Are your executives ready to sign-off on your contracts?
As buyers, we probably all wish that suppliers were more accountable for their sales practices and commitments. Whether it is the promises made when we buy a new car or the cost and timing of a house extension, most of us have suffered from the frustration of dealing with sales people who seem somewhat untroubled by truth or accuracy.
In the world of business, buyers often try to drive performance through onerous risk terms, ranging from liabilities, to liquidated damages, to rights of termination. But in general, this approach does not work well. So now we appear to be moving to a new era of control, requiring suppliers to sign up to even more specific undertakings of integrity.
As in the past, Government seems to be the driver of change. Exasperated by repeated performance exposures, several Governments are exploring the idea of forcing senior management in key suppliers to confirm that their internal processes have included thorough validation of contract commitments and their capability to perform.
In theory, this capability assurance is a role that should be performed by Contract or Commercial Managers. In practice, it often is not. Commercial staff may be involved too late; they may lack the skills or authority to mount effective challenge; their concerns are ignored or overridden. But soon that may be changing, with the creation of an integrated ‘Capability Assessment function’. Quite where that leaves the contracts or commercial manager remains to be seen. Some may be at the forefront, identifying and leading the necessary changes within the business. Others may simply be swept aside or absorbed by this new assessment and sign-off group.
The world is changing and the days of the commission-based sales organization are numbered. Business integrity will continue to advance and steadily will become a pre-requisite for winning significant contracts.