Organizational Hand-Shaking

by Krishna on March 1, 2009

In a previous article about outsourcing, I briefly mentioned “hand-shaking” between the customer and the vendor. By this, I meant that both parties should go through a phase of understanding about how each side operates. This allows them to communicate properly and complement each other’s weaknesses. If this step is not present, small issues can escalate into major problems and can cause distrust and breakdown between the teams. This process is not unique to outsourcing. It could happen anytime an organization starts working with a new person or entity, such as a new employee, contractor or vendor in the same town, state or country.

In many cases, handshaking is a combination of two steps: marketing and legal. The marketing step involves the customer and person/vendor getting to know each other through their public representations (such as resume, website, etc.) and their private declarations (in interviews or questionnaires). The legal step is the negotiation and signing of a contract with the employee or vendor. After that, the two sides start working with each other.

This closely resembles getting married after a few dates, i.e., each party is surprised to learn things about their partner that they never knew before the marriage. If the surprises are pleasant or trivial, it will not affect the relationship. But if they are unexpected and significant, then it could derail the association between the two sides.

Unlike a personal relationship, a business association cannot usually go through a long stage of understanding each other before the legal step, because it costs money. The RFP process is an example to the contrary, but it is expensive, can introduce other types of risks and can be voluminous without being comprehensive. To keep the process of hiring a new person or vendor inexpensive, one has to focus only on a few important selection criteria.

This means that after the contracts are signed, both sides have much to learn about each other. And every interaction between them will provide new detail that can help or hurt the relationship. The first step is to build an environment of mutual trust and a reservoir of good will. That is, each party will trust that the other side is sincere in their dealings, and interpret every action in the best possible terms. So, when there is some unpleasant encounter, they do not start blaming the other party, but instead find out why the problem occurred and find how the issue can be solved.

It is of course possible that one side (customer or vendor) may be incompetent, but if due diligence was done in the selection stage, the chances of that happening are low. Most problems are usually due to misunderstanding, misinterpretation or wrongful assumptions. Remember, each party has been successful in the past with other customers or vendors. So any problem has to do with some peculiarity of the relationship.

One of the solutions to problems could be the termination of the relationship not because of any deficiencies in one party, but because the different ways of working are incompatible with each other. Example: a company used to CMMi-style processes working with a vendor using Agile processes. It could theoretically work, but if there are too many issues, maybe they are not meant for each other.

Everything I wrote above is equally applicable for a new employee in a company. Signing the employee contract is just the beginning. The company has to go through the process of understanding and training the employee so that the relationship can be successful. Usually, the effort is successful, but sometimes, it is not.

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