Contract Management versus Relationship Management

The simplest answer to this question is yes, but the reason for this is a bit more complex. It is no secret that the business environment is constantly evolving, and as things change, so do people’s expectations. These inevitable changes and shifting expectations are occurring at all levels. For example, leadership roles frequently expand and shrink, the responsibilities of employees fluctuate, and clients are becoming increasingly particular. Companies must be able to adapt quickly to meet these changing demands and remain competitive, and this requires strong management skills and processes.

In general, management involves managing people and expectations and is really about fostering positive relationships. This may involve a relationship between a supervisor and an employee, a company and its clients, or between partners in a joint endeavor. For many of these relationships, there is a contract that outlines the parties’ roles and obligations. However, managing such contracts requires a lot more than just worrying about fulfilling responsibilities and mitigating the risk associated with failing to do so. Here is why contract management is essentially synonymous with relationship management:

Collaboration

A contract is a formal collaboration, and clearly one of tremendous importance because it imposes legally binding obligations upon its signatories. If your company enters into contractual agreements, this demonstrates a commitment to collaborating with the other party for a defined period of time, and in some cases, perhaps even indefinitely. Thus, the success of this contractually stipulated collaboration is dependent upon the parties maintaining a cordial and harmonious relationship.

Compromise

All relationships, contractual ones included, require compromise. People have different ideas and priorities, but the only way for a relationship to work is for each party to be willing to give and take. Unfortunately, one party often tries to take more than it is willing to give, and this frequently leads to nasty contract disputes. The simplest way to avoid such costly hassles is to be willing to engage in a fair compromise so that all parties involved may prosper.

Communication

Relationships are bound to encounter struggles along the way, but most obstacles are easily circumvented via effective communication. As contract-related issues arise, they must be brought to the table, openly discussed, and resolved in a mutually agreeable fashion. Clearly, communication correlates with compromise, once again reinforcing the importance of both in managing contractual relationships.

Compliance

In order for parties to a contract to remain on friendly terms, they must ensure that they actually perform as agreed in the contract. There is no doubt that failure to comply with clearly stated contractual terms is the root of most contract disputes. In the event that full compliance is not feasible, for whatever reason, this must be communicated immediately and steps must be taken to mitigate the consequences of such breach. Contract compliance requires solid management on both sides, as well as all of the aforementioned actions of collaborating, compromising, and communicating.

People often say that relationships take work, and contractual arrangements are no exception. It makes more sense to invest in the maintenance of a healthy contracting relationship than to spend resources and exert effort on rectifying any wrongdoing. For far too long contract management tended to be reactive, but these days, the business climate requires a more positive, proactive approach.