This week: the collaborative opportunity in your contracts

This week's driver: frameworks, not firepower

Contracts are the bedrock on which a business sits, and you find them in every area of the business. Making them fertile ground for new legal issues to pop up and grow.  Agreements are also an easy way to drown in complexity, helped in no small part by lawyers who will tell you this is all very complex and as a result, draft you one that’s 24 pages long.

So to stay on track to land your long-term plan, you need to have a clear focus and a consistent approach to your contracts and agreements. 

Here are eight things every CEO should do before, during and after signing an agreement, to prevent new legal stuff from coming up and derailing your business plan. They make up the exact approach I use with every contract I see.  And they work whether your contract is written or verbal, implied or explicit:

1.  Know who you're getting into bed with.

Before you pick up a pen or even start talking to the other business, do a wee bit of homework on them. Get a rough feel for what they do, where they do it and what drives them & makes them different. If you can, take a wee bit time to actually get to know the individuals in that business as people, not just as a business partner. That’s because trust is the magic ingredient for long-term success with contracts. And you can’t build trust without first building understanding and rapport.

2.  Build a deal that works for both sides.

Be open about what you need, why, and what's in it for you. Then actively listen to what they need and why. Ask yourself “would I accept everything I'm asking for if I were them?” If not, change it till you would. Contracts are a two-way thing. And imbalanced situations quickly fall over.

3.  Partner with volunteers, not hostages.

Mutual success binds businesses together far more tightly than any legal document possibly can. So stop worrying about making your contract water-tight and stop trying to lock people in: no-one gives their best when coerced. Instead, only ask for the minimum commitment - the shortest notice period - you genuinely need to make alternative arrangements should things not work out as planned.

4.  Treat your contract as an aide memoire, not a weapon.

Don’t think about your contract as a mechanic for suing the other business. Instead, see your agreement as first helping you to think about all the things you need to consider to create an environment for success. That contract then serves  to remind you what you've both discussed and agreed. Despite what your instincts (or lawyers) may tell you, a contract is not about setting you up to take the other person to court. Litigation is gambling in wigs: expensive, stressful and uncertain.

5.  Make your legal documents reflect who you are

If you want to be seen as easy to deal with, your contracts and T&Cs need to be easy to deal with too. If you want to be innovative & different, they should be innovative & different. Write in plain English. Explain every change. Make it human. Just because contracts have looked boring and formal to date doesn’t mean they have to look that going forward. Make your contracts look and feel like an extension of your business. You want people to engage with them, after all.

6.  Raise all concerns or issues as soon as they pop up so they can quickly be resolved

Assign one or two people per business to actively manage the partnership. Get them to meet regularly & discuss all concerns immediately, so issues get sorted before they become problems. Long-term success comes from relationships, rather than from letting things build into problems.

7.  Build in an internal dispute resolution ladder - and never jump straight to court

As a backstop, include an internal escalation mechanism: first to the respective contract manager’s boss, then to the CEOs. And if that doesn’t work, reach for mediation to privately build a bridge between you. Resist “going legal”. Remember: its gambling in wigs, and, unlike with mediation, your losses in court will be very public.

8.  Treat your contract as a living document

You don't have a crystal ball. When the assumptions underlying your deal change (and they will), discuss it together openly & then adapt your agreement so both sides remain happy. A contract that no longer reflects reality is just a source of future conflict. So, if its out of date, change it, even if its working to your favour in the short term.

This week's sleeper: Assuming staff will tell you what they see, hear and think

As your business grows, it's ever more important to be able to stay in touch with everything that's going on, and hear everything that you need to hear, about your business. 

Especially as, once you can't touch the sides of your business any more, you've no idea whether there are 6 inches or 600 feet between your fingertips and solid ground. At that point in particular, you become dependent on your staff telling you what you need to know about your business. 

Don't sleep on staff raising issues automatically and willingly. 

It doesn't matter how friendly and approachable you are. It doesn't matter if your door is always open & you always make yourself available. It doesn't matter if you've told people they can raise anything with their line managers or with HR.

It's really hard to raise stuff that goes against the grain. It's really hard to raise stuff with the "higher ups" (which is why you get collared so often in the pub, when the Dutch Courage is flowing). It's much easier to keep your head down, than to stick it above the parapet.

So you can't just assume that your staff will automatically tell you what they see, think and hear.

Instead, you need put in place formal feedback systems. And those systems need to provide three things:

• independence (no, your HR team are not independent)

• anonymity/confidentiality (knowing the issue is what matters, knowing who raised it doesn't)

• follow through (because nothing is more dispiriting than gearing yourself up to raise something only to see it ignored)

Those three things are the essential conditions needed to encourage staff to tell you what they're seeing, rather than just assume they will. 

So CEOs, here's the question to ask yourself this week: do we provide our staff with an independent, confidential reporting mechanic, that we take seriously and actively follow-up on?

Till next time

Andrew