When making agreements with others what is more important, having an ironclad contract or an atmosphere of goodwill to live by?
Obviously, the right answer is “both” However, hypothetically, if you could only have one, which would it be?
Any agreement is only as good as people’s intentions to live by it. That is the reason when there is lack of goodwill people say: “This agreement is not worth the paper it is written on.”
People are so smart. They know how to go through the motions and pretend like they are committed to an agreement while doing the minimum to live by it. They always have excuses and blame circumstances and others for their lack of compliance.
Yes, you could always carry out legal or disciplinary measures if people don’t comply with the written letter. In some situations, especially when you don’t care about a positive future relationship with that person, that may be the right way to go.
However, in a team environment where you still have to work, partner and collaborate with that person the next day, that approach won’t be optimal.
Take for example the story of two senior executives who were the heads of the two most important divisions of a global technology company. Their divisions had to collaborate on a daily basis in order for the company to succeed, but they didn’t. The reason being that the two executives didn’t get along. Needless to say, this caused a great deal of conflict, tension, and dysfunctionality in the company, and it hurt business performance and results.
The executives were intelligent senior people. They understood the negative consequence of the status quo both in terms of undermining results, as well as in the toxic atmosphere it created within their team members. However, they couldn’t get over themselves and their personal issues in order to interact with genuine respect.
They brought in a professional mediator who worked with them for more than a month to write up a contract outlining how they and their respective organizations would behave and treat each other. The mediator pulled teeth to do this, but through sheer determination was able to produce a coherent contract, which both executives signed.
Do you think this ended the issues?
Of course not. The back-stabbing innuendos, lack of sharing information, subtle competition and trashing each other with customers and other undermining behaviors continued. In fact, they were even fiercer.
In contrast, take another two executives in a different company – one was the head of enterprise customers and the other of small business customers. Given the nature of their customers, they had disputes on a regular basis about which customer belonged to each of them and which deal should be counted against each of their sales quotas. But, they never made it or took it personally. They always worked it out. Sometimes one of them won and another time the other did. They kept it as amicable and fair that they could without having anything written between them. They also went out of their way to help and recognize each other. It was 100% goodwill.
When goodwill is 100% authentic it doesn’t matter how detailed or ironclad the contract is. But if you don’t have goodwill at some level it doesn’t matter how clear and detailed the contract is.
So, in conclusion, it is better to have 100% goodwill and 60% ironclad contract, than 100% ironclad contract and 60% goodwill.