There are the business risks people are aware of. And then there are the ones that lurk in the fog of day-to-day corporate life. Like icebergs, what pokes above the surface only hints at the danger.
Here are a few tips to recognising and dealing with these hidden risks:
Think you are working too hard? The odds are you’re right. Organisations are lean, and expectations are higher than ever. The 50-hour plus week has become the norm.
With a few exceptions, you are responsible for your own correspondence, calendars and coordination. Your e-mail inbox is stuffed, lunch is a sandwich gobbled while hunched over the keyboard. The result? Too many people spend the great bulk of their time reacting.
You are so busy putting out fires that you can’t even think about issues that aren’t screaming. This is workable in the short run, but the matters you are not getting to today are often the major expenses (or lost opportunities) of tomorrow. The bottom line: neglecting issues that are important but not urgent can destroy an organisation over time.
Avoiding this iceberg requires building a healthy corporate culture that is able to achieve a balance between the short and long term. This means changing how people see themselves, their co-workers and their organisation, and changing how they behave. Here’s what you should do:
Recognise that no one can be effective 24/7 and encourage everyone to regularly power off;
Discourage face time. Reward productivity and accomplishment, rather than the sheer number of hours spent on the job;
Throw a life raft to people who are drowning. Help them identify tasks that are unnecessary or can be offloaded to others;
Limit the number and length of meetings, involve only people who truly need to attend, and use a written agenda to maintain focus; and
Establish a mechanism for identifying and ranking longer-term issues. Then free up or acquire appropriate resources to focus on the top priorities.
The steps are simple. The challenge (and path to success) lies in the consistency of their implementation.
Poor contract management
Everyone recognises the value of a good deal, and negotiating contracts is important. But once a contract is signed, it often disappears into a file drawer. Doing the deal may be more exciting than managing the agreement. But inadequate contract administration can have nasty consequences you will not see coming.
What is involved in contract management? That depends on the type of agreement and the industry, but here is a taste:
Enforcing price caps;
Preventing unwanted auto-renewals;
Providing required notice of cancellation;
Avoiding multiple contracts for duplicate or overlapping services;
Ensuring that payments aren’t made on expired contracts;
Renewing trademark registrations;
Reviewing agreements in a timely manner; and
Reducing the risk of litigation by tracking compliance with contract provisions.
Finding and implementing a contract management solution became a top priority for one technology company when it discovered that it had just signed an excellent multi-year agreement for telecommunication services.
Unfortunately, their existing contract for the same services still had more than a year to run. The overlap cost them more than $100,000. Litigation due to non-performance or lack of enforcement of contract provisions can, of course, cost many times more.
Fortunately, the solution for this problem is relatively easy. Technology comes to the rescue in the form of readily available software designed specifically to manage contracts.
Once you shine some light on the issue, the next steps are to identify, acquire and implement the right contract management solution.
You may even find that reducing this risk has an unexpected upside. A small city recovered $70,000 in overpayments for expired contracts in the first six months after implementing contract management software and an additional $200,000 in the next fiscal year.