What is a contract manager?
A contract manager is a professional who oversees the creation, execution, and implementation of a company's contracts. They play a crucial role in ensuring the contractual obligations are met by all parties involved, while protecting the interests of their organization. Their goal is to facilitate smooth business transactions by managing contractual terms, mitigating risks, and resolving any contract-related issues, and fostering strong business relationships between stakeholders.
Do contract managers need to be lawyers?
Contract managers do not need to be legal counsels, although having a solid understanding of contract law is beneficial. They often collaborate with legal counsel on complex legal matters. While contract managers focus primarily on managing contracts and ensuring compliance, their role in an organization is often multi-functional. The level of legal and multi-functional expertise required can vary depending on the organization and contract complexity.
In a typical B2B SaaS company, the associated contracts are mostly sell-side contracts. Here, a contract manager's role is closely related to revenue operations, where the goal is to enable the sales team to create and execute contracts efficiently. In a procurement company, where the majority of the contracts are buy-side contracts, their role aligns closely with procurement management, encompassing tasks such as supplier onboarding and negotiation. Additionally, a contract manager's responsibilities share similarities with those of a project manager, as they involve tracking and managing obligations, as well as other key contract milestones.
What does a contract manager do?
A contract manager's responsibilities are multi-faceted, involving both strategic and administrative roles. They’re involved at every stage of the contract lifecycle, starting from the drafting stage, all the way through to the execution and post-execution stages. Here are some of their key roles and responsibilities:
Contract creation
Creating and drafting contractual documents that clearly define the obligations, responsibilities, and terms for all parties involved.
Contract negotiation
Working directly with clients, suppliers, or partners to negotiate terms that align with the organization's interests and objectives.
Risk mitigation
Assessing potential risks that could arise from a contract's terms and working to mitigate those risks.
Compliance
Ensuring that all contractual agreements comply with laws, regulations, and organizational policies.
Conflict resolution
Addressing any disagreements that arise from a contract's interpretation or execution, working towards resolutions that are in the company's best interest.
Contract analysis
Analyzing contracts to provide insights on their impact, effectiveness, and how they can be improved for future dealings.
Managing obligations
Overseeing the implementation of contracts, ensuring all parties fulfill their contractual obligations.
Renewal and termination
Managing contract renewals, extensions, and terminations, ensuring these processes align with the company's strategic goals.
A contract manager serves as a critical link between the organization and its partners, clients, or suppliers. Their role is integral to successful business relationships, risk mitigation, and strategic alignment of the company's objectives with its contractual obligations.
What are the skills needed to become a contract manager?
To excel as a contract manager, you’ll need to develop a mix of technical and soft skills. Here are some of the key skills needed in this role:
Negotiation skills
Contract managers often need to negotiate contract terms with other parties. Therefore, strong negotiation skills are essential to secure the best possible conditions for their organization.
Legal knowledge
An understanding of contract law is beneficial. It will help to interpret legal language and understand the implications of various contract terms and conditions.
Analytical skills
Contracts involve numerous details and variables. Contract managers must be able to analyze these elements, evaluate their implications, and make decisions based on their analyses.
Knowledge of contract management software
Familiarity with contract management software such as Zoho Contracts is helpful because businesses often rely on these tools to streamline processes, track contracts, and ensure compliance.
Attention to details
When it comes to contracts, even minute details can have significant implications. Therefore, meticulous attention to detail is crucial in this role.
Communication skills
Contract managers must communicate effectively with various stakeholders, including clients, suppliers, and internal teams. They need to be able to clearly explain contract terms and conditions and manage any potential conflicts or misunderstandings.
Problem-solving skills
Contracts can often lead to disputes or other issues. Being able to solve these problems efficiently and effectively is a key skill for contract managers.
Project management skills
Overseeing a contract from initiation to closure often involves project management skills. This can include coordinating with multiple teams, managing timelines, and ensuring that tasks are completed correctly and on time.
Ethical judgment
Contract managers often handle sensitive information and must conduct business ethically and professionally. They must be trustworthy and respect confidentiality.
In essence, the role of a contract manager requires a unique blend of legal, analytical, communication, and project management skills, along with high ethical standards and keen attention to detail.
How do you become a contract manager?
Becoming a contract manager typically involves a blend of formal education, practical experience, and the development of several key hard and soft skills. Here's a more detailed pathway:
Obtain a degree
A bachelor's or master's degree, often in business, law, or finance, serves as the starting point for most contract managers. However, degrees in other fields can also lead to this career, given the right experience and skills.
Gain experience
Practical industry knowledge is essential. Entry-level positions in procurement, operations, or administration can offer valuable exposure to contract processes.
Get certified
While not always necessary, some professionals may opt for an advanced degree, such as an MBA or a law degree. Alternatively, a specialized certification, such as the Certified Professional Contract Manager (CPCM) credential from the National Contract Management Association (NCMA) (a professional association based in the United States), can be advantageous.
Network
Talking to relevant people in the industry, such as other contract managers and in-house legal counsel, might not only help in securing a job but also help in enhancing knowledge and understanding the latest trends in contract management.
Seek advancement
With relevant experience and the right skill set, opportunities for advancement into a contract management role will present themselves. This could be within your current organization or in a new setting.
Although this provides a general guide, remember that individual career paths can vary. Some contract managers may carve out their own unique paths, stressing the importance of gaining the necessary knowledge, skills, and experience to manage contracts effectively.
What is the expected salary of a contract manager?
The compensation for a contract manager can differ greatly depending on several elements, such as the industry of operation, company size, complexity of the contracts managed, geographic location, and the individual's experience and qualifications.
According to Salary.com, the annual salary for contract managers in the United States in 2023 was estimated to be between $113,710 and $151,530 with a median of $131,740. However, those working for larger corporations or possessing a significant amount of experience or specialized certifications could potentially earn higher salaries.
Wrapping up
Aspiring contract managers would be entering a dynamic field that is the core of business operations. To succeed, they should focus on obtaining relevant education, gaining practical experience, and developing key skills such as negotiation, contract law, and analytical abilities. They should also embrace technological advancements, such as modern CLM tools, and stay updated on industry trends. With attention to detail, strong communication, and problem-solving skills, aspiring contract managers can embark on a fulfilling career and contribute significantly to organizational success.