Author: Tim Cummins
Compared to other world regions, Australians sees less purpose in contracts – and those expectations are mirrored in the results they perceive themselves achieving.
IACCM’s recent study, ‘The Purpose of a Contract’, is generating many interesting findings. Participants were offered eleven areas of possible purpose, ranging from value as a support for marketing, to finance, to operations and risk. In every category, respondents from Australia rate the performance of their contracts lower than any other region, by an average of almost 20%. The only areas where the sense of purpose is close to the worldwide ‘norm’ are:
- defining rights, responsibilities and obligations. Australia is in line with the global average for purpose, but 8% below average for results.
- governance and performance management. Australia is again in line withe the global average for purpose, but 14% below average for results.
- a framework for a mutually successful business outcome. Australia is marginally below the global average for purpose and 18% below average for results.
Why the difference?
The only immediate clue for this variation from norms comes in the form of the write-in comments. These reveal a possible divide between views of the contract as a legal instrument, as opposed to an operational tool. There is a sense that the contract fails because of a lack of authority – and this is especially strong among those who work for large multi-nationals, where contract terms and models are perhaps imposed from elsewhere.
Some comments also reflect a degree of cynicism about the role of lawyers, especially in areas such as the contract’s effectiveness as a communication tool or operational guide (each being a category where effectiveness is rated especially low).
These findings are interesting because Australia is also among the most innovative in approaches to contracting.
The focus on alliances and collaborative relationships goes back almost 20 years and today there has been tremendous success in raising the quality of performance management through better contracts.
So ultimately I am left with the hypothesis that these differences are a matter of culture – that the general approach in Australia tends towards greater collaboration through strong and well-defined relationships, but that this approach is often frustrated by external forces.
Limited local empowerment reduces the overall effectiveness of the contract and therefore gives it a reduced purpose.
This is especially notable when it comes to the role of the contract in supporting the brand and corporate values: for Australians, that certainly is not something that their contracts achieve.
Tim Cummins will be a keynote speaker at the PASA CPO Summit in March. ‘Future Proofing You’ will be held on 13 & 14th March 2018 in Sydney.
Read more from Tim Cummins on the Committment Matters website.
Tim Cummins is CEO of the International Association for Contract & Commercial Management (IACCM), a non-profit organization that he founded in 1999. Read more here.