Building Business Relationships

Are you struggling to create and keep profitable customers? Columns for Sales and Marketing Management who wants to build business relationships.
Saturday, July 19, 2003

The 'Lingering CEO' Syndrome (Abstract)

The "Lingering CEO" Syndrome Citigroup's outgoing CEO is a great leader. His continued presence as chairman, however, will only cramp incoming CEO Chuck Prince's style. [Business Week: Daily Briefing]

A change of command, should really be a change in command. When a senior executive like a CEO to remain in place during an extended transition period it most likely causes conflict and strife. Who is really in charge, the old CEO now chairman, or the new CEO?

In the case where both CEO's are qualified individuals, the organization will split alliances.  Any co-leadership creates friction in the command structure that overtime break down the companies ability to successfully compete. In the long run, all business relationships suffer under these conditions.

For the outgoing CEO:

For the new CEO:

Justin Hitt teaches executives how to create strong business relationships that can increase profits while improving customer loyalty. To learn more about business relationships visit Inside Strategic Relations or call +1 (877) 207-3798

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Every executive will be replaced some time or another

Charles de Gaulle. "The graveyards are full of indispensable men." [Quotes of the Day]

In respect to your business relationship with yourself, when was the last time you brought up a replacement. Many executives today work too hard, have too many regrets, and are damaging their health for what ever is next. No matter where you are, you'll always want more, so why not enjoy what you have.

The strategies of strong business relationships help you produce a network of stronger people around you.  These people create the environment that is your business, they help your business reach its objectives, and in term help you reach your own. Are you really enjoying what you are doing with your business?

I encourage you to keep an eye out for a "younger, more capable individual" to take your place someday. It isn't about you being unable to provide your organization what it needs, it's about continuance. If anything should happen to you, have a team that can stand on it's own.

Often managers fear if they find someone who can outperform them, that they will soon be replaced. What do you have to fear?  If you have a vested interest in the equity of a company, and someone can create greater profits, well let them. Your replacement doesn't have to take over tomorrow -- cultivate teams of people who can take over in years.

In searching for your replacement, surround yourself with able bodied individuals who help you excel.  You don't have to be all things to your company, just compel other people to take the business were it should be. Enjoy the satisfaction of the great things your people can do for the company, take yourself to where you want to be, not where you think you are.

Justin Hitt teaches executives how to create strong business relationships that can increase profits while improving customer loyalty. To learn more about business relationships visit Inside Strategic Relations or call +1 (877) 207-3798

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Could a strong relationship be bad for business

S.E.C. Demands 6-Month Ban on New Ernst & Young Clients. Federal regulators reiterated their demand yesterday that the accounting firm Ernst & Young be banned from accepting new audit clients for six months. [New York Times: Business]

Your customer has a software product that improves your business processes, it's a direct relationship and improves your abilities as a company. What could be wrong with such a relationship?  Well, a lot of things if you're supposed to be an independent auditor.

Impartial relationships between companies and executives has put Ernst & Young in a tight position. Already experiencing a reduction of clients since the last quarter, they are banned from excepting new clients for 6 months. Could you afford such a penalty for a questionable relationship?

Certain industries have rules of independence that govern transactions between organizations, especially the client-vendor relationship. These rules are built around public companies to prevent fraud, secure (public) investors interests, and govern the transaction of banking agencies.

It's great to have strategic partners that improve your business, but they shouldn't be customers too. It is difficult to keep a relationship neutral when you buy from your customers in a substantial way. You must always be aware of the rules in your industry as far as independence is concerned.

Stay abreast of how other perceive your relationships, if you are in the public eye this is ever more important. I'm not going to lecture you on what is right or wrong in a business transaction, but just remember, if it can embarrass you in the paper, you probably shouldn't do it.

Yes, some strong relationships can be bad for business. How should executives protect themselves when developing new business relationships?

  1. Sign only agreements provided to you through your counsel.  Even after an agreement is reviewed, only sign an authorized copy received through your counsel. Never receive any contract directly from another party, always have them forwarded to counsel first.
  2. Review all agreements against existing relationships and rules.  When your legal counsel reviews an agreement, provide them background about the new relationship encouraging them to check it against other company activities. By pointing out conflicts of interest before binding terms you can reduce your long-term risk.
  3. Allow yourself a few hours before finalizing any decision.  Scarcity is a buying motivator often used to encourage people to make decisions at the immediate moment. Nothing is so important it can't wait a few hours. Take a break to discuss the terms with your counsel, even leave the meeting to spend some time getting things right.
  4. Always outline all agreements in writing. Make it company policy to never enter into a verbal agreement. Often those decisions made in a hurry are the ones that hurt the most. Use at least a letter of understanding to document the terms of the agreement, conditions, and how each party will be compensated.
  5. Always attend meetings with another person.  As a corporate executive, it is important to provide yourself with a second opinion (a second set of ears) to document any agreements made in conversation. This could be a secretary or even an understudy who is only observing.
  6. Be aware of ongoing business relationships created by managers.  Often executives are hurt by the relationships of others inside the organization. Make sure everyone is aware of the types of relationships that are appropriate for your type of business. Hold individuals responsible for mistakes in this area.
  7. Separate yourself from decisions with personal friends.  Have a business justification for transactions with friends, family members, and close associates. Never share information of mutual benefit that is of a sensitive or restricted nature. If at all possible have financial exchanges reviewed by your counsel.

Justin Hitt helps executive build stronger relationships that can increase profits and create loyal customers. For more information visit Inside Strategic Relations or call +1 (877) 207-3798

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Last update: 04/18/2004; 3:05:23 AM.

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