Managing Vendors – Articles by Jim Everett

Tips on managing vendors, skills and competencies required

Mindsets in Business – Part 4

Posted on | February 21, 2011 | CLICK HERE TO COMMENT OR ASK QUESTION

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When is someone simply being polite or generous, and when are they keeping track of favors gifts as a scorecard mindset?

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This question applies inside companies, with vendors, 3rd parties, and in personal life. Not all gifts and favors are generous acts, and not all return obligations are taken on board. Different companies, cultures, personal values and backgrounds interpret generosity differently. It is less of an issue with large, multi-part contracts, and more relevant in smaller projects and 3rd party relationships.

Who has not heard the expression, “Now you owe me, big time!”. Usually it is after that person has gone above and beyond the call of duty, or has done something that is construed as a favor. This is a strong indicator that the person keeps score. When they do what they see as a favor, they expect commensurate payback at some stage. They will often do favors as a way of building up chips they can cash in later. Here is a small story to illustrate.

One time, a consultant I know was engaged to select a vendor on behalf of a client. The consultant’s approach in these situations was always to be objective, and to recommend based how each candidate rated on the set of criteria agreed with our client. That is what they are paid to do. Since it was a relatively small project to supply, customize and support a proprietary program to deliver interactive media in-house, each of the vendors was briefed personally at their offices, with a more informal approach. This can be a good way to get a first-hand feel of how the vendor would work with the client.

In once case, the VP of one of the candidate vendors knew the consultant personally from previous work together. To go over the details of the RFP (Request for Proposal), the consultant visited the VP at their offices, and a week later met informally over coffee at a local shop. The vendor VP offered to pick up the tab for coffee, which seemed at the time to be no big deal. As it turned out in the final assessment, the software from that vendor did not meet the criteria for functionality, nor did they have the resources to customize.

Another, more suitable vendor was select with more robust, functionally suitable software, and a team ready to customize. My colleague later told us he had been called by the VP of the unsuccessful vendor and was berated angrily for not choosing them. The VP had said, accusingly, “You did not choose us! I thought we had a friendship and agreement. We bought you coffee, and have done other favors for you by sending you articles and information!” My colleague was stunned.

The problem was a difference in mindsets around what is meant and expected from small gestures or “favors”, such as buying coffee or emailing articles. My colleague’s mindset saw these gestures simply as part of a collaborative thing to do as part of ongoing business networking. The VP of the vendor saw them as logging up points of obligation. Ironically, the vendor company was out of business a year later, and the selected vendor was serving the client well.

Some cultures have gift-giving and favor-doing as part of their business model and mindset. Not exactly bribes, but creating unspoken obligations. Other cultures treat mutual gifts and favors as a way of breaking the ice when starting business dealings. Other cultures see doing favors as a sign of being subordinate, or in a supplicant status. Some vendors use gifts simply as a way of saying, “We hope you will keep us in mind.” When first doing business with a new vendor, or a vendor in a different culture, it is important to be aware of their mindset, and what gifts and favors represent. Be careful giving and receiving, and make sure that both parties understand.

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