Making Contracts Agile
In today’s connected and fast-paced world, traditional contracts are not keeping pace with companies’ more agile development and management processes and are making it more difficult to manage suppliers and distribution partners. There is a growing appeal for companies to incorporate more flexible contract negotiations and drafts. This is where agile contracts management practices can help.
The agile contracts management model puts more emphasis on flexibility, continuous communications, and multiple milestone check-ins, and focuses on outcomes versus traditional deadlines and all or nothing deliverables. Chances are if your company has not begun adapting to this new way of thinking, you may be missing out on business as more and more companies become agile-minded.
A recent NPR study shows that 1 in 5 jobs in America is currently being held by a worker under contract. Freelancers and staff augmentation processes are becoming more common with the shift to remote and project-based work. In fact, many believe that within the next decade, contracted employees could comprise half of the total workforce. As businesses grow, project and staffing needs shift. Agile contracts allow that to happen with ease.
Here are four ways to build agile contracts processes:
Define Priorities and Focus on Results
An agile contract is customized to meet specific goals, but also provides flexibility for the inevitable changes that occur. The key to making sure the contract is agile is defining mutual goals and drafting an agreement that outlines outcome priorities clearly. Rather than detailing out all of the scenarios to avoid in a contract and including curt language to that effect, it is best to focus on overall results and what will be delivered. This gives room for all parties to adjust and shift resources to meet the agreed to priorities as necessary without risking a breach of contract. Since an agile approach encourages consistent communications, the ability to reach stated objectives is enhanced.
- Seek Feedback
To successfully engage in an agile contract, both sides of the contract must know what the other expects. This includes exchanging honest feedback, so each side can make changes when needed. A constant loop of communication must be established from the start of contract negotiations, continued throughout the contract drafting, and has to be a key part of the ongoing working relationship throughout the execution of the contract. Failure to keep this feedback loop open is often a breaking point for contracts in general, regardless of whether they are more traditional or agile. However, contract agility is only achieved when both parties are open and willing to provide ideas and able to accept constructive criticism for the sake of the shared goal.
- Emphasize the Partnership
Basing contracts on mutually defined outcomes creates more opportunities for partnership. Often there are more than two parties in a contract, but this does not mean the parties work completely independently of each other. In fact, agile contracts achieve the best results when a true partnership is formed. Collaborating together with mutual respect is a key aspect to keep the contract moving forward towards the goals set. In the past, it was often the case that rigid contracts created conflict in the relationship, leading to negative outcomes and sometimes lengthy and expensive litigation.
- Be Transparent
Making transparency a priority in agile contract management is key to a positive working relationship. Open and honest feedback and collaborating as partners enables all parties involved to be transparent when unforeseen issues arise throughout the contract process. If one party tries to sweep an issue under the rug, versus bringing it to everyone’s attention, conflict is often created, and the problem can become exacerbated. Instead, when working with the agile model, the whole point is to check in often and make changes as issues arise, confirming why transparency is crucial throughout the life of the contract. Concannon Business Consulting offers expertise in agile contracts management. Our experienced contracts management team would be happy to review and help create an agile contract structure for your business. Contact us today!