by Guest Blogger – Brooke St Clair

There is a lot of work involved in establishing a new contract in an organisation. However the real work often begins when the contract is signed because this is when the benefits of that contract truly start to accrue to the organisation. Unfortunately this is often the area that organisations pay the least amount of attention to and once the contract is executed it is then put in the bottom drawer of one of the company executives and forgotten about until problems arise. At this point the contract (albeit somewhat dusty) emerges from the drawer and often events and circumstances have moved on to such a point that the contract provides little assistance in helping you resolve these problems.

You will be thankful to know that there is a better way! While basic contract administration is a good starting point, the critical element that most organisations are missing is understanding the importance of building and maintaining a strong relationship with your suppliers or clients. The practical reality is that contracting is just another relationship and with all relationships it needs to be mutually beneficial in order for it to be effective. This should not be underestimated by organisations as a strong relationship with your supplier or client will achieve more for getting the outcomes you desire than by studiously applying the small print of a contract that may have been drafted years earlier. An established relationship can also be invaluable in achieving a timely resolution to any issues or problems that arise in the contract before they escalate into contract disputes.

So how do you go about getting this good relationship? The starting point is understanding your contract management style and that of your counterpart. There are many different values and behaviours that people bring to managing their contracts but using the human synergistics circumplex as a guide they can generally be allocated to three different categories:

  • Constructive styles: focus on win-win outcomes, facilitating trust and respect and creating good interpersonal relationships
  • Passive defensive styles: avoiding difficult discussions, focus on keeping others happy, focus on following rules and processes, prefer to maintain the status quo, generally play it safe and are risk averse.
  • Aggressive defensive styles: focus on protecting your organisation, being perfectionist about contract compliance, generating win-lose outcomes and competing on contract interpretation.

In generating long term sustainable relationships with your suppliers or clients constructive styles are one of the most powerful tools you can have at your disposal. When both parties to the contract are exhibiting constructive styles, strong sustainable relationships can be developed which can yield long term productive outcomes for both parties and produce greater satisfaction as a whole.

Sounds easy right? But the real challenge in establishing strong relationships with your suppliers or clients is how you handle the non-constructive styles. What do you do in the event that your counterpart in the other party is exhibiting some of these non-constructive styles and this is creating situations of conflict?

The trick is to recognise the difference in styles and understand where you and your counterpart are different. This will enable you to objectively recognise possible sources of conflict and put strategies in place to manage the sources of that conflict accordingly.

Here are a few examples:

  • If you know the other party is risk averse and you want to present them with an innovative idea that results in mutually beneficial outcomes, conduct a risk assessment to show them how you can work together to manage the associated risks.
  • If particular individuals in the other party avoid difficult discussions about the general ‘health’ of the contract, consider establishing a confidential performance evaluation process to gather feedback from stakeholders in the other party on the performance of your company. This will enable them to provide any constructive feedback in a safe environment and avoid those difficult face to face discussions.
  • If your counterpart generally exhibits aggressive defensive styles they may consistently reject your offers for coffee or lunch catch-ups to build the relationship. You may interpret this as a personal rejection, however in reality to them it may be merely following an internal policy. To work successfully with these individuals you need to learn to work within their rules and boundaries. It is important to recognise that while they are quite willing to act professionally and maybe even be friendly they are not going to be interested in establishing any kind of relationship that is even remotely akin to a friendship. By understanding this upfront you can avoid a lot of unnecessary effort and shift your focus to other suppliers or clients you are managing that are more amendable to establishing these kind of relationships.

If you as a contract manager can recognise what your differences are, you can start to work with these differences to generate mutually beneficial outcomes.

What do you think your contract management style is and is this helping or hindering the establishment of strong mutually beneficial relationships?