While politicians argue over the need for new regulations and controls on bonuses and pay, top global corporations continue to steer their own path to enhance governance. They understand the need to balance risk and opportunity, ensuring the trust of key stakeholders. Making and managing responsible commitments is fundamental to that issue of trust.

In the first-ever study of its kind, almost 10,000 contracts, procurement and legal professionals worldwide were asked to nominate the companies they most admire for the quality of their contract management performance. They identified more than 400 organizations. Today, IACCM, The International Association for Contract & Commercial Management, a group representing more than 2,000 major international organizations, has announced the results of a study highlighting the top 25 most admired contract management performers in the world. Occupying three of the top 4 positions are groups from the outsourcing industry. This might be expected, given the long-term nature of their contracts and the criticality of contract management to profitability, customer value and relationship retention. 

“It is not surprising that services-based companies top the list of IACCM’s findings,” said Jason Busch, Editor of the blog www.spendmatters.com. “But other companies on the list such as Boeing suggest the importance of contract management to overall business success in the manufacturing world as well. As global business relationships become more complex and varied across industries, contract management becomes the tool by which top performing organizations define success and reduce risk with key partners. More than a legal tool, contract management is a foundation for overall relationship management.”

Today's contract management techniques stretch far beyond the largely administrative tasks of the past. Leaders in this area understand its critical role in both relationship and corporate governance. The contracting process provides a framework for regulatory compliance, reputational risk management and effective change control, as well as offering a source for added value and innovation. Top companies realize that added value goes much further than simple price cuts or cost reduction – they use superior contract management skills to drive measures such as improving the safety and reliability performance of contractors or ensuring continuous upgrading of speed and quality.

 

 "As governments worldwide debate regulatory responses to the banking and credit crisis, they should consider the extent to which contracting policies and practices represent a key line of defense for corporate behavior and ethics," said Tim Cummins, IACCM’s CEO. "They would do well to study the companies and business sectors that have adopted robust self-regulation through high quality management of their trading commitments."  

 

Therefore this first study of excellence in contract management is both timely and significant. The voting is now complete, and the next step is to conduct in-depth interviews with many of the winners to understand the approaches they have taken to develop 'good practice' in the way they handle their key trading partners. IACCM will issue a more detailed report on the steps to achieve contract management excellence later this year.

 

THE GLOBAL 25

 

 

 

Footnote: IACCM completed the research for this study in June / July 2008. Researchers asked participants to nominate companies with which they had dealings as a professional and which exhibited excellence in their post-award contract management performance. In many cases, those experiences were with specific groups or divisions of a company – for example, in some instances the nomination was for sales contracting, in others it was for procurement. Information on the nominated group or division is available on request from info@iaccm.com. Given the focus of the study and the make-up of the respondents, nominated organizations tend to be those dealing with relatively complex, high value and long-term contracts; there is also potential bias towards North American and Western European companies based on the makeup of the organizations contacted.

 

This study is based on the opinions and experiences of IACCM members and does not necessarily reflect the views of IACCM officers or members of the Board. It is the first in an on-going series of studies related to contracting and relationship management excellence and all suggestions regarding future development of these studies will be welcomed. IACCM will also be pleased to share the criteria that, in its experience, represent the core attributes required to achieve high performance in these areas.