Harmonising Governance and Collaboration for Transformative Contract Management

Without adequate Governance, Contract Management cannot succeed. A lack of oversight and review of issues, or even of a formal process, leaves both parties in the contract exposed to a much higher degree of risk. Yet sometimes in Procurement we wish we could just go ahead with contracts and supplier engagements without having to worry about the regulatory and process-driven ‘straightjacket’ that we feel forced into by Governance.

However we might feel about Procurement processes we can be sure of two things. One, they exist for our own protection. And two, they aren’t going anywhere. But Governance processes, especially those that have been created thoughtfully, shouldn’t be viewed as a roadblock to progress or an exercise to be worked around. We should actually be actively embracing the possibilities that they open up for us.

The processes can have a particularly transformative effect in Contract Management. They can help deliver outcomes that far surpass both expectations and organisations who choose to take a more traditional approach. In order to achieve these successful outcomes, we need to strike the right balance between Governance and Collaboration.

What is a Governance Charter?

In a Corporate or Legal sense, a Governance Charter:

“sets out the main aspects of a company’s corporate governance, such as its governance structure, the internal regulations of the Board of Directors, its committees, and the Executive Committee, together with other important topics.”

This definition, full of legalese as it is, may or may not make a huge deal of sense to you. The essence of the Charter is to outline key roles and responsibilities within an organisation or partnership, detail key strategic goals and objectives, and to ensure that there is an appropriate structure in place for the management of this.

And while such a Charter would most commonly be found at the highest levels of an organisation, they are becoming more frequently used throughout the organisation, especially in scenarios where there are partnerships or collaborative projects. At its root is a fully comprehensive document which, by providing a consolidated overview of governance mechanisms, can actually lay out a clear pathway for successful collaboration.

What Does it Mean for Procurement?

So far, so good, but what does all of the mean for Procurement? The last thing, we hear you cry, is yet another Procurement process. I would argue that we can definitely use a process that can help crack successful collaboration in the Contract Management sphere. As we have alluded to already, when it comes to Contract Management, success lies at the intersection of governance and collaboration.

The Governance Charter provides the foundation for success by pinpointing where this intersection lies, and providing a path to get there. It is a lean, yet powerful, tool that encourages parties to think, agree, and collaborate on how they will work together, then establishes robust controls to facilitate an efficient and collaborative working relationship between the two parties.

Learn to Create Harmony

While this may sound straightforward on the surface, the reality is that you need a harmonious interaction of a number of elements in order to ensure the collaborative arrangement runs smoothly. These include the formation of the relationship, and assessing which relationships will thrive with a Charter, and the creation of the agreement in an easy to understand way.

It may take some effort to get your Charter in place, but once you have it, you will begin to reap the benefits. If you want to understand more and see how a Governance Charter can help create harmony from discord, you’ll need to join my session this week, ‘Contract Management: Best Practice Governance’ with The Faculty Roundtable. In this session we’ll delve deeper into the keys concepts which will help drive high performance and help unlock successful outcomes:

• Craft Successful Relationships by Design: Master the art of intentional relationship building, setting the foundation for success from inception.  
• Ensure Both Parties Effectively Manage the Arrangement: Learn proactive contract management strategies that ensure both parties contribute to the arrangement’s success.  
• Create a Transparent and Understandable Governance Agreement: Dive into governance with simplicity and clarity, crafting agreements that are both effective and easy to comprehend.

This article was written by Dr Sara Cullen, Managing Director, The Cullen Group. 
Dr Sara Cullen will next be joining The Faculty Roundtable Program on 14th May for a masterclass that seamlessly intertwines governance and collaboration, reshaping the way you approach contract management for transformative outcomes. If you’re a Roundtable member, you can register for the masterclass here.