Handshake-based business or is it still better with a contract?

Whoever bases business on a handshake nowadays will be seen at best as unrealistic or old fashion and at worst as unprofessional. And this immediately leads us to the question whether a contract by means of a handshake is even valid. Naturally, any experienced manager or lawyer will strongly suggest closing a contract. However, more often than not, I get word of contract non-compliance complaints with its consequences of mostly year-long and costly processes. Not without reason do international companies set up their headquarters, and thus court of jurisdiction, in Switzerland, Singapore or Delaware as legal matters there get solved quicker; and companies fear legal uncertainty more than anything else.

Essentially however, it is in my view about something a lot more fundamental, and namely about values like reliability, honesty and agreement between one’s own value system and the daily trade, and which in daily business life seem to be increasingly losing their meaning in favor of fleeting, short-term success. In brief, integrity is necessary, and for me this means on a daily basis: I say what I do, and I do what I say.

Now let’s not fool ourselves: we just need a look in the newspapers or on the internet in order to find out that little progress has been made with these values. The image of politicians and also of many managers speaks clearly! The failure to observe these values has gotten in the meantime so extended, and even more because of the crisis, that nobody trusts nobody anymore. Or would you seriously trust a banker, a phone salesperson or an insurance agent that you don’t know personally? Frankly speaking, I would not. For in these sectors as in every sector, are decent, highly competent and ethical professionals to be found (even when just a few).

All which has brought us to the decisive question: have values a future?
Let me anticipate the answer right away: yes, they do, and more than ever.

Let me explain this briefly. As an example, one of my companies celebrates this year its 125th (!) anniversary. And believe me, this is not something you can achieve with lies, betrayal and thick contracts. Another company is, even in the current time of crisis, successfully active in Spain. Looking at it closely, I think that both of those companies have something in common: continuous, solid clients who appreciate reliability, honesty and dedication and who, themselves, stand for those same values. Such companies exist and behind them are usually business people representing and living with those values every day!

In my experience, integrity really pays off in the longterm when you consistently not only stand up for your conviction but also stay by your clients’ side in difficult times. I would however just as sincerely confess that we have a close and careful look at our clients before we decide to do business with them. And this is not something you acquire overnight, but rather through longterm orientation, perserverance, transparence and sincerity. Yet, the more these values lose value, the more will they be looked for by competent clients. It is not without reason that there are more potential investors then really good investment opportunities: because they are looking exactly for these values, and not just quick business.

This is even more true in international business. At an event at GILD INTERNATIONAL Business Club, the question was asked of how dangerous it is to do business in Angola. The answer was: not less nor more than in Portugal, one merely has to intensively take interest in the country and the people. Which once again brought to our attention how crucial personal contacts are, as it is still the best way to get introduced to someone. At the end of the day, there is an intelligent mind behind every business idea.
Maybe just drop at GILD INTERNATIONAL Business Club for a handschake and a cup of coffee (even if you don’t have a contract allowing you to do so), in order to talk about values such as integrity, dynamism, innovation, excellence and business opportunities.

2 Responses to Handshake-based business or is it still better with a contract?

  1. Decent reading. Nice blog design at the same time. continue your great work.

  2. Yes,
    A couple of values vs. ever growing complicated contracts.

    A strong network of like-minded business partner makes a huge difference and as one of my mentors said: Let them do the contracts and we do the business in the meantime.

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