Article 44 – Building Relationships

by Tan Thiam Hock

BACK in the good old days, like the 80s, doing business was less complicated. Business ethics, if any, were loosely worded and subject to multiple interpretations. Businessmen live by their code of honour, either through a handshake or a nod in agreement. You have to earn the respect of your business community the hard way.

It was pretty straight forward when it came to getting new businesses. Get an introduction from a friend, take your prospective customer out to dinner, maybe go to pubs and for bigger fishes, take them to a nightclub. Face to face contact was crucial and you need to get to know your customer well, sometimes even becoming good friends.

Those from my era will remember the many times you tell your wife in a very important tone, that you have to miss dinner at home because you have to entertain a major customer. No questions were asked as to where you entertained them and no checking on you at 3am since there were no mobile phones then. Just make sure there are no lipstick stains on your shirt or on any part of your anatomy when you get home drunk.

If you are the boss, you are expected to look after your employees through thick and thin and in return, you could expect blind loyalty. Except for sales people, job hopping was almost non-existent. It was a comfortable relationship, when the boss was the Boss.

Nowadays, it is no fun being the Boss. You are held at ransom by your employees who will switch jobs for any reason, be it money or personal. They question your strategies, your authority and inevitably your integrity. It is a much tougher job now being a Boss living up to your employees’ expectations. It is now a cautious relationship, cordial at best.

If you are on your own, there are other kinds of relationships that you need to worry about besides employees and personal family types. Different strokes are required to cultivate different types of relationships.

Managing supplier relationships differ substantially when managing a listed company from a privately owned company. Strict governance and high transparencies are the norms and any slight variation from the norm will normally result in a case of criminal breach of trust. So the level of creativity to cheat increases in complexity and intensity so much so, more governance is required and the poor auditors are being blamed for being incompetent and dishonest.

If you are on your own, you will not cheat yourself. You will want to build a long-term relationship with your suppliers who in turn will support you through the good and bad times. Like your bankers. The only problem you will encounter is that the bankers, like all employers, have problems keeping their employees so you will have a new account relationship manager serving you every year. The only solution is to ensure you keep a good track record dealing with your bankers. It has now become a faceless relationship.

Somehow all suppliers, big or small have common methods of building relationships with customers especially the big important ones. Big entertainment budgets, free trips with expenses thrown in and closing an eye towards an occasional direct or indirect bribe. Even in the normally incorruptible Singapore civil service, exchange of sex for contracts has been front page news recently. Singapore is definitely not the place to conduct an intimate relationship with your customer.

As in every country in the world, the government is the biggest customer. From defence contracts to infrastructure projects to provision of services and consumables, the annual spending budgets run into hundreds of billions.

More zeros if you trade in rupiah and dong but the modus operandi is the same wherever you are. The decision makers in charge of the budgets are the most important customers, so how do you build a relationship with these people?

If it is an open tender, then supposedly, the supplier with the lowest quote wins the tender. I am assuming that all suppliers have been pre-qualified as reliable and competent. Every supplier in this case has an open relationship with the Government.

When it is a closed negotiated contract, then the chosen one has a privileged relationship with the key decision makers. This is the highest form of relationship that many promising businessmen aspire to have but unfortunately only a few can attain.

Privilege relationships takes a long time to develop, like betting and investing on the right horse but can be short-term if the decision maker does not stay in office long enough. So the chosen one will have to act fast to land the biggest contracts and hope to recover his investments in the shortest time possible. Due to intense competition for the privileged position, he might end up having a strained relationship with his biggest customer. Such relationships are not good for his heart and normally leaves him emotionally drained but financially well-compensated.

When the Government gets involved in business through the government-linked companies, it has now become both customer and supplier. Now that the web of GLC companies fight amongst themselves for every single contract and in every industry, the Government is now in control of every major industry in the country. The biggest customer is now the biggest supplier. It has become an incestuous relationship.

So what kind of relationship can SMEs build with the nation’s biggest customer? None. No relationship at all. But you can build a partial relationship with the GLCs and be a sub contractor or sub supplier to the Government via the GLCs.

Alternatively, you can compete with the other 400,000 or so SMEs for small, scattered customers engaging in casual relationships. You might have to fight harder to survive but at least you can sleep well knowing you are not in a relationship with a family member that you do not know of.

Advertisements