Contract Insider

Contraflow Communication for Managers

The normal perceived communication model in management is top-down.  We listen to those above us, summarize, then broadcast to the people on our team.  Occasionally, top management has a question, we pass that question to our people, get an answer, then pass it back up the chain.  Overall, the flow is 90% down, 10% up.

Until a crisis.

During a crisis (disaster, end of financial year, quarter-close, sudden drop in sales, contract termination threat, etc) the model flips around.  Instead of a conduit down, managers must become an efficient conduit UP.

Senior people both inside your management chain, and in other organizations, need a single source of truth for what is going on in your organization.  They expect that you will quickly pull information from your teams, condense it, validate accuracy, then communicate it in a tight, coherent form devoid of emotion or unnecessary editorial comment.

In the military, we called the ability to do this "Military Bearing" - and you can see it in pilots, surgeons and other people who truly do life and death jobs.

Now, in contracts, nobody is going to die.  That said, our work can mean life and death for organizations and careers.  So, there are things we can borrow from this model that will improve your ability to handle a sudden reversal in the flow of communication.

(1)    Plan.  Not all shifts in the communication model are sudden.  Some happen every month, quarter, or year.  Plan in advance how information will flow, document a process for updating status, build in confidence tests to ensure the information flowing is correct.  The more you can do in advance, the less you will have to think about when things get hot.  Communicating about communication during a crisis is difficult, because people may not be listening while under stress!

(2)    Breathe.  Too many people start to rush, particularly when time gets short.  Pause that extra second to allow your speech to sound measured, unruffled.  For negotiators, imagine the other side just revealed a surprise point, treat this the same way.  Pause, think, breathe, then react.  Also, sounding unruffled increases other people's confidence - and that is

(3)    Know which sources to trust, and how far.  Rumor during a crisis continually finds its way into the stream.  Know the definitive source of the information you need, and only trust that source.

(4)    Go visual.  Many people make the mistake of staying with verbal communications.  A status board that is constantly updated and trustworthy is worth its weight in gold.  People don't have to wait to get their answer, they know what they need, and might be able to get it without interrupting your team.

(5)    Understand the executive's next step.  If you are being asked for data that the executive needs to put into a spreadsheet, don't send her your input in a Powerpoint file!  Send it in the spreadsheet so she can point, click, communicate.  The more she has to do with your input, the less value you are adding to the communication stream.

(6)    Contingency-planning is crucial.  What if the networks are down, phones out, building locked, or critical people drop out of the loop?  In simulations, I always identify the key actors during the first 30 minutes, then take them out of the loop.

(7)    Practice.  If it is something really important, it is worth the time & money to walk through it when the pressure is off.

(8)    Trust is key.  If you are the kind of manager who does not build strong direct reports, or punishes people who speak up in a way you don't like, then you are doomed when the communications flow reverses.  People will only tell you good news, shade the bad, or do anything to avoid you when you need them the most.

(9)    Be ready for the flow to flip back.  Executive priorities change, they have more critical problems come up, or the crisis passes.  You and your teams need to be ready for you to stop being a switchboard, and go back to leading.

(10)    Get to the point.  This is no time for elaborate detail, "I told you so" or snide remarks about what caused the situation.  The critical thing is to get through the storm, you can argue about who forgot the umbrella on the other side...

If everyone is thinking alike, someone isn't thinking.

There is always a Patton quote to get you moving.  Maybe not always in the right direction, but moving nonetheless!

People who know me will tell you that I am always suspicious of instant consensus.  When there is similar thinking without discussion...

...the Political Scientist in me thinks, "Well, the fix is in... somebody set this up before the meeting"

...the Negotiator in me thinks, "Is there any point in using my capital to bring up new ideas?"

...the Management Consultant in me thinks, "Well, this seems efficient, or is it just that everyone has lost interest?"

The point of leadership is to listen, take in all of the viewpoints, then make a decision.  You will not make everyone happy, ever.  That said, people you listen to will respect the fact that you heard their opinion.  If you ignore people, that is where trouble starts...

Proactive v Reactive Time Management

Introduction

Francis Handerhan is a Contracts Director with Oracle Corporation, 2^nd largest IT software Corporation globally. Francis has been involved in managing Shared Service Centers for six years. Francis has acquired significant experience working with Corporate Governance, Revenue Recognition, Sarbanes Oxley and Audit policies & requirements, which govern the IT industry. From the experience gained in Centers in Australia (serving Asia Pacific), Romania (Europe) and most recently Costa Rica (North and Latin America), Francis has noticed certain similarities amongst the different Centers. The experience and employees may have different culture influence, but the Shared Service Center culture is unique to itself, not to the country the center is located in.

One of the unique aspects to the off-shored Center is discussed below.

This post was originally published in June, 2008.

Proactive v Reactive Time Management

When working in or with an offshore center, you may be party to discussions on understanding and respecting cultural diversity. Celebrate our differences, as it were! Appreciating and celebrating cultural differences is a healthy and positive step in a Center’s development but what everyone working with a Center should understand is the Center’s own culture and environment. Whilst supporting business across four continents in three different centers, I have noticed one constant within the Center environment. As many corporations, especially in the IT industry, are driven on a quarterly cycle the employees supporting this business are conditioned to become firefighters. By firefighters, we refer to those brave individuals who can jump into a deal mid-flight and assist navigating the deal safely towards closure. Or the classic quarter end push, where Companies execute the bulk of their business at month end (do not forget reporting is due as well), which reinforces the fire fighting mentality and encourages reactive behavior.

As part of a Senior Management team, I find it a waste that during weeks 2 through 5, I see lots of web surfing, YouTube, chatting and extended coffee breaks. I don’t mind a little down time as my team’s put forth extra-ordinary efforts, but like most things in life, down time is best in moderation. When I discuss the use of time with my teams they point out that the business has slowed after the close and there is little to do. My response to this is perfect! We have ample time for training and debriefing!

The question I ask is, ‘How do we go about a paradigm shift from the reactive mindset to proactive one?’ One answer to this question is in how we plan and execute our time in the Shared Service Centers. There is significant benefit from working within a quarterly cycle. Time management wins handsomely if the weeks of the quarter are managed properly. Instead of the 3-month accounting period, look at the quarter as a twelve-week accounting period. An example of well-planned and executed time over a twelve-week quarter would be the following:

Week 1 – Wrap Up from Previous Quarter, Reporting and Roll Over Business
Week 2-3 – Reporting & Debriefing
Week 4-7 – Training, Training, Training
Week 8 – Forecasting & Preparation
Week 9-12 – Execution

Approaching a project or set of trainings from a weekly view can allow for better visualization and in turn, realization of your plans. This is also quite helpful when planning employee leave as well as time in lieu.

If able to realize a paradigm shift, a few achievements a Center might celebrate are:

1. Employees      will have more transparency to assist in their understanding, which will      encourage acceptance and buy-in to the quarterly plan.
2. The      use of the Debrief Strategy in weeks two & three will:
   1. Eliminate       communication and data errors from the future
   2. Identify       ‘low hanging fruit’ to immediately fix.
   3. Gives       an active voice to all participants of teams and LOBs
3. Employees      will find better use of training in weeks four through seven, thus      preparing them for execution when business requires.

Time, along with our employees, represent two of the greatest resources a company possesses. Considering that the time management issue presented above impacts both of these precious resources, Management teams leading a Center should review the day-to-day running of their operations and ask if time is being used the most effective way possible throughout their business cycles. And if the answer is that the Center can be more effective (and let’s be honest, all Centers have room for improvement) it is time to review the use of each hour, day and week.

- Francis Handerhan

The Myth of Acceleration

(Originally posted in April, 2008)

Accelerating a contracting process usually benefits the side that is more prepared.

At least in terms of getting the best of the deal.

Think it through, if we know what we want, understand the risks, and are able to balance them against offsetting rewards or mitigation factors - what sense is there in delay?

On the other hand, when we don't know what we want (or, worse, a committee is trying to figure that out), don't know the risks, and need to think all of the offsets and mitigating factors through each time - delay is our friend.

The sad thing about this is that it is really the same terms being negotiated each time.  The IACCM's top 10 most negotiated terms list remains about the same every year.  As that is the case, your company has seen the most frequent challenges to your indemnification provision.  You've heard all of the variables about Payment, and there are only so many business variables that surround most of your sales-side deals...

Face it, there really are only so many ways to intelligently re-draft the ownership of IP resulting from a services deal.

So why does increasing deal complexity bedevil most contracts organizations?

1. Poor documentation - we don't know what the primary and all allowable fallbacks are because there is no really easy way to look them up.
2. Poor metrics - how often does fallback #7 work?  If you don't know, you aren't managing your terms, they are managing you.
3. Poor communication - with the average tenure in the profession over 8 years, many contracts people see no need to talk to their peers.  This can be disastrous in widely scattered companies where hallway conversations between contracts & sourcing staff are extremely rare.
4. Pressure to accelerate in the absence of the above...

The last one is most damning.  We've all fallen prey to the TAT metric inside contracts groups.  "If we turn it faster, they will love us."  This can be a fool's errand unless the tools (and more importantly the desire) exists to understand each deal individually, as well as how they fit into the portfolio of all deals.

Accelerating once you have 80%+ of the variables understood is easy.  Until then, you aren't accelerating, you are cutting corners and calling it efficiency.

- Stephen Sopko

Bargaining

(Original post in February 2008, updated)

What's the difference between negotiation and bargaining?

A 40-year contract negotiator taught me that the only difference between negotiation and bargaining was the dollar value of the deal.

We feel the need to 'negotiate' when the deal is highly visible, and when various parties around the deal (consultants, approvers, reviewers, sub-contractors) force a complex web of decision onto the deal.  As a result, extensive coordination is necessary, because in the modern business climate, nobody is empowered to make a decision alone.

Bargaining is much less restrictive.  You negotiate by arguing for days over the wording of a clause, you bargain when it is time to sign the deal, and a few last things haven't been decided.

It's bargaining when we say, "Look, if you give me X that I want, I will give you Y that you want."

It is negotiation when we say "The Industry Best Practice around that is to do X, you know, the thing that I want."  By the way, this happens so often that I spent a fun twenty minutes on Wikipedia rooting through all of their very cool posts on logic to find Argumentum ad populum which is really what we are up to when we use the 'industry best practice' approach.

Now, there is a place for negotiation and bargaining.  But where many people in the profession go wrong is by using one or the other, exclusively.

Think about bargaining without negotiation - doing deals with no review, controls or assurance that either party can actually deliver.

Negotiation without bargaining leads to deals that get bogged down for months in trench warfare between competing groups of experts.

The 40-year negotiator who mentored me was a master of knowing when to negotiate, and when to bargain.  For the last few years, I've worked with outsourced, lawyer-dominated contracts functions, and our people were master negotiators, but struggled with bargaining.

I think the key is that to bargain, you must be in the position to make (or completely influence) the final call.  You can do X for Y trades if you really control Y, and really have visibility to X.  Outsourced (or even captive offshored) staff can be good at negotiation, but I question whether they should have the authority to Bargain.  Bargaining is something that is best done by in-house staff, after all of the negotiation and administration has been completed.

In my consulting practice, I often find outsourced (or automated) processes that eliminated bargaining.  The result of those processes just doesn't feel right to our clients. By re-mapping the process to re-introduce the ability to bargain, we achieve the desired look & feel, without losing the benefits of centralized delivery.

- Stephen Sopko

Growing in Contracts

One of the problems with automation and outsourcing (in contracts and elsewhere) is that it closes the door to entry on our profession.  And that may be a good thing.

Ours is a profession where many of us spend years writing purchase orders, analyzing prices or serving as the coat-holder for more senior negotiators.  I've seen this go far beyond 'paying dues' and sour some really excellent talent on the contracts profession.

The parts of our role that are exciting (negotiating, deal architecture, problem solving) are not learned by starting out doing the parts of our role that aren't as exciting (paperwork, transactional buying, governance reviews).  This creates a gap, causing people in our profession to plateau way too early.

For a metaphor, let's go back to my Florida roots.  Orange trees are horrid, nasty things.  There are strains that are hardy and robust, but these produce lousy oranges for eating.  The trees that produce edible oranges are very fragile.  The solution is grafting.  A tough orange tree grows to a certain age, then sweet orange branches are grafted on to it.  Edible oranges grow from these grafted branches.

I often think of this when looking at a contracts organization... I know that after my first 4 years at the bottom of the profession, I was pretty burned out and bitter.  Fortunately, I got to do 2 years in systems and analysis.  I came back with a better idea of how my activities fit into a bigger picture.  Grafting worked!

This is why I tell my early-career mentees in contracts to rotate out of their department for a while.  Some don't come back, finding their success in other parts of the organization.  The ones who come back have the perspective and informal relationships necessary to be trusted with the exciting parts of the job.

- Stephen Sopko

One Mans Ceiling Is Another Mans Floor

(Originally published July 30, 2008)

OK, yes, I've been spending too much time in retro coffee shops listening to Paul Simon lyrics.

This one got me thinking, though, about the two (or more) sides to everything we do in contracts.

Unlike "pure" legal situations, there is a business opportunity aspect to the contracts process that attracts some, and repels others.  People in the profession who hustle, and can see the upside to any situation, tend to do best working in sales support organizations for senior sales executives.  Those who can see the downside to everything tend to do well in sales support, but working for the CFO or General Counsel.

Upside = Reward

Downside = Risk

Ceiling, Floor.  One party's reasonable indemnification is another party's intolerable risk.

Contracts is where the twain meet, and worse, where everything is written down, signed, and becomes legally binding.  No more room for spin, so marketing professionals tend to see contracts as their evil, dark side (oh, and the feeling is mutual...)

People with an entrepreneurial bent often struggle in contracts, until they start to see themselves as master deal-makers.  Unfortunately, you have to slog through a couple of decades pushing paper before you have the gravitas to do big deals, unless you pick a part of the organization where deal-making and hustle are rewarded.

Let's talk about those next time...

- Stephen Sopko

Swimlanes, sign of a broken process?

(originally published October 27, 2008)

After over a decade of process indoctrination (TQM, Six Sigma), I still resist swimlane charts.

Oh, simple swimlanes I can live with.  Here is one at Wikipedia (incidentally, attached to the article about swimlanes is a simple one about contracts!)

What continues to get me are mind-bogglingly complex charts showing a simple transaction, but scattered across 8+different organizations.  Either the swimlane chart drafter is trying to show too broad a process, or (as is often the case in contracts) a simple function ends up sprawled across the organization for lack of a clear home.

At Dell, an example was the transition of business from the pre-contract cycle to post-contract management.

The chart already had a dozen lanes BEFORE offshoring was considered!

• Sales (Inside + Outside)
• Proposals
• Legal
• Finance (controllers, AR, AP (for subs))
• Delivery (products + services + professional / integration services)
• Contracts (post-award administration)
• Third parties (sub-contractors)

Reducing the number of swimlanes to those that actually, materially drive value is an important part of Lean Services.  The RACI model of communication takes out some of the organizations that just need to be Informed (i.e. Accounts Receivable) versus those Accountable parties who need to review/approve transactions (controllers).  Applying RACI to the above mess dropped the number of swimlanes down to 8 in a single afternoon, we then started arguing over the organizational boundaries, and, as always, headcount.

Often, I find the reason for proliferating swimlanes is a merger or layoff in the distant past.  Organizations define their boundaries based on what they are comfortable doing, and will fight to the death before allowing a "foreign" task box into their swimlane.  Innocent seeming tasks can carry a lot of visibility, workload and risk.

I tend to start with a linear chart, showing the workflow from a simple chronological perspective.  Once everyone agrees that, yes, this is actually the way business flows through the company, then the time is right to start placing markers on boxes or lines that denote when a handoff occurs.

If you de-pressurize this process, it encourages groups to look at the business from a flow perspective, rather than as a zero-sum headcount exercise.  It doesn't hurt that, usually, I am finding ways to make the administrative work "go away" as part of the bargain!

- Stephen Sopko

Proposals

(originally published 2/25/2009)

A lot of friends, with one eye on more US Government spending in one bill than most of WW2, are asking me about Government proposals.

My first, best piece of advice - read the RFP, and respond with exactly and only what the agency wants.

I wrote & bought off RFPs for 10 years, then spent 5 selling to them.  The biggest RFPs we ever lost were ones where we bid, "to take the customer in a new direction."  The worst criticism we ever got was from a customer of 15 years after we moved to a 'one-size-fits-all-because-we-don't-have-the-headcount-to-do-a-good job" business model.

Crash. Burn.

Increasingly, online purchasing systems are removing any capability to get creative with the RFP process.  You buy the way Ariba (or SAP) tell you to buy.  I think buyers miss a big opportunity by letting the machine do the work, but that's the way it is.

In this environment, sellers are well-served by a master agreement in place with the agency.  Then, you can bid easily, even electronically, knowing that a consistent set of terms apply to all transactions.

Finding RFPs is another story, but once you've found them, here are a few key steps:

• Read the RFP
• Summarize the technical requirements for your engineers (delivery guys, etc) and give them as much time to figure out how to meet them as possible
• Start workign with suppliers and partners for special pricing, also early - the more time you give them to get approvals, the better
• Talk with Sales, while Government folks respect the quiet period of the RFP timeline (unlike their commercial counterparts), you can learn a lot of environmental (mission, pressures, changes at the top) that you need for the response
• Outline exactly what the response document must contain to be considered acceptable by the buyer
• Fight against putting anything more into the response, if you must, mark it as "Additional Information" and put it at the back - that flags a buyer not to review the marketing material
• Watch out for changes, amendments & extensions, different buyers announce them different ways
• If you will need an extension, ask for one EARLY
• Keep in touch with the technical team as they develop the solution - DO NOT wait until the last minute and yell, slow & steady engagement keeps it on their radar and gets the deadline met
• Learn the technology for how to submit the bid - most systems come with a thick manual, so be prepared to spend time learning how to use it

I will add some more as I think of them.  A final note - the temptation is to put Public bids on a clerical person, because they contain a large amount of clerical effort.  The problem is that purchasing is done differently by every one of the 20 or so big Federal bureaucracies, 50 states + DC, 100-odd cities, 120-odd school districts and 3200 counties... Getting on top of that, and keeping up as they evolve, goes way beyond bid clerking.

- Stephen Sopko

Equipoise 2.0

(originally published in 2008, this is an updated version...)

My lovely and talented wife sent me this word of the day, found on a blog about Agile software development teams.

Equipoise is the equilibrium formed by offsetting conflicting forces.

What a great word for negotiators!

Now, my style of negotiations is very different from most.  During my formative years in the profession, I was always negotiating on behalf of one team, with another team.  Many corporate negotiators have a similar challenge - so, where most negotiation classes assume:

MOTIVATION -> YOU || OTHER <- MOTIVATION

Reality is more like:

MOTIVATION -> Stakeholder \
MOTIVATION -> Stakeholder -> Negotiation Team -> YOU  ||  OTHER <- Similarly communal structure
MOTIVATION -> Stakeholder -> Controls Auditors /
MOTIVATION -> Stakeholder /

When I was a government contracting officer, at least I had the advantage of controlling the money.  Groups that wanted to buy something gave me their money (allocating it to the buy in the finance system), I then committed the funds by completing the negotiations and signing the contract.

...but I digress.

My view of negotiators for both buyers and sellers is that we are standing on a 10 foot tall 4"x4" pole, surrounded by pitchfork and torch-wielding stakeholders.  Our job is to quiet down our mob, so we can shout across at the other pole-standing negotiator from the other side.  Equipoise is a perfect word for succeeding in that environment!

Before you can start shouting across the divide, you must achieve equilibrium between the competing forces inside your own company: sales, manufacturing, finance, legal, environmental, diversity, marketing, some guy on the board a vendor knows, subcontractors, etc.  Let's call this internal-equipoise (EPi).

Now you are ready to take this shaky set of negotiation points and work with your counterpart to match it up with their similarly shaky internal-equipoise.  Success here means achieving external-equipoise (EPe).

Finally, you need to take the resulting deal and pass through its requirements to your vendors, sub-contractors, etc - I'd call this relational-equipoise (EPr), because everything built to date can be shattered by a key sub refusing to agree.

I've been doing yoga (well, my wife's Wii Fit does Yoga, I try not to fall off the board) - and so many of the positions involve achieving a state of relational balance.  Do this with one leg, and that with your arm, now achieve balance in that position, with the conflicting forces trying to throw you off balance.

Equipoise.

- Stephen Sopko