Trust-enhancing contracts
Trust, according to the Speed of Trust by Stephen MR Covey, is a function of two things: character and competence. Character includes your integrity, your motive, your intent with people. Competence includes your capabilities, your skills, your results, your track record.
When I read that book, I was struck by how much of it applied to contracts. Covey cites evidence that mistrust is a direct business cost because of its impact on their relationships with clients or suppliers. His trust audit scores key behaviours such as: talking straight, demonstrating respect, creating transparency, clarifying expectations, keeping commitments, and extending trust. In my view, you could only get full marks if you company is using simple contracts!
Simple contracts enhance trust by managing expectations and leaving no room for nasties. Your contracts should have terms which make your relationships better, not worse.
Loveable
As it says in Chapter 4 of my book on Small Works, the aim of your contract should be to record your agreement, safeguard your business and avoid disputes… all without annoying your client. A simple contract is easier to read and highlights where the document is inaccurate, incomplete, or ambiguous.
In my 2014 Survey into Construction Contracts, a surprising 30% said they loved their contracts because they help them do business. But 10% of respondents to that survey thought contracts were a necessary evil.
A loveable contract needs to start with a positive process, include terms which enhance trust, and then must perform in practice. To reduce friction, its payments terms must be understood by everyone who uses them. To respond to current conditions, it needs a flexible change process. Your contracts should safeguard your business without annoying your clients/suppliers. Do they?
What should you do?
We know that over 80% of business people say their contracts are either very hard or impossible to understand. Simplifying those documents will help build or enhance trust and make you fall back in love with something whose purpose is to help you do business.
Start with simplicity (especially before you decide to automate).
