Top academics from the fields of law, supply management, economics and project management have realized that weaknesses in contract management result not only in value loss, but increasingly impact the fundamental competitiveness of today's corporations. This understanding is reflected in the increasing presence of contract and commercial management as a Board level issue. Companies as varied as Ericsson, Shell, Verizon, CSC, Invensys and HSBC see this as a priority issue, driven by a combination of the need for improved compliance and the imperative of growth.

As the leading non-profit association for those with an interest in contract and commercial management, IACCM undertakes extensive research in its own right and works with member corporations to validate findings and identify areas for improvement. This work has led to a number of important insights, of which some examples are:

• The underlying causes behind poorly performing contracts are due to weaknesses in contract and commercial management in more than 70% of cases.
• Improved contract management (buy and sell) can yield up to 9.2% improvement on bottom-line performance (cross-industry average), with significant sector variations.
• The highest performing sector (outsourcing and complex services) is also the sector to have made the most significant investments in contracting capability; this is based on their understanding that in a services business, contracts are the core asset.
• High performers achieve substantially shorter lead-times in closing business; they are more effective in 'partnering' with their key customers and suppliers; they benefit from a large (30%+) reduction in the frequency of claims and disputes.

Achieving these benefits depends on executive support for a strategic shift in the role of contract management and investment in the tools and resources needed to develop corporate capability. In the short term, this is typically achieved through consolidation of resources; a program of up-skilling; earlier and more active involvement with the business units; lifecycle responsibility and measurement; and a more holistic focus on risk. Each day, organizations are awakening to the need for action and the opportunity that improved contract management offers.

Where are we going wrong in our hiring practices?

• Failing to give recruiting the priorities needed for success
• Failing to properly define the real job
• Failing to define and control the whole process
• Poor briefing to HR or your external resourcing services provider
• Lack of preparedness for the interview process
• Indecisiveness at offer stage
• Delays in delivering the offer in writing

Allow me to elucidate...  it's not rocket science....   Far too many operational leadership and manager hours are expended on the hiring process.  Putting a price tag on this wasted time is one way of emphasizing the problem and a good marker against which to measure improvements.

For any one job, up to Senior Manager level, the absolute ideal is to interview three candidates for 1½ hours, invite one back for second interview, and make an offer that is accepted without demur.  This is best resourcing practice, and it is your target. 

You may be viewing this as a frustratingly impossible goal or an issue you have addressed and (  happily!) passed to HR.  Perhaps you overlooked that HR likely initiated the existing procedures as a 'one size fits all' service for the whole business.  Is your time and its cost to your company the price being paid for an illusion of efficiency?

• You can achieve a recruitment process that is effective for you and your team. 
• You can substantially cut the time it takes to hire. 
• You can put a price tag on the process and identify the cost reduction.
• You can substantially reduce the hours invested in the recruiting process.

 

GROUNDWORK

Start by putting a price per hour value on your time, and any others of your team, leadership and support admin who get involved in the recruitment process.  Don't forget the overheads....

Consider the last time you recruited onto your team and note the actual time span from initial sign-off to acceptance. 

Count the collective hours applied to the whole process prior to an offer being accepted.  Get brutal.  Don't miss anything - interviews, meetings, telephone calls, by-line chats, briefings, reviewing applications, drafting the position description.  Remember interview time starts from the moment you began to prepare until the candidate left your offices...

So you've started to do the sums ...  and shock has set in....!

Better pour that large glass of    wine you've been promising yourself...

or take a long, long, long, long    run in the park to shake it off. 

TO DO LIST

1.          Prepare an 'applicant friendly' position description.  This is not your internal job description.  This is a document on headed paper, your golden moment to sell your company, your team and this career opportunity, to an applicant who will be looking at several such prospects.  Describe your company's history and current operational structure. Define the job in 'success' terms:  an overview of the challenges and objectives, what you expect this person to deliver and what you expect to be achieved in the first six months/year.  Emphasize the opportunity, not a dreary list of commonplace duties and conventional attributes/qualifications.  Top talent will not be interested in a job description obfuscated with the mundane.

2.          Prepare interview questions that you will repeat with each candidate so you can properly evaluate interview results.  Consider a tailored skills profile that each candidate will complete in advance to ensure applicants selected for interview have the mandatory professional experience and knowledge that you seek.

3.          Check your PR:   Physically, personally, check if your company web site is a turn off or a magnet for applicants;  make sure no 'bad news' is about to hit the press.  Ask if your PR could run some good news stories about contract wins/your contracts team, to entice attraction to your recruitment campaign -- articles you can send to selected applicants to motivate them.

4.          Prepare the interviewing team, state your expectations.

5           Prepare a timetable for interviews and ensure every person involved is committed to the interview process and prioritizes the activities in their diaries.  Three weeks after briefing HR or your external resourcing services, expect the three best applications to be presented to you, applicants who have been thoroughly interviewed and skills profiled.  Expect written summaries of strengths and weaknesses against the job description, and any other positives or negatives to help you focus your interview questions.  These three candidates should be very capable of achieving your immediate goals, delivering the remit long term, and of adding value.  Three weeks -- at the outside four for leadership roles -- is more than adequate time to prepare a quality short list. 

6.          Interview all three candidates on the same day if possible, at the worst, two consecutive days.  Ask for a commitment to interview out of usual business hours, if it will benefit the process.  Consider interviewing the shortlist of three on a Saturday. 

7.          Within 24 hours of the interview, invite your No 1 choice for a final interview session, preferably within four days.  Advise HR to have a draft letter of offer prepared ready for minimal final details.  Personally thank the No 2 and No 3 choices for their time and say you will be back to them within a week - this is your back-up pipeline, don't lose them. 

8.          On the day of the final interview, if this is successful and you plan to make an offer, do so verbally and then take at least one more hour showing the successful candidate the offices, introducing him/her to key colleagues, including video-conference, if appropriate.  By this time HR should have the letter of offer ready to hand to the candidate.

9.          The next evening follow up with a personal phone call to avert counteroffers and any indecision, and to resolve queries.  If your candidate can't start within two weeks, plan to continue communication to keep the candidate focused on your company.  If the wait time before starting is more than a month, invite the candidate in for lunch, a team briefing, training, an evening out with the team.

10.        Make a note of the hours you have saved.  Note the time taken from start to finish.  Run a win/loss analysis so everyone will buy into a continual improvement program.

BRAVO! Your next step is retention techniques.....

Copyright © 2012 Suzanne Birch.  All rights reserved.

About IACCM Resourcing

Suzanne Birch is the CEO of IACCM Resourcing.

IACCM Resourcing gives IACCM Corporate Members and Members business priority; advanced interviewing and skills profiling significantly improves the quality of short lists and offer/acceptance ratios.We deliver services world wide - Retained Headhunting, Flexible Outsourced Support, and Contingency Supply. Consultancy includes Recruitment and Retention, Effective Position Descriptions, Outsourced Support for Professionals in Transition, and enhanced salary and trend surveys.

Recent research from a risk analysis firm, Maplecroft¹, indicates that emerging, key growth economies worldwide face the greatest financial risk from natural disasters such as floods, droughts, earthquakes and cyclones.  Nations like China, Mexico, India, Philippines, South Korea, Indonesia, Turkey, Bangladesh and Iran have particularly limited ability to recover, exposing them to severe business disruption.

Summary of analysis: 

Last year was the most costly 12 months on record for natural disasters: It cost  $380bn (£242bn).  The tsunami that struck Japan in 2011, US$210bn, was the main reason for the cost increase.

Any business investing, operating or sourcing within emerging economies is particularly exposed. 

Hydro-meteorological risks from flooding occur along the Mekong Delta.

Drought resulting from failing or late Monsoons pose another problem.

Very large economies, having a higher resilience to natural disasters, tend to recover more quickly.    At the same time, the US -- where the West coast is exposed to earthquakes and East coast to hurricanes – ranks high for absolute economic exposures.

Research points out the need for mitigation planning, whether a business is in an emerging economy or a large, established one.  Three mitigation criteria are sound infrastructure, strong disaster preparedness and compliance with building regulations.

Bottom line? Businesses must build resilience to mitigate the impact of such events. 

ONE READER’S RESPONSE:

This underscores the importance in some contracting scenarios to have clarity and certainty over a force majeure* event, and is it limited to the primary disaster or extended to secondary effects.  In Japan, the earth quake led to the tsunami, which led to the flooding, which intersected with a damaged nuclear reactor.  Months after the “event” had ceased, contractors/suppliers were unable to fulfill their contractual obligations.  So, if the FM clause is not clear on the “FM event” and the “duration”, disputes might arise over what is excusable or not, and for how long.

Jim Bergman, IACCM

*Force majeure is generally intended to include risks beyond the reasonable control of a person(s), as opposed to negligence or malfeasance of a person(s)… example: a natural hazard.

To read the full text of this article, click on the link: http://www.bbc.co.uk/news/science-environment-19254685

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1.  SOURCE OF RESEARCH:  Maplecroft, a risk technology and analysis organization, is supported by a range of professional services, which help shape corporate strategies to identify, mitigate, manage and monitor risk, responsibility and reputation across operations, supply chains and distribution networks.   It is located at Towers, St Stephen's Road, Bath, BA1 5JZ, United Kingdom

The “quality movement” used in manufacturing has bypassed the legal profession. In particular, the legal profession has been reluctant to standardize. Current approaches to contract drafting represent a glaring example that.

Language. Traditional contract language is dysfunctional. It's compiled by copying from precedent contracts of uncertain quality and relevance. Contracts are full of archaisms, redundancy, and other problems. The result is confusion and delay, leading companies to waste vast amounts of time and money and assume unnecessary risk. For contract language that's clear and consistent, companies should adopt a style guide, train personnel, and revise their templates.

Process. Creating contracts by copying and pasting helps perpetuate dysfunctional contract language. And it's slow, allows for only limited customization, and allows drafters to use out-of-date templates, among other problems. Document-assembly software allows users to create contracts by answering an annotated online questionnaire. Document-assembly software is now sophisticated and intuitive, and it's in use at an increasing number of major companies.

Source of Inertia. Many organizations that might benefit from retooling their contract language and process don't give the idea serious consideration. That's because lawyers value their autonomy. But the freedom to continue performing inefficiently and inconsistently what should be commodity services isn't freedom worth preserving.

Cost-Benefit Analysis. The potential benefits of change are clear, so any organization looking for an advantage should reassess its contract language and contract process. That involves analyzing whether the costs and risks of copying and pasting traditional contract language outweigh the costs of change.

SOURCE: Kenneth A. Adams & Tim Allen, The Illusion of Quality in Contract Drafting, New York Law Journal, July 17, 2012. Copy available at http://www.koncision.com/wp-content/uploads/2012/07/Illusion-of-Quality-NYLJ.pdf.

• KENNETH A. ADAMS is a speaker and consultant on contract drafting and president of Koncision Contract Automation. Contact him at kadams@koncision.com.
• TIM ALLEN is president of Business Integrity, developer of ContractExpress document-assembly software. Contact him at tim.allen@business-integrity.com.

That lack of clarity continues to undermine the contracts and commercial practitioner. Non-practitioners are not sure what we stand for. Indeed, their confusion frequently stems from their interactions with practitioners, since they themselves are highly variable in how they see their role and responsibilities. One of the questions I receive most often is 'what is the value of a contract manager?' (Yes, I will accept amusing answers to that one!).

IACCM continues its work to define the contribution of commercial practice and within that, the body of knowledge required for its performance. To do that, we need wide acceptance of the principle that competency must be defined at both the professional and institutional level, with standards of excellence in training and institutions that sustain a profession. Those standards of competency must be international in scope and accompanied by clear indicators of value.

To me, the value proposition relates to our work in developing and sustaining healthy and profitable trading relationships. To achieve this, we need some simple approaches to prevention, diagnostics and cure. A good place to start is in the area of risk – since this is one of the few things on which all contracts and commercial staff agree they have a role. Inspired by work undertaken within two member companies, IACCM will be promoting discussion around commercial assurance and the development of associated commercial risk dashboards. It is a good place to start because we believe that through this approach we can make our work immediately relevant and intelligible to senior management – especially at a time of such dramatically increased risk sensitivity.

Watch out for up-coming webinars where we will discuss our plans and put forward ideas. And if this is a topic on which you have views or would like to contribute, please let me know.

Many lawyers now realise the importance of selecting an AFA that is 'most likely to create a “win-win” situation' for both parties. In line with the findings of IACCM's own research, the article identifies the need for a 'true partnership', rather than one party simply 'trying to get a deal'.

Click this link to read more.....http://www.insidecounsel.com/2012/08/10/the-pros-and-cons-of-5-popular-alternative-fee-arr?utm_source=ic&utm_medium=email&utm_campaign=iccommentarya

In the interview, David and Tim discuss whether or not, in these times of increased cost cutting and drive for greater efficiency, we have sacrificed good judgement in the push for greater speed of decision making. Issues covered include the challenge GCs face with having so many sources of information -- twitter, blogs, instant messenger, texting etc- and the importance of being disciplined with how you use this information.

David discusses solutions such as preparing in advance through much more investment in training, as well as the importance of checklists, so that GCs can easily source a response to a common question. This approach helps legal executives respond more quickly, but still accurately, to these multiple sources of questions.

The interview also explores BT's volume of LPO work. David compares traditional law firms, with their focus on advising the legal team, to LPOs, who have evolved so they can now help various parts of the business. David uses the example of putting a contract together, where the commercial, legal, bid management, contract management and finance teams are all involved, so it is beneficial to have the teams working with common platforms and systems, and LPO providers have recognised this.

As David explains, in the current environment "You have only one choice…which is to work as lean as possible. So we're being very much driven in that environment to show how we're being efficient around our cost, how we're generating revenue."

These are just a few examples of how David's team at BT is working leaner to meet the evolving demands of the business. To hear the full interview podcast, follow this linkhttp://www.bit.ly/Oy7Jzk.  If you prefer to get the transcript send to you directly, request it by emailing: exchangeinfo@iqpc.com

These topics and more will be explored in further detail at the 7^th Corporate Counsel Exchange, taking place at the Hotels van Oranje, Noordwijk, from 14^th - 16^th October 2012. 60 General Counsels will gather to benchmark strategies and share best practice to help them become more efficient and add value to their business. They will be joined by a select group of solution providers who have been invited because they offer a service or solution to meet the needs of General Counsel.

About the Legal Exchange Network

The Legal Exchange Network host a series of invitation only forums designed to help senior strategy makers overcome their most pressing challenges that heads of legal face today. Exchange only invites in-house Counsel and legal executives with the highest credentials, and solution providers with the most cutting edge capabilities, to deliver a unique business development opportunity and true peer-to-peer learning and networking forum.http://www.corporatecounselexchange.co.uk/PR

For more information about the industry leading speakers, the latest agenda, please visit:http://www.corporatecounselexchange.co.uk/PR or email exchangeinfo@iqpc.com

If you are a general counsel, or offer a service you feel would add value for a General Counsel, request your invitation today online here: http://www.bit.ly/NH54Gx or email:exchangeinfo@iqpc.com.  

For more information on solution provider opportunities email: exchangeinfo@iqpc.com or call: +44(0)207-368-9404

Media contact: Beata Majcher, +44(0)207-368-9745 beata.majcher@iqpc.co.uk or visithttp://www.corporatecounselexchange.co.uk/PR

SOURCE Corporate Counsel Exchange