Relational Contracting

 

Woman in a red skirt signing something

Relational contracting focuses on the relationship, as well as the deal.

It builds trust through the alignment of strategic objectives and creates partnerships instead of transactions.

It embeds guiding principles for the relationship – such as honesty, loyalty, autonomy, equity, reciprocity and integrity.

It shares a vision of what joint success means and establishes a fair and flexible governance framework based on equality and respect.

HOW DO CONTRACT TOOLKIT DO THIS?

We enable both parties to share data in a shared workspace. Instead of a ‘them and us’ culture, we create one team, to deliver the goals of both. Person A of Bodgitt Ltd checks certain obligations while person B of Fixers Inc. checks others.  Suddenly, the most appropriate person in either organisation has done one check and everyone knows it has been done.

 

We do this by breaking the contract down into its individual obligations and crowdsourcing the tasks.  Any problems can be escalated in seconds so that the respective contract managers see the issue simultaneously.  They can seek a solution either jointly or purely in their own organisation. The app offers this in real-time.

WHO IS CONTRACT TOOL KIT FOR?

All organisations that manage complex contracts.

The app provides governance for every obligation of each contract. It reminds individuals to check that the obligation is being performed. It reports the results via dashboards and keeps surprises to a minimum.

An organisation was entitled to increase its prices in line with inflation. Unfortunately, the delivery team had not read these Terms; they had only read the Schedules because they were in Operations and didn’t have access to them.

 

Thus, they missed this important opportunity.

 

When they realised, they asked their customer to backdate the increase. Unsurprisingly, the customer refused, agreeing only to pay the new rates going forward.

 

That omission caused a £1m loss on that one contract alone.

How does the Contract Toolkit app promote relational Contracting?

Sharing monitoring and outputs of the contract means the parties can have dashboards appropriate to their roles. When an issue is highlighted as failing, both teams can see it. If not dealt with at the amber stage, it escalates to red or even black automatically. Senior people in both organisations will see the issue on their dashboards and interrogate the data on their screen. If they need to, they can get involved and direct it to resolution.

A national provider of services has many contracts with a customer that is coming to market with a large opportunity. 

The MD wants to land this opportunity so is keen to make sure that the customer finds them easy to do business with.

The list of disputes with this customer across all the contracts can be seen on a single screen in Contract Toolkit along with the estimated costs to settle.

Now the MD can choose whether to decide some or all of them in favour of their customer.

They can either instruct the commercial team to make such deals or have a principal-to-principal discussion to make such a deal.

The decision is transparent and clear governance is demonstrated through the tracking in the app.

Our apps provide real-time information to senior management that enables them to:

  1. build exceptional relationships
  2. minimise the number of surprises
  3. maintain good governance
  4. work from anywhere with good internet links.

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