Reciprocity


This posting is part of a series on Partner Management.

Partnerships are formed on the basis of equality and most of them operate as such on the principle of reciprocity. This principle dictates that a relationship is kept in balance, not by the use of money, but because both parties deliver an equal amount of value for each other. If I scratch your back, then you scratch mine. Reciprocity is a very powerful and yet extremely dangerous concept: what happens if at the end of the day one party ends up doing a lot more scratching than the other? Then a basis for conflict is born.

Reciprocity might seem to be an excellent idea if you expect that the other party will deliver much more value. That is indeed fine if you seek a relationship for only a limited period of time and don’t mind ending with a conflict. In all other circumstances I would suggest to think carefully about the way you appreciate the mutual contributions to the relationship.

A classic example is to following situation where you decide to enter a partnership with another company: You deliver a product; the partner provides the services. The partner needs to train its employees to work with the product and they will most probably sell your product to their clients.

Again, the principle of reciprocity dictates that the partner can train its employees for free. Of course they will be in your debt for this. The debt is not a monetary debt, but an emotional one. The score is kept by the individual employees who own the relationship on behalf of the companies. Further, during the course of the year, the partner manages to generate business for you. Again, following the principle of reciprocity there is no commission. Instead the emotional debt is settled.

As long as the relationship between you and the partner is in good health and there is regular contact between the two employees involved all is well. The relationship however relies heavily on those individuals who own the relationship. When one of them leaves, the predictable result is that the partnership is at grave risk.

When a company develops more relationships which need to be available to more than one employee reciprocity is no longer a viable option. A well designed partner program appreciates this and strives to identify how partners ad value and how that contribution is monetized. This means that both parties pay each other for services that they deliver.

When you implement a partner program you will need to specify that partners pay a normal training fee and that they will get a commission on their sales volume. In the end of the day it is still well possible that invoices send by both parties are of the same amount. This would effectively be as if the principle of reciprocity was applied, but now at least there is full transparency and no room for any disputes.

Although I advocate moving away from reciprocity, I also know that this can be difficult thing to do in practice. In most cases you will end up with a partner program in which you will expect your partners to invest in the relation first. With already established relationships your loyalty may be questioned. It may come across as if you do not longer trust your partner. New partners may be reluctant to be to only party who is making the investment. Communicate carefully about this issue.

One thought on “Reciprocity

  1. The start of an interesting thread on how to deal with the balance in a relationship between two parties. I agree that this depends on how both parties view the value of the service received and rendered. However, I believe it’s a misconception trying to monetize the “value” of a service that has been entered on the basis of Quid Pro Quo.

    There is a simple way to solve this if one of them doesn’t rely on the other party’s sincerity to deliver its fair share …

    either walk away or set up a real agreement in the first place that clearly describes all terms and condtions of the deal.

    kind regards, hansrp

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