Figure 1: ‘Staying Together’ ISO 44001 (2017) Collaborative Business Relationships
In previous blogs, we explored the importance of selecting the right commercial models, selecting the right partners, jointly managing risks and opportunity, and other key features to reap the benefits of collaborative ventures. Once the relationship is afoot though, we also need to ensure that collaboration remains at the heart of the relationship throughout the complete lifecycle. Once the euphoria of establishing a high performing, collaborating venture is over, there may be a temptation to revert to transactional management practices with a failure to maintain and sustain effective collaborative outcomes. This blog explores strategies to measure the effectiveness of collaboration once a contract is afoot and identify opportunities to realign behaviours when required.
ISO44001 Collaborative Business Relationships recognises ‘staying together’ as a critical part of the collaboration lifecycle. Within this stage, there is a requirement to:
- Describe how relationship health will be monitored and reported,
- Implementing processes to monitor behavioural and trust indicators, and
- Review relationship metrics and take corrective actions where necessary.
The key issue here is to ensure all relationship metrics are jointly managed and reviewed. More specifically, relationship health needs to be considered in the context of delivering the joint objectives of the collaborative venture.
There are no hard and fast rules relating to what metrics should be used to measure relationship health. There may be a mix of subjective and objective metrics, as well as lead and lag indicators. There is also opportunity to incorporate the relationship measurement framework with the broader commercial performance management framework. Generally, we would rarely align remuneration or payment to a relationship health metric rather, relationship health may be used as an ‘Enterprise Performance Measure’ or ‘System Health Indicator’ as described in Dr Andrew Jacopino’s excellent podcast on Third Generation Performance Based Contracts. As with all performance measurement metrics, there should not be too many, and those that are used must be relevant.
Some of the more common relationship metrics we can use include:
- Leadership participation. Are key leaders engaged and meeting regularly;
- Disputes and Issues. Are disputes and issues dealt with promptly and equitably;
- Transparency and No Surprises. Are there any communication failures, bottlenecks, or unnecessary incidences of surprises in the relationship;
- Collaborative Culture. Do buyers and suppliers work together collaboratively ensuring that all parties ‘fix the problem and not the blame’; and
- Continuous Improvement. Are the parties working toward a common goal to maximise value in a joint environment?
Some of the above metrics can overlap and some of the metrics may be sub divided into additional criteria. What is needed though is that there are agreed processes to measure relationship health so that corrective action can be taken and more importantly, positive behaviours are reinforced and acknowledged.
Managing Relationship Challenges and Corrective Action
Relationship Management is a continuing activity that demands attention from all parties. In long-term relationships we must anticipate the risks associated with complacency and challenges associated with key staff turnover. Even the most diligent, high performing teams will encounter relationship ‘challenges. Consistent with collaborative contracting principles, issues need to be dealt with considering the following principles:
- Deal with issues at the lowest level possible, quickly, and fairly;
- Focus on fixing the problem, not the blame;
- Attempt to turn issues and challenges into opportunities (embrace continuous improvement opportunities)
- Do not be afraid to make big changes or change tack to better achieve joint objectives.
The key objective in ‘staying together’ is focussing on delivering joint objectives. In some cases, uncertainty, risks, and environmental changes may mean that the joint objectives cannot be delivered, and the relationship may need to end. Consistent with ISO 44001, an exit strategy should be pre-agreed to ensure future business opportunities are not jeopardised.
Measuring and managing relationship health is of paramount importance in a collaborative venture. This is of particular importance in long term relationships and where repeat business is expected. Several metrics are available to assist in measuring relationship health though the real test of relationship health is reflected in how the joint team members interact, as observed in the Australian Government Guide to Alliance Contracting (emphasis added):
The desired culture should align to the behaviours required to enable the key alliancing features such as good faith and ‘no disputes’ to operate. Often the desired behaviours are described through establishing an Alliance Charter which documents the alliance values. However, the real culture of a team is demonstrated in how the team behaves and interacts.
 ISO 44001 Collaborative Business Relationships [2.8].
 ibid [8.8.4].
 ibid [8.8.7].
 See e.g., Association of Strategic Alliance Partners ‘Alliance & Collaboration Assessment Tools’ at https://www.strategic-alliances.org/page/collaboration_tools
 ISO 44001 Collaborative Business Relationships [8.8.8].
 ibid [8.9.5].
 Australian Government – Department of Infrastructure and Transport, ‘National Alliance Contracting Guidelines – Guide to Alliance Contracting’ (2015), p 35 at https://www.infrastructure.gov.au/infrastructure/ngpd/files/National_Guide_to_Alliance_Contracting.pdf