All You Need to Know About HR Contract Management

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All You Need to Know About HR Contract Management


Modern HR departments have many hats. Contract management is one example of all the many hats they wear daily. The importance of contracts between employees and employers is paramount. Proper management of these documents is crucial to a successful business. The contract management process could go wrong or not be optimized in many ways.

Poor contract management can have devastating consequences for both the company and the employee. Below are some strategies for contract management that HR departments should keep in mind as the workplace and labour market continue to change rapidly and in unpredictable ways.


What Is Human Resource Contract Management?

Human resources contract management refers to the management of operations within an organization. It is similar in concept to sales and procurement contracts. It also shows the business relationship between employees, organizations, and certain terms and conditions. Managers must consider human resource contract management’s strategic and critical aspects.

Strategies for Contract Management That HR Departments


Keep On Top of Storage and Handling

Good contract management is both compliance- and organizational-oriented. Contract storage and handling are essential components of good contract management. The best contract management software provides digital contract repository which is an essential component of document management.

It provides peace of mind for clients, employees, suppliers, vendors, and clients. Because everything is centralized, it makes it easy for employees and new employees to access the information they need, especially if they are unfamiliar with the details or disorganization in their employer’s document management.


Establish A Centralized Location

Until the advent of contract lifecycle management, all employee contracts were kept in large filing cabinets. The principle remains the same, regardless of whether you store your contracts in a filing cabinet or on the cloud: HR departments must keep all contracts in one central location. This makes it easier to search for contracts that need to be amended or referenced, saves time, and ensures employees and managers know where they are.


It is evident that having sensitive data in one central location is a challenge. This requires cybersecurity.

Easy Signing

Contract signing part of drafting a contract is usually the hardest. Getting both parties to sign a contract can be difficult, primarily if it is not located in a central location or if there are disputes over terms or benefits. It is essential that you have e-signing capabilities in your contract management process.

To avoid potential bottlenecks, both employees and the company should have easy access to the same document and be able to insert signatures from both sides easily. Sometimes, inefficiencies in the signing process may cause employees to be hesitant or give the impression that the organization isn’t forthcoming about their rights and obligations under the contract.


Performance Should Be Regularly Assessed

Your HR department should begin mapping out KPIs for contract management. The most common performance indicators are contract length, employee satisfaction, and relationship quality. They also show how strict you follow milestones and deadlines. And how expensive it is to update and maintain contracts.

HR departments can also learn from past mistakes by conducting regular performance assessments. Assessing how specific language in contracts affects clarity, employee satisfaction, and dispute resolution is crucial. This will ensure that both employees and the organization understand what is expected.


Keep Track of Deadlines and Major Milestones

The number of employees a company hires, whether full-time, part-time or contract workers, increases as it grows. It becomes more challenging to keep track of employment and other contracts once this happens. Different employees will have separate contracts. They may have additional terms and deadlines. Good contract management requires that you keep track of all these differences.


Leverage Templates

Consistency is a crucial component of good contract management. Standardized language templates that have been reviewed and approved by your legal department can help you save time and reduce risk. Templates can also help you understand your contractual obligations better. A template can save businesses a lot of money as it makes it easier to find legal experts when a new contract needs to be drafted.


Avoiding jargon and using simple language are two of the best practices for contract templates. This makes it easier for clients, employees, and vendors to understand and make contracts more easily understood by all parties. Once a template structure is established, it can be modified and updated as necessary as part of the review process described in the previous paragraph.


Sometimes deadlines and milestones are difficult to meet, and some require specific actions by employees and employers. An HR professional can have a much easier time monitoring and prepare for these dates with a good contract management system. This will help to avoid being left behind, which could lead to significant consequences for both the company and the employee.


Continuously Review Your Process and Assess Your Goals

Contract management is dynamic. It evolves to meet market realities and business goals. The first rule of good contract management for HR professionals is to have a built-in review process that constantly reviews procedures and ensures that contract management aligns with organizational goals. These goals could be cost savings, risk management, or increased transparency between employees, employers, and their families.

Understanding why you are changing your contract management processes is crucial before the review begins. It takes time to create a contract management system. Auditing and tweaking it can be complex.

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