W.W. Grainger, Inc.
Author: Tim Cummins
Not only are comic contracts not a joke, they are indicative of the way forward. And not only is it socially responsible to make contracts understandable, it is also good business.
It doesn't matter what statistics you choose, most people cannot understand contracts and many don't try – they just sign. And of course this attitude relegates 'the contract' to a position of limited importance. It is an annoyance when it causes delay, a source of celebration when signed and a potential weapon (or defence) when things go wrong. But a tool for communication? Not really. A brand promise? Rarely. A source of corporate pride? That really is a joke.
It can be different
A recent article by J. Kim Wright illustrates that things don't have to be this way. For years, IACCM (the International Association for Contract & Commercial Management) has promoted contract simplification and has offered its Contract Design Award to those who design for users, rather than remain stuck in 18th century legal tradition. There are many good reasons for thinking differently – and of course it doesn't have to involve turning the contract into pictures. Indeed, the section of the article that most struck me was this:
”As they took the long and cumbersome contract apart, they became more and more aware of terms that did not fit their values or culture. They had to reverse-engineer the complex lawyer-focused agreement to get back to the true intentions and needs they wanted to address in the contract. What were they really wanting to accomplish? How would their contract reflect their workplace culture and values?”
Do your contracts reflect your business values?
Throughout my career, I have found most top executives to be disengaged from the contracting process. They see contracts as necessary, but not of real interest or relevance. Yet as the above section illustrates, a contract tells you about a business, its true beliefs and ethics. It is their commitment – or lack of commitment – to the market. As former IBM Chairman and CEO Lou Gerstner once said:”Contracts are about brand image”.
In some of the best and most successful businesses, I have been fortunate in seeing a very different level of executive engagement, where the CEO actually wants to test and align 'what we say versus what we actually commit'. For many, doing an honest evaluation is a scary, controversial and eye-opening experience because they come to realise the scale of mismatch between their public and marketing statements, compared with the actual commitments contained in the contract. But having that alignment is the real route to sustainable growth, to ensuring true 'ease of doing business'.
Is it really the case that contracts should be about minimizing commitments or – far worse – trying to take advantage of people, of suppliers, of customers? Is that the standard of ethical behavior to which you and your business aspire? If not, then it's time to undertake an evaluation, to bring your contracts into line with your value system – and perhaps to make them something that is designed for users, a source of pride, a communication that can be understood. Now that really would mean that your contracts were not a joke.