Wq2 SDX§§P)_- this is what our 4-month-old kitten typed running over the keyboard while I was writing this – some kind of feline code? All large organisations have hierarchies and authority delegation for decision making. And some of them, particularly in global organisations can seem as dense and impenetrable as our cat’s contribution. Many can run to 20 or 30 pages and typically have different levels of country management sign off followed by regional and then head office sign off. Some are initially drafted in a language other than English – and translated badly if at all. They reserve decisions on specific topics like standard contract terms or parent company guarantees or settlement of significant disputes to the ultimate parent company. Try changing the software or cloud terms for a US corporation in the UK. I have and you can’t without the buy-in of head office – who generally won’t amend their conditions without very good reason. Don’t get me wrong this is not a criticism of large corporates. Rather the need to recognise that authorisation processes are often complex. It follows that on any deal for say an IT outsourcing contract internal governance approval at the right time and level in the UK and globally is not a nice to have but absolutely essential.
Governance in this sense can be looked at from the perspective of the individual negotiation team seeking stakeholder buy in – or from a corporate perspective where contractual governance will or should be a part of this overall corporate governance which is “the structure of policies and processes that steer a company’s direction, management, and compliance efforts.” See this article Corporate Governance: Definition, Principles, Models, and Examples. Senior stakeholders at an appropriate designated level should also sign off on any significant contract once it has been fully negotiated and prior to signature. This ensures the buy in of the whole organisation not just the negotiating team to the project and its delivery. This incidentally assist the other side in the negotiation. There is nothing more soul destroying than working hard to reach a viable and fair contract, only to then find out that the other side won’t proceed to finalise the deal because its management is not on board.
I have often been asked to bring the full panoply of internal legal review to a complex service contract bid, only to find that it is a figment of some salespersons individual agenda, which has not been sanctioned even in principle by senior management. If this approach is followed for all review functions – commercial, technical, finance and project delivery – it can be a gross waste of valuable professional time and resource. It is also incredibly helpful in a contract negotiation if the key parameters have already been understood and at least provisionally signed off at an executive level. You then know when you have to go back for further senior authorisation to say a higher-than-expected limit of liability. It also prevents the other side from going behind the back of the negotiating team to exploit contacts with say the chief executive of your client. This actually happened to me and because we were all aligned when I forewarned the CEO by email of such an approach by a customer, he emailed back almost instantly reiterating his support and telling us we could circumvent this tactic by saying we had his full backing.
AI quite sensibly suggests that “Stakeholder buy-in in contract negotiation is critical because it ensures organizational alignment, facilitates smooth execution, and is essential for achieving long-term success. It transforms a mere formal approval into active support and commitment from all parties involved.” A “stakeholder” is someone involved as an individual or a group such as a contract approval board with significant influence, power and a vested interest in the success of a project. They should have the organisation’s wider interests in mind. See this Project Management article Understanding Different Types of Stakeholders and Their Roles which observes more generally in the context of projects that “stakeholders are indispensable in shaping outcomes, influencing priorities, and determining overall project success.” It proposes there are two types:
Internal stakeholders - individuals or groups within the organization who are involved in the project or directly affected by its results.
External stakeholders - entities outside the immediate organizational structure that have an interest in the project’s execution or success.
It then recommends an organised approach to managing such stakeholders: “Effective stakeholder engagement begins with a disciplined approach to stakeholder analysis and mapping.”
See also this article Securing Buy-In from Stakeholders: An Overview which discusses who a stakeholder buy-in is and identifies different types including:
It also recognises the importance of effective and timely stakeholder involvement. “Every project comes with risks — but many of these can be identified ahead of time and managed by working closely with stakeholders and gaining their support. Plus, if you have good relationships with your stakeholders, this will help to carry you through if/when challenges arise or there are problems with the project.”
I thoroughly endorse the timely and effective involvement of stakeholders in service contract reviews. If your manager will be present on a final contract approval board then thoroughly briefing and discussing any challenges and risks with them beforehand will not only inform that process, but also enable it to operate far more smoothly and effectively. If the leaders of your function do have some concerns then these can be addressed before they are asked to make or endorse a final recommendation. Apart from anything else it is extremely embarrassing and potentially career limiting to have some position you have taken in a contract negotiation undermined in a public forum by your department head.
As an example of good contract negotiation governance, while in private practice I acted for a major UK IT supplier bidding for a large public sector communications contract where the purchaser was using a competitive negotiation process that culminated in “locking” the final four bid contenders in a hotel for a week to see who could negotiate the best contract. My client had not only obtained all necessary internal buy in for each stage of the process including this last one, but sent the head of the relevant division to the hotel one evening to join in the discussion, understand what was going on and coincidentally talk to the customer. All of this eased the way for the company to endorse the contract bid process which it eventually duly won.
Improving governance processes is probably where AI has the potential to come into its own as a means of managing the involvement of key stakeholders at the right time. The expression and implementation of internal governance processes can be time consuming and sometimes inconsistent. AI could streamline the approval process by “intelligently” routing contracts to the appropriate stakeholders (legal, finance, procurement, etc.) based on predefined rules, such as contract value, risk level, or type. This could help eliminate bottlenecks and promote timely reviews. There is however in my view no substitute for personal involvement in endorsing a major procurement project either as a proponent on the bid team or an approver.
As the entrepreneur and speaker Cheryl Sew Hoy observed “The best way to minimize disagreement is to make sure that all the stakeholders are in the room.”
Governance in this sense can be looked at from the perspective of the individual negotiation team seeking stakeholder buy in – or from a corporate perspective where contractual governance will or should be a part of this overall corporate governance which is “the structure of policies and processes that steer a company’s direction, management, and compliance efforts.” See this article Corporate Governance: Definition, Principles, Models, and Examples. Senior stakeholders at an appropriate designated level should also sign off on any significant contract once it has been fully negotiated and prior to signature. This ensures the buy in of the whole organisation not just the negotiating team to the project and its delivery. This incidentally assist the other side in the negotiation. There is nothing more soul destroying than working hard to reach a viable and fair contract, only to then find out that the other side won’t proceed to finalise the deal because its management is not on board.
I have often been asked to bring the full panoply of internal legal review to a complex service contract bid, only to find that it is a figment of some salespersons individual agenda, which has not been sanctioned even in principle by senior management. If this approach is followed for all review functions – commercial, technical, finance and project delivery – it can be a gross waste of valuable professional time and resource. It is also incredibly helpful in a contract negotiation if the key parameters have already been understood and at least provisionally signed off at an executive level. You then know when you have to go back for further senior authorisation to say a higher-than-expected limit of liability. It also prevents the other side from going behind the back of the negotiating team to exploit contacts with say the chief executive of your client. This actually happened to me and because we were all aligned when I forewarned the CEO by email of such an approach by a customer, he emailed back almost instantly reiterating his support and telling us we could circumvent this tactic by saying we had his full backing.
AI quite sensibly suggests that “Stakeholder buy-in in contract negotiation is critical because it ensures organizational alignment, facilitates smooth execution, and is essential for achieving long-term success. It transforms a mere formal approval into active support and commitment from all parties involved.” A “stakeholder” is someone involved as an individual or a group such as a contract approval board with significant influence, power and a vested interest in the success of a project. They should have the organisation’s wider interests in mind. See this Project Management article Understanding Different Types of Stakeholders and Their Roles which observes more generally in the context of projects that “stakeholders are indispensable in shaping outcomes, influencing priorities, and determining overall project success.” It proposes there are two types:
Internal stakeholders - individuals or groups within the organization who are involved in the project or directly affected by its results.
External stakeholders - entities outside the immediate organizational structure that have an interest in the project’s execution or success.
It then recommends an organised approach to managing such stakeholders: “Effective stakeholder engagement begins with a disciplined approach to stakeholder analysis and mapping.”
See also this article Securing Buy-In from Stakeholders: An Overview which discusses who a stakeholder buy-in is and identifies different types including:
- Emotional Buy-In - Stakeholders support the project because they feel comfortable, they trust and respect those involved, and they feel connected to the work through their participation or relationships.
- Intellectual buy-in – Stakeholders are aware of and understand the project, and are convinced that it has merit based on a logical consideration of the facts.
It also recognises the importance of effective and timely stakeholder involvement. “Every project comes with risks — but many of these can be identified ahead of time and managed by working closely with stakeholders and gaining their support. Plus, if you have good relationships with your stakeholders, this will help to carry you through if/when challenges arise or there are problems with the project.”
I thoroughly endorse the timely and effective involvement of stakeholders in service contract reviews. If your manager will be present on a final contract approval board then thoroughly briefing and discussing any challenges and risks with them beforehand will not only inform that process, but also enable it to operate far more smoothly and effectively. If the leaders of your function do have some concerns then these can be addressed before they are asked to make or endorse a final recommendation. Apart from anything else it is extremely embarrassing and potentially career limiting to have some position you have taken in a contract negotiation undermined in a public forum by your department head.
As an example of good contract negotiation governance, while in private practice I acted for a major UK IT supplier bidding for a large public sector communications contract where the purchaser was using a competitive negotiation process that culminated in “locking” the final four bid contenders in a hotel for a week to see who could negotiate the best contract. My client had not only obtained all necessary internal buy in for each stage of the process including this last one, but sent the head of the relevant division to the hotel one evening to join in the discussion, understand what was going on and coincidentally talk to the customer. All of this eased the way for the company to endorse the contract bid process which it eventually duly won.
Improving governance processes is probably where AI has the potential to come into its own as a means of managing the involvement of key stakeholders at the right time. The expression and implementation of internal governance processes can be time consuming and sometimes inconsistent. AI could streamline the approval process by “intelligently” routing contracts to the appropriate stakeholders (legal, finance, procurement, etc.) based on predefined rules, such as contract value, risk level, or type. This could help eliminate bottlenecks and promote timely reviews. There is however in my view no substitute for personal involvement in endorsing a major procurement project either as a proponent on the bid team or an approver.
As the entrepreneur and speaker Cheryl Sew Hoy observed “The best way to minimize disagreement is to make sure that all the stakeholders are in the room.”
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