Subscribe to my Feed
« So, what’s the big deal with apologies? | Home | Will the next President clean up the Justice Department? »
Why “handshake deals” aren’t always great business ethics
By Lauren | August 6, 2008
One of the services I provide to clients is writing contracts and engagement letters for them to use when they start new business relationships. Depending on what my client expects to be doing, the documents can get pretty complicated, spelling out the scope of work, the obligations of the other person, how and when my client will be paid, what work is due when, and so forth. When I deliver the finished product, my clients sometimes give a sigh for the “good old days when business was done on a handshake.”
With due respect, I’m not sure those “good old days” were especially good from a business ethics standpoint.
I’ve never been in favor of taking a combative stance with clients and customers; to me, if you can’t work with someone from a position of mutual trust and respect, you really shouldn’t work with them at all, even if there’s a lot of money on the table. At the same time, even the best-intentioned people can have misunderstandings and failures to communicate, and “handshake deals” offer lots of opportunities for both. Without a written summary of what’s going to happen, it’s very easy for two people to talk right past each other, not discovering the differences in their expectations until something goes wrong.
A well-written contract or engagement letter protects both parties to a business transaction, spelling out what’s going to happen when and how so that no one gets unpleasantly surprised. The goal isn’t necessarily to spell out every possible contingency, because unforeseen events have a funny way of happening regardless of how careful you are. But in my opinion, a contract or engagement letter is a great tool to use to make sure that you and your client or customer have essentially the same understanding of how a business transaction is going to proceed. Good communications support good ethics – contracts and engagements letters can be great communications tools.
Topics: Business Ethics, Risk Management, business communications, customer relations, ethics |