Treating each other with integrity in business is the test of a relationship that will stand the test of time. Integrity means ensuring your dealings are conducted with honesty, reliability and sincerity.

An article I recently read had the theme of professional advice the writer didn’t think they needed but it turned out to make a big difference in the long run. In particular one paragraph caught my eye. It started with “Face value has no value” and was focused on how the actions of others can impact us, especially if those actions impact us negatively.

Personally or professionally we generally accept a lot of what we are told based solely on how we feel about a person and what we see based on if a good connection been made. Either way, it’s about whether or not we can relate to the information and, in other words, is based on not much more than face value.

From time to time I work for the NZ Police, and the number of business owners and members of the public that come in reporting incidents that have their foundations in the acceptance of material information that has its root cause based solely on face value only is astounding. These misunderstandings for one reason or another then often become a much larger issue, sadly even resulting in significant financial impact or more on occasion.

In business most people genuinely want to do a good job, and the people we employ and engage generally intend to do a good job, most of our customers aren’t intentionally difficult, so why do the numbers of disputes and levels of disharmony appear to be on the increase? However, it happens and for whatever reasons a significant factor tends to be clarity of the communication. Most of us have heard the saying “the devil is in the detail”. Well, it’s true when it comes to business. There is always more to every story. The problem arises when we fail to look deeper and miss the opportunity to make a bad situation better or don’t consider mitigating our risks from the outset.

Small business ownership is a significant part of our economy usually having less than 20 staff. These individuals have started their business because they are good at what they do, so it’s not surprising that many small business are particularly bad at managing their contracts. To be fair, this lack of management oversight is not solely the domain of small to medium businesses either as much larger businesses have been shown to be equally at fault. A common myth is that if it’s not in writing then there is no contract – this is simply incorrect. Contracts are both written and verbal, however if it’s not in writing then there is simply no stake in the ground to fall back on. The benefit of having something documented is that it provides information to support intentions at the time. We must remember that there are two sides to everything and we each have a responsibility to ascertain and seek clarification when needed.

Business risk today includes all the common areas like controlling finances, product reliability, human behaviour, competitors, public perceptions, commercial and legislative requirements, fraud corruption, equipment and technology. And as more companies down size or seek to do more with less budget they are also potentially exposing themselves to unquantifiable risks such as defaulting customers or suppliers. Mainzeal here in New Zealand is an excellent example of defaulting business and the impact of which has had a enduring downstream effect, one which was largely over looked as a potential risk by customers and suppliers alike.

So for what it’s worth, here is my professional advice that you probably don’t think you need but just maybe you’d be pleased to have one day:

  1. Everything you do in business presupposes there is a contract, so if it’s potentially important to the business then get it in writing.

  2. Procurement is a proactive business process that underpins the organisation’s strategy by managing relationships with internal customers and the supply market to deliver the requirements of the customer. Consider some of the benefits:
    • Lower overheads
    • Innovation
    • Opportunities for mutual growth
    • Reduced costs and improved service for the customer
    • Increased profitability

  3. Mitigate your risks. Consider what keeps you awake at night then consider both the likelihood of it occurring and the impact if it does, then put plans in place accordingly. Perhaps even consider insurance if that’s appropriate.

  4. Think of contracts as business tools rather than legal documents – tools that help achieve successful outcomes and deliver bottom line value. Good contracting is not just about reaching agreement. It’s a three stage process: entry, performance and exit.

  5. In your company who cares the most about the commercial relationships? If it’s not you then who cares, why, what information have you got and is it current? If it’s not current, invest time and effort in ensuring its real time and maintained accurately.
    In closing, a good friend of mine, Colin Fairweather, has a saying that goes, “We must be satisfied that what is being done is what is wanted, and what is wanted is being done.”

How we can help you
If you have any questions about the way your business is managing its customers, suppliers, contractor arrangements or about contracts in general whether in writing or not, our team is experienced in working with both large and small businesses across a wide range of industries and we can assist you with strategies and expertise in developing policies and procedures to future-proof your business. If you would like to discuss this further, please contact any of our team members on 0800 464 844.

Cathy has more than 20 years of experience across a wide range of disciplines including Service Delivery, FMCG, IT, Banking and Telecommunications having worked with major New Zealand and dominant global organisations. Outsource management, cost saving and contract management strategies are areas she is both professionally and personally passionate about.
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