In my article “The Case for Commercial Contract Management in Small to Medium-Sized Enterprises” I argued that SMEs need commercial contract management due to the complexity introduced by digitalization. In this article I look at how the characteristics of the SME influence the requirements of the commercial contract manager. Then I look at the strengths that the commercial contract manager must bring to the role in order to be successful.
Characteristics of SMEs
Revisiting my previous characterization of the SME, here I look at how two main factors, the size of the company and the role of the owner, influence the requirements of a successful commercial contract manager.
The SME is less complex and smaller, and staff tend to wear more than one hat and have broader responsibilities than at a large company.1
An SME generally has limited resources. This is particularly true for new starts-up who have not yet attracted potential investors and bankers, making it dependent on the capability of the owner to generate resources.2
While the SME has the flexibility to adapt to changes in the environment due to its size and informal structure, these attributes can be a threat to its growth. A change in government policy or technology can have significant consequences if additional resources or capital are required and become a constraint on the SME’s competitiveness in the market.3
Role of the Owner
An SME is often managed by one or more owners whose management style is often informal. The owner leads the company and plays the role of both employee and employer. Employees are normally expected to jump in where needed as there is no clear division of tasks. Decisions are commonly made by the owner.4
SME owners are highly motivated, caring and curious individuals. They are avid readers and want to learn everything from why a business failed to how to find, motivate, and keep good employees.5
How do these characteristics influence who will be the right fit in a commercial contract management role at an SME?
The Successful CCM at an SME
Every commercial contract manager needs certain competencies and skills to be successful in their role. These are divided into core competencies, technical competencies and soft skills.
The commercial contract manager needs a set of core competencies independent of the environment or size of the company in which they work. These include commercial and legal knowledge, familiarity with the company’s industry and the subject matter of the contract. When working in an international environment, cultural knowledge of all parties is essential. Finally, it is good communication and interpersonal skills that make it all work.
The technical competencies needed by the commercial contract manager at an SME are broad because of the range of commercial and contractual issues they need to deal with. Limited resources in the organisation mean that the commercial contract manager must be knowledgeable in and advise on many areas, e.g. insurance, bank guarantees and regulatory issues.
The commercial contract manager will need experience with a range of contract types e.g. leases, employment and agency agreements in addition to the standard commercial ones. With the cross-border relationships made possible through digitization, they will also need basic familiarity with the law in the geographies where the SME does business.
In addition to the core and technical competencies mentioned above, the successful commercial contract manager brings the following qualities to their role when working with an SME:
- Leadership style capable of influencing and unifying a cross-functional team
- Curiosity and willingness to learn
- Adaptability, flexibility, persistence, and the ability to work under pressure
- Communication skills at all levels of the organization
- Willingness to take on tasks that fall outside their area of expertise
- Proactivity and team-focus – this is not a role for a politician!
- Knowledge sharing
- Focus on value creation
- Commitment to help the owner realise their dream
While these success factors are by no means exclusive to an SME, they are emphasized in the SME environment.
All commercial contract managers need to exhibit a set of core competencies in order to do their job. Additional competencies, along with attributes that complement the characteristics of an SME are what make the commercial contract manager successful in an SME environment. Do you have what it takes?
Acknowledgements: This is the second of two articles based on material prepared by Albert Schot (schot.ch) and Dr. Ingrid Slembek (inaccord.ch) for presentation on March 26, 2020 at a local IACCM member meeting in Zürich, Switzerland.
2 Essays, UK. (November 2018). Characteristics Of The Small And Medium Enterprises Economics Essay. quoting (Welsh and White, 1981). Retrieved from https://www.ukessays.com/essays/economics/characteristics-of-the-small-and-medium-enterprises-economics-essay.php?vref=1
3 ibid., citing Aragon-Sanchez and Sanchez-Marin, 2005.
4 ibid., citing Feltham and Barnett, 2005.
5 Rubin, C. The Six Traits of a Successful Small Business Owner, found on 04.02.2020 at https://www.inc.com/news/articles/2010/07/six-indicators-of-success.html