Watson retired from playing in 1976 to run a steel business. He then managed Airdrie and Motherwell, but only lasted six months in charge of the latter as they were relegated from the Scottish Premier Division. Watson then helped to set up another business, Cairnhill Structures, in 1990. He was also known as a lay preacher.
In April 2015 Watson was inducted into the Airdrieonians Hall Of Fame, an awards ceremony to honour former Airdrieonians managers and players.