After his release from a playing contract at Luton, Watson was given the position of first-team coach by Luton manager
Mick Harford on 14 January 2009. After Harford's departure on 1 October 2009, Watson continued in his coaching capacity under new boss
Richard Money until May 2010, when he left the club. Following the departure of
Aidy Boothroyd from
Colchester United to take the manager's job at
Coventry City on 20 May 2010, Watson expressed an interest in taking up the vacant managerial position at his former club. In May 2015 he was appointed manager of
Maldon & Tiptree However, Watson left the club after only eleven days to take up the position of assistant manager to
Teddy Sheringham at
Stevenage. He left his position in February after Teddy Sheringham's departure. From July 2015 to November 2015, he worked at the academy of
Colchester United. In August 2016, Watson was appointed assistant manager at
Eastleigh. In January 2017 he was appointed to the same position at
Whitehawk but left the club after just two games, following a change of manager. In March 2017 he was appointed manager of
Bishop's Stortford. He left the club at the end of the
2017–18 season. On 28 June 2018, Watson was appointed assistant manager of
Hungerford Town. He left the club on 2 October to join
Ebbsfleet United as a first-team coach. However, only eight days later, he was appointed caretaker after manager Gary Hill's departure. After a three-game unbeaten run the club confirmed, that Watson had been appointed to the manager's job on a permanent basis. The club was beaten in the heaviest defeat in 27 years, 7–0 by Barrow on 4 January and also crashed out of the FA Trophy to lower league opponents Royston. Other heavy losses such as a 4–0 drubbing at Chesterfield away ultimately saw the club relegated out of the National League and Watson sacked. On 7 January 2021, Watson was announced as the new manager of
National League South side
Billericay Town. On 5 October 2021, Watson was sacked by Billericay after Watson led them to one win and one draw from eight matches to start the season. In January 2024, he joined National League South club
Welling United as assistant manager to Rod Stringer. On 23 March 2025, it was announced that Watson would be taking over as manager of Sheppey United for the 2025/26 season, taking over from the recently deceased Ernie Batten. On 9 February 2026, after a winless run of seven matches, Sheppey United announced that they had parted company with Watson as manager. == Personal life ==