Thursday, June 07, 2007

Personal Relationships & Work-Related Contracts

Over the years, I have had the opportunity to work for a range of organisations, from the 3-person outfit to the hegemonic multinational corporation.

In small businesses, where one often invests one's own funds, personal relationships are pivotal. It can make a difference between spending a bomb on an item or paying for the same item at slightly over cost.

Prudence is a virtue indeed.

I realise that same prudence is a virtue in much larger organisations. It can be a factor in deciding how much bonuses you bring home at the end of the year!

But in larger organisations, where one deals with funds often belonging to others, personal relationships should be on the watch list.

Giving contracts to a friend or a relative or even one's personal supplier of goods or services (for example, the plumber of your house) should be an issue of concern.

Like it or not, there's always some form of kickback; and this does not necessarily mean mere cash or gifts-in-kind. It could be something as unobvious as goodwill.

This in turn marks the beginning of an organisation's journey down the slippery slope of reckless spending. One could end up paying more than is necessary for a good or service.

In some cases, this has eventually led to the creation of the rogue employee. And the manifestations of these have been seen in the corporate world at different points in history.

It is for this reason many large organisations find it useful to have procurement committees.

It is also for this reason one often solicits various quotes for a particular good or service before awarding a contract to a supplier; this is quite often an effective and objective way of ensuring an organisation is getting good value.

If you work in a large organisation, be wary of the colleague that awards contracts to those he or she knows personally.

Don't be afraid to whistleblow and bring this to the attention of the independent members of your Board of Directors!

Dharmendra Yadav

Please consider the environment - do you really need to print this?

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