Except eventually in the context of friendship, almost every action in our lives that is not basically carried-out in solitude is subject to agreements. Family relationships are more stable if based on agreements. Political programs and organizations as well as governments, no matter if they are local, regional, national or supranational, can only be successful through agreements. International business of any kind leverage the FTA (Free Trade Agreements) that have been signed bi- or multi- laterally by countries under the auspices of the WTO (World Trade Organization).
Most companies make arrangements to reach agreements that are formalized in contracts in their usual business management activity (shortly “make agreements”). If the company has an international footprint (MNC/MNE: Multi-National Company or Enterprise) or international trading activity, it probably needs these agreements quite frequently and faces challenging trans-national issues. And if the company has an uncertain or/and complex business relationship matrix, as commonly the case when producing-marketing-selling innovative products, it surely needs them urgently and consistently.
Business is actually framed with agreements of many kinds, in sales, purchasing and for alliances, aiming at many different purposes. Every kind of business in fact leverages reaching agreements with clients, suppliers/providers and allies. Big companies, SMEs and start-ups in every sector, in the national and international arena, make agreements to survive and grow.
The Agreement functions (Agreements Strategy, Agreements Development, Agreement Execution and Contract Management) play a hinge role in the company with the areas having any kind of interest regarding the agreements and the resulting contracts formalizing them, in order to satisfy every possible appropriate requirement, interaction and impact of the company agreements. The figure below represents the “Agreements Egg“, showing this 360 direct and indirect involvement in the agreements activity and results for relevant areas in the company.
The Agreement functions are presently and mostly carried out in a handicraft way, with the solely formal support of the Legal area (by General Counsel), that takes care of any possible contract issues in front of the applicable courts, in a reactive way for the business needs in agreements formalization.
The HoA (Head of Agreements) is the position with responsibility over the agreement functions, assuring that business is boosted through effective agreements, made with significant and conveniently selected partners, consistently through sales-purchasing-alliance relationships, following the optimum model for each agreement type to support and implement the strategy, containing comprehensive conditions as required through the organization, within the contract context defined by the Legal function and then operated through a client-conscious contract manager role. The high ranking evolution for the HoA is the CAO (Chief Agreements Officer).
We will see in next articles on the topic AGREEMENTS IN BUSINESS MANAGEMENT, why, what and how agreements should me implemented in business management. Indeed the topic should be incorporated into Master education in Business Schools, both at the specialization level – in order to provide the market with the professionals that are actually being looked for to cover related positions in many well-known firms – and at MBA level to help CxOs sense the impact that consistent and well-made agreements have in challenging business management.
Virginia Cortés, Expert in Business Agreements & Contracts and Professor in International Business Management in ESIC.