Assignment 5# Managing the Contractor–Customer Relationship Assignment

Ethical issues that can arise in contracting

The term contract has been used to mean an agreement that is normally binding and valid that occurs between more than one party. It is very important for each and every organization to be controlled by ethical foundations which happens to be its pride, for it, to have a proper perception among the clients that it serves. With the presence of a business contract, it will act as an ethical framework that controls and binds all the parties in an organization to adhere to.

It is important to acknowledge the fact that, there are so many methods that have been used in the recent past for service delivery in the organizations, of those methods, contracting method has been on the rise. However, as elaborated below, there are many threats to achieving organizational goals in consideration of the ethical issues:

First and foremost, we have conflict of intrest. In the process of contracting services, conflict of intrest has proven to be the most unethical behavior practiced by the parties involved. According to (Fredrickson 2005), when conflict of intrest comes in contracting services, it leads to the public services to be not settled properly. He gives examples of cases that involve conflict of intrest that occurred in the eighties that really affected the public; where, the officials from the pentagon offered contracts of defence to parties for a pay off and these were, the scandal of “ill winds” and that of the “savings and loans.” Through such activities, the public will lack faith in the staff and they will thus, not believe in the process of contracting. This is what will inturn make people not to trust the process and think of a way of corrupting the officials of the staff.

As explained by (Denhardt and Gilman 2005, 269), for the sake of gaining back the trust of the public in the process, there is need to do reviews of the contracting process which should be done by an independent third party.

The second unethical issue is accoubntability. This means taking responsibility for an action done by a person. As put forth by (Dicke and Boonyarak 2005, 189), the law has mandated the administrators of the public sector a duty to be like stewards who take care of the interests of the people. It is this duty to the public that makes them accountable as compared to those at the private sector. It is thus important, when drafting contracts, to consider putting aspects of accountability even to the private partners. This will help promote ethical behaviours in all sectors not just public.

The third ethical issue is integrity. In simple terms it can be used to refer to following or observing moral values. It is also key when it comes to relationships involving the process of contracting. As per the words of (Luke 2005, 160), not much has been done to both private and public sector when it comes to integrity. It is thus paramount that, integrity is observed both at the agency level and individual level so as to deliver services effectively to the clients. A lot of research should be done on the factors of integrity, since, it has proven to be a very important ethical issue.

Fourthly, we have fair competition as another ethical issue in contracting. Competition has not only proven to be important when it comes to service delivery to the clients, but also in contracting process. Proper competition to award of contract ensures, presentation of exceptional value. It is the duty of the organization that wins the contract to provide quality services to clients. It is important for this process to be fair, for the sake of avoiding the competitor price fixing or collusion, which will affect the competitiveness in the market and it is also unethical.

Fifth and last, we have laws and regulations. These laws are not only aimed at protecting the employees, but also consumers and the other parties in the market. When an organization receives a contract and signs it, they should put in mind the terms and conditions binding it. For the sake of clarity and being safe, an organization should make use of legal advise so as to be on track as explained by the contract terms.

Analyze and discuss the strengths and weaknesses of the dispute process using the concepts discussed in the text

The process of contracting can prove to be very frustrating at times. When the relationship between the contractor and the client is not friendly, it will have a diverse effect to the management and the success of the organization. This issue can lead to; increase in the cost of contract that can lead to its nullification and also the impact on achieving money value. Thus, there is need for all the parties in the organization to avoid any dispute that can arise through maintaining proper relationship with customers. Since disputes are not intended, it is the role of the organization to make sure that they put in place procedures of resolution that are cost effective, just incase it arises.

The process of dispute resolution is very confidential not like judicial way, which has to be made public. Organizations thus, should ensure that they protect the confidentiality of information in dispute resolution. Since the process is flexible, it is bound to be reviewed according to the terms which puts into consideration the good will of all the parties that are involved. Also, the cost implications as compared to judiciary is lower since, the parties involved are fewer, and procedure used is an agreement by both parties.

Nevertheless, this process also has its own challenges. First, when a decision is made in a dispute process, it has no legal bindings. As compared to many situations that people face, a lot of them would otherwise wish to get justice when a judge makes a final decision on a case. But in this situation, the process of resolution is voluntary thereby, all the parties involved might not participate fully to the process. Biaseness can also be witnessed in the process especially in the event one party is very persuasive than the other.

Importance of contractor-customer relationship

For proper relationship to occur between the contractor and the client, there is need for proper communication in the process which will help in, planning, implementation process and finally in the assessment of the project. When good communication occurs between the two parties, it will act as a good basis to maintain contact with each other. Lack of communication between the parties can make an agreement to collapse since, none of the parties involved will be interested in the process. This then will come will a lot of cost implications.

When communication is there between the contractor and the customer, it will ensure a healthy relationship between the two. Under normal circumstances, when two parties communicate cordially, their relationship will not only survive but will also become strong. This is because, when they don’t communicate, they will not get good feedback which will result to a misunderstanding that will then result to a conflict. It is also important to acknowledge the fact that, the process of communication should be fair and honest. This is because it has been proven that, honest partners receive honest feedback in the process of communication and thus, leading to proper understanding.

When a contract is made however, it is important that the contractor satisfises the needs of the consumers. So proper communication here is vital in ensuring that there is an understanding and satisfaction of both parties’ needs. Failure to which, the contractual relationship will no doubt end. Lack of good communication will not only affect their relationship, but will also affect their work. Thus, it is important for both the contractor and the client to be in touch with each other in a way that is honest for the sake of ensuring the continuation of their partnership.

Describe the risks and responsibilities in the contractor-customer relationship

In every situation that involves an engagement between two parties, there has to be risks involved and should be considered accordingly. For the sake of the contractor and the customer, it is good that the contractor ensures that they they put in place practices that will reduce the risks on the part of the customer when it comes to their finances, legal implications as well as their profession. It is important to understand that these risks in a customer-contractor relationship vary depending on the services provided and the vendor involved as discussed below;

The first risk is strategic risk. This is a risk that has a direct effect on the strategic plan of the customer. Since a strategic plan is long term in nature, the risks that might come in handy will also have long term implications. Thus, it is a duty of the contractor to ensure that their relationship with the client is one that will not compromise the objectives and goals of the client in relationship to their strategic plan.

The second risk is the reputation risk. This is a risk that puts the reputation of the customer at stake, due to their engagement with the contractor. For example, a situation where the contractor decides to bring in a service provider who will pose a risk to the customer, it will not just affect the client but the running of the organization as a whole. The problems that arise in an organization should be detected with the use of appropriate management techniques. For these risks to be managed effectively, there is need for a proper engagement between the contractor and the customer. Before that is done, there is need to explore the risks well so as to put in place proper mitigation measures.

According to (Early, 2010), the relationships between parties in a contract have become multidimentional in nature, such that for success to occur, there has to be proper integration in the business not just solving the challenges that occur. It is the role of the leadership in the organization to ensure that, its goals and objectives go hand in hand with the expectations from the contract.

Apart from the risks as elaborated above, responsibility has also proven to have a major effect on the relationship between the customer and the contractor. It is the duty of the contructor to fulfill the terms that the clients have defined in the contract. Finally, both parties involved in the contract; that is the contractor and the customer, should work towards what the agreement states to avoid conflicts in the performance.

References

Sacconi, L. (2012). The social contract of the firm: economics, ethics and organisation. Springer Science & Business Media.

Houlden, P., LaTour, S., Walker, L., & Thibaut, J. (1978). Preference for modes of dispute resolution as a function of process and decision control.Journal of Experimental Social Psychology, 14(1), 13-30.

Xu, Y., Yen, D. C., Lin, B., & Chou, D. C. (2002). Adopting customer relationship management technology. Industrial management & data systems, 102(8), 442-452.

Anderson, K., & Kerr, C. (2002). Customer relationship management. Retrieved from http://www.briefcasebooks.com/andersonfm.pdf