by Dr Vince Giuca
“A man’s word is his bond” may be relevant in another age and in a different setting but, within complex and fast-changing business environments of today, it can be a recipe for disaster. And, of course, the same can also be said of a woman’s word.
What one says and what the other hears, let alone understands, can be poles apart. People have fallible memories and circumstances that were never discussed or contemplated in more casual settings can arise with drastic consequences. Therefore, how important is it to have a structured approach and to put in writing what you have agreed about the partnership? Is a shareholders’ agreement sufficient? What should be documented?
These are all key questions that require serious consideration and an equally serious response. You are going to invest a great deal of your time and money (and emotion) in your business. Right! Well you don’t want the partnership to place all this into jeopardy and you don’t want to expend a lot of effort and emotion into sorting out disagreements and conflicts with your partner(s).
Putting on paper all of the key issues will provide you with the foundation for a successful partnership. It will not guarantee success – there are many other things that impact on the success or otherwise of a business. However, having the right foundations in place will go a long way in helping to achieve the desired outcomes.
While a legal document (such as a shareholders’ agreement) is a necessary component for establishing a partnership, it is not sufficient. The danger for many partners is that this gives the impression that the major issues have been dealt with, whereas they may not have. Furthermore, partnership issues continue to evolve and on-going discussions and resolutions are critical for a healthy relationship.
Issues that can cause problems and should to be documented include business planning and direction, decision-making processes and authorisations, job roles and responsibilities, employment hiring (particularly family members), organisational values and behaviours, and succession and exit planning.
ABOUT THE AUTHOR
Vince Giuca is the Founder and Executive Director of Partners-in-Business Institute (PiBI), established to assist executives, managers and entrepreneurs with human resource management, workplace conflict, team and organisational development, partnership relationships and business negotiations.
Vince completed his PhD on ‘The changing role of the entrepreneurial founder in emerging fast-growth firms’ in 2012.
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