The role of a commercial manager is often difficult to define and describe, as the nature of the role and where it sits in an organisation will depend on the size and maturity of each organisation. In terms of competence, a commercial manager will usually have either finance or legal background but may also be someone with several years of contract negotiation or sales experience.
The roles of a contract manager, project manager, sales manager, financial controller or in-house counsel, are well established and understood but less so the role of a commercial manager. As for trying to describe the, the answer is that it is often a combination of all of the above.
Having spoken to a number of commercial managers in different organisations, some of the descriptions we have heard are:
“The difference between a lawyer and commercial manager is that when a lawyer gets asked to look at a contract, they will open the document and start reading. A commercial manager will pick up the phone and speak finance, sales, and other stakeholders first to understand the deal, before they even open the document.”
In order to properly review, draft or negotiate a contract, you need an understanding of its commercial context and the contractual risks it poses to the business. This means having an understanding the both the product or service and their market, as well as the importance of the customer and the contract from a strategic perspective. From a more practical perspective you need to understand the profit margin, cash flow and project management risks. This doesn’t mean that a commercial manager has be a product expert, lawyer, accountant, compliance expert or operations manager. As another commercial manager describes it:
“It’s not about being an expert in every area, it’s about knowing enough about each of these areas to be able to ask the right questions to ensure that the business understands the proposed deal. It’s being able to identify when you need to get expert help or lift a potential problem up to the management team”
It’s not surprising then, that most commercial managers are good network builders, able to develop good relationships with finance, development, operations and sales teams. They understand the politics of an organisation and how to get things done. The role is often regarded as being that of a spider, sitting in the middle of a web. It is often the case that if you need a piece of information, a commercial manager is a good person to ask. If they don’t know the answer, then they will know the where to find it and more importantly, who to ask.
The role of a commercial manager is often described as being the conscience of the business, or the final sense check – someone who is able to ask the ultimate question – should we be entering this deal?