Two Simple Steps to Make Sure Everyone Knows What's in That Contract

Do you remember what the first day at your job was like? I've had more than my share of first days over the years. So, I'm a bit fuzzy on some of the details.

But I do remember one thing vividly: corporate orientation training.

Corporate orientation is usually when you're given a nice tall stack of documents to sign off on. Things like human resources policies, code of conduct, privacy and confidentiality agreements, and so on.

Now, I'd forget what was actually in those documents minutes after signing them. It was just too much information to keep track of. But I did sign off on them. And I knew exactly where to find them when I needed them.

The process of tracking what your organization has committed to in supplier agreements should be no different.

In fact, I'd argue it's even more important to know what policies are flowing through to supplier agreements to protect yourself from liability exposure.

In this week's video, I'll show you the two simple steps you can take to make sure everyone is clear on what terms and conditions are in your supplier contacts.

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Video Transcript

Do you remember your first day at your job? Or if you’re like me, do you remember the many first days at all the jobs you’ve had over the last 25 years?

I don’t remember everything about every first day, but corporate orientation always sticks out in my mind.

Specifically, all the policies that I had to review, and all the documents I had to sign off on. HR policies, code of conduct, privacy, security, confidentiality.

I never remembered what they said, but I knew they were enforceable, and I knew exactly where to find them if I needed to refer to them, because organizations generally do a pretty good job of centralizing their corporate policies and making sure everybody knows where to find them.

So there’s really no reason why we can’t treat contract management the same way.

In fact, I would argue that it’s even more important for employees to know exactly what corporate policies are flowing through to their supplier and customer agreements.

Every professional services agreement that I’ve ever executed —  as a procurement executive on the buy side and as a consultant on the sell side — had some very stringent privacy, confidentiality, and indemnity language in it.

We spend so much time and effort negotiating those three specific clauses, and yet I often see both customers and suppliers exposing themselves to all sorts of liability because they simply don’t understand what’s in their contract.

And there’s no central location where they can go and look it up.

Obviously the first and most crucial step in fixing this is to centralize your contracts.

But there’s another step you can take to eliminate this exposure (at least with your supplier agreements).

It’s something I’ve implemented at a few organizations and it’s really not that hard to do.

Most of the time, the privacy, confidentiality, and indemnity language that we put into our supplier agreements closely resembles the same policies that we sign off on as employees.

Add a step to your internal process requiring every new supplier and the executive from the business unit that approved that deal to sign off on a document saying that they’ve read and understood the privacy, confidentiality, and indemnity language in that contract.

And that they understand the personal liability should they breach any of those provisions.

Now chances are that they don’t have any personal liability. But I guarantee you: if you get somebody to sign that document, they will read the contract and they will understand what it says. And they’ll be that much more vigilant when they’re dealing with each other.

So, that’s it for this video.

Please remember to check out our course on the four pillars of contract management at oneviewnow.com/course and stay tuned for the next and final video in this series: The risk of exposure to audit.