achieving them. But in order to bring your strategy to fruition, you also need an execution plan that details all of the steps and actions that will be required to achieve your goals. More simply, your strategy is what you want to do and your execution plan is how you are going to do it.
While these two elements should go hand in hand, it is all too common for there to be poor alignment between strategy and execution. In fact, if your organization is struggling with bringing high-level objectives to reality, you’re not alone: according to a survey cited by the Harvard Business Review, executional excellence is the number one challenge faced by corporate leaders in the U.S., Asia and Europe, with as many as two thirds to three quarters of organizations reporting that they struggle to implement their strategies effectively.
Step 1: Align your planning
Having a plan to align your contract management strategy with your execution is an important way to reduce these struggles and improve your results. To ensure maximum alignment, this planning is best done early on. As you develop your strategy, some good execution-related questions to ask are Who? When? and How? Who is responsible for each action in your contract management plan? When does the action need to be performed? How will they fulfill each required action? The answers to these questions help you to spot and address challenges that can interfere with the successful execution of your contract management strategy before they ever occur. They will also form the backbone of your execution plan.
For example, let’s say that part of your strategy is to standardize certain types of agreements. As you ask these questions, you might determine that aligning your execution to your strategy means creating contract templates, training the individuals who will be required to implement these contracts on when and how to use them, and storing them in a location that will be accessible to those who will be using them. While such tactics might seem simple, if you haven’t taken the time up front to plan them out, it might be harder than you’d expect to achieve standardization.
Step 2: Align your resources
The successful execution of any plan relies on those involved having their right tools to do their job. Contracts are obviously the most important tool in this instance, but your contract management system is a vital tool that shouldn’t be overlooked.
An ineffective contract management system can cause alignment difficulties between your strategy and your execution in numerous ways, especially if your contracts are out of sight and out of mind or difficult to access. For instance, you may want to delegate ownership of certain tasks within the contract management lifecycle to the most relevant parties – for example, the department that relies on the services of a specific vendor. But if all of your organization’s agreements are stored in a single location that offers limited access to those outside of the contract management team, passing along these tasks could be easier said than done – it may even result in more work for the contract management team due to a high volume of access requests from other departments.
Contract management software can be an effective tool for improving alignment between your strategy and execution plan. If you’re trying to delegate tasks, for example, certain features such as user permissions reduce the potential for bottlenecks by allowing you to grant access to those who need it without jeopardizing the security of your data.
Step 3: Align your people
There are a host of ways people within your organization can derail your contract management strategy. They may not be on board with your vision (or even clear on what your vision is), they may not understand their role in bringing it to fruition, or they may not know what they need to do to comply with defined processes and standards – to name just three potentials for poor alignment.
These alignment fails are probably why researchers in one study found that found that while 84% of managers said they can rely on their boss and direct reports all or most of the time, only 9% trust colleagues in other functions or units all of the time and just half rely on cross-functional colleagues most of the time. As effective contract management is a collaboration between stakeholders across an organization – with execution relying on both the contract management team and the parties who use these contracts – these statistics are indeed startling. After all, if you can’t rely on stakeholders to fulfill their role within your organization’s defined contract management processes, the strategy will likely fail.
An effective communication plan can go a long way towards achieving alignment in this respect. From the earliest stages of rollout of your contract management strategy through to on-boarding and each step of execution, you can avoid delays, poor compliance and other issues by ensuring that each person involved understands their role and how to perform their required tasks.