Proper management of the contractor-customer relationship is requisite to the success of a business deal. The fulfillment of contractual mandates between customers and contractors requires both professional and ethical management structures (Dovalina, 2006). When the relationship between customers and contractors is not managed ethically, numerous adverse effects are likely. Some outcomes of unethical management of contractor-customer relationships include resource wastage in legal fights and loss of trust amongst partners. Thus, proper legal guidelines must be used in the contracting process Markgraf (n.d). Dovalina (2006) argues that contracting is an “attractive form of alternative service delivery for local, state, and the federal government.” With increased outsourcing among government agencies, there is a need for new management skills. According to Langer (2010), “greater outsourcing requires greater oversight of projects, and this is creating managerial problems.” This essay is aimed at discussing the ethical issues that can arise in contracting. It will analyze the strengths and weaknesses of dispute-solving procedures used following detection of unethical behaviors. Further, the essay will discuss the importance of communication in the contractor-customer relationship. Finally, it will highlight the risks as well as responsibilities inherent in the relationship between a customer and a contractor.
There is a consensus amongst scholars that one of the main challenges in managing contracts is the establishment of healthy relationships between customers and contract managers. In contracts, administrators are mandated to manage their staff and their external outsourcing partners (Langer, 2010). The complexity of the problem arises from the fact that most business executives, across different sectors, are ill-equipped to manage contracts effectively (Langer, 2010). The modern society craves for efficiency in every business process. In this quest, “contracting out is perceived as the optimal means of creating a newer, better, and more efficient means of service provision” (Dovalina, 2006). In addition, contracting out provides streamlined operations and incentives to reduce cost. However, numerous ethical gaps need to be addressed in the management of contractor-customer relationships. Firstly, costing of contracts must be “ethically negotiated.” In this case, there is need of striking a balance and ensuring that both contractors and customers benefit from the relationship. Secondly, transparency must be emphasized during the negotiation and bidding process. Moreover, conflicts of interest must be avoided, and in case they exist, must be addressed publicly. The involved members must also “refrain from participating in the relevant decisions” (Markgraf, n.d).
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The lawyers representing clients in the negotiation processes must know their customers. Goldman (2007) offers a “summary of model rules of professional conduct applicable to contract drafting and negotiations.” The rules and regulations within the particular industry must be followed so as to guard the professional standing of lawyers and their clients. Also, during the contract period, there must be proper incentives to monitor compliance with contractual obligations by the parties involved. A positive reputation must be maintained between the parties. An ethical organization executes contracts within legal bounds, without endangering the interests of any party.
One of the main aims of following laws and regulation is to ensure that there is a proper foundation for addressing disputes (Lawther, 2003). The dispute process helps in strengthening the contractor-customer relationship. For instance, the push for transparency in managing contracts and customers ensures that every decision made is based on professional codes of conduct and not biased to a party or individual. The contractors must demonstrate to consumers that the prices quoted are competitive and fair in the market. This will ensure that there is trust and mutual understanding between the two parties. Conversely, a weak dispute resolution process is likely to favour one party at the expense of the other, leading to a weakened relationship. Communication is also vital in the contractor-customer relationship. Therefore, managers should take a leading role in ensuring that information concerning contract-related decisions flows to both parties consistently. Proper management skills are required for this to be achieved. This is because, for every decision made, the effect will spill over to the two parties. Good project and relationship management require superior managerial skills (Langer, 2010). The project is threatened if proper communication lacks.
Contractor-customer relationships have both risks and responsibilities. On the one hand, the client has the responsibility of defining the terms and conditions, as well as all the expectations. On the other hand, the contractor is responsible for fulfilling the terms and conditions spelled out (Lawther, 2003). Every party also has a responsibility to play for the realization of contractual obligations (Langer, 2010). It is also the responsibility of both sides to ensure that decisions made are professional, legal, and ethical throughout the contract period. This will aid in avoiding conflicts, and wastage of resources in their resolution. Both parties must also ensure transparency throughout the process, including disclosing special interests and their relationships with people taking part in the contract process. Contractors must adhere to market rules, and their services must be offered at fair prices. This is because unethical bidding and pricing “hurts the effectiveness of the market” (Markgraf). Moreover, quality maintenance and enhancement must be upheld as a priority for contractors.
Contractor-customer relationships harbor two key risks. These are emotional and financial (Lawther, 2003). For instance, in case the contract is terminated untimely, one party is likely to experience financial loss. Likewise, the relationship can be a source of stress and anxiety for one or both parties. An emotional bond is created once a contractor-customer relationship is established (Lawther, 2003). Thus, in case it does not proceed as expected, negotiations are likely to be damaged. This may jeopardize the entire contract.
In conclusion, maintaining contractor-customer relationships requires good managerial skills. Leaders involved in contract administration are mandated to manage their employees, and the customers they serve. The key ethical issues that need to be addressed in contracts include adherence to rules, honesty, conflict of interest, accountability, transparency, and misuse of discretion. Ensuring that these ethical issues are addressed aids in avoiding and resolving the disputes that are likely to arise during the contract period. Communication is critical in ensuring that each side understands the reasons for making particular decisions. Both parties also have various responsibilities in the contractor-customer relationship. Fulfillment of these responsibilities is also crucial in addressing possible risks. Overall, adherence to legal and professional codes of conduct by both contractors and customers is essential to the maintenance of good relations.
References
Dovalina, J. (2006). Assessing the Ethical Issues Found in the Contracting Out Process. Applied Research Projects .
Goldman, E. (2007). Ethical Issues in Contract Drafting/Negotiation.
Langer, E. S. (2010). Managing the client-contractor relationship: Increased bio/pharmaceutical outsourcing demands new management skills. Chimica Oggi-Chemistry Today , 28 (4), 27-30.
Lawther, W. C. (2003). Contracting for the 21st century: A partnership model. The procurement revolution , 167-216.
Markgraf, B. (n.d.). Business Contracts & Ethics. Chron.com. Retrieved from http://smallbusiness.chron.com/business-contracts-ethics-74199.html
