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Navigating Complex Relationships In Business

Business relationships come in a wide variety of configurations, all of which are affected to some degree by the personalities involved. These "personalities" include not just the quirks of the individual people who work within each firm, but the total effect their combined contributions to company culture have on the "personality" of the business as an organization – in other words, just as a business can be a legal "person" for the purpose of conducting transactions, it can also have a "personality" for the purposes of building business relationships. Relationships between these corporate persons exist alongside, and for obvious reasons are influenced by, the often complex relationships between individuals within a company and those who connect their firm's operations with colleagues in other organizations. Fostering and maintaining strong, mutually-advantageous relationships in business can often pose a challenge, but success in this area offers numerous rewards. To learn more, consider scheduling a company culture or contract negotiation consultation with one of the experienced New York business law attorneys at Schwab & Gasparini. We maintain four convenient locations, so reach us at (518) 591-4664 in Albany, (315) 422-1333 in Syracuse, or (914) 304-4353 in Hudson Valley or White Plains.

What Are the Three Types of Business Relationships? 

Business relationships can be defined in a variety of ways. Some of them will be dependent on industry, or only apply to certain business structures. In general terms, however, business relationships can be sorted into the following categories: 

• Relationships between colleagues working in the same organization 
• Relationships between individuals not employed within the same organization  
• Relationships between organizations 

Each of these categories brings its own set of considerations into play. 

Business Relationships Within an Organization 

Many companies focused on developing business relationships overlook the relationships internal to their organization, considering "company culture" issues to be a function of human resources management (HRM) rather than business strategy. The reality, however, is that the working relationships within an organization are just as critical to its success as those with parties external to the company. 

Internal business relationships can for the most part be characterized in two ways: 

• Vertical: One individual in this business relationship reports to, or on the other hand has oversight over, the other. This condition applies, for instance, between a job site supervisor and the members of a construction team; generally it will also apply to the business relationship between a senior vice president and members of the middle management staff. 
• Horizontal: Neither individual in this working relationship has oversight or control over the other. A horizontal business relationship can apply even when the two individuals involved occupy widely different "pay grades," or positions within the company's hierarchy, as long as neither is in the other's "chain of command." While it may sound counterintuitive, this situation is actually quite common among employees of the same company who work in discrete departments but occasionally need to share information or otherwise collaborate. 

Business Relationships Outside the Organization 

Individuals who work for any company over an extended period of time are likely to find themselves needing strong working relationships with contacts outside their own organization. Return customers are an obvious example, but in reality this category of relationships in business can also encompass the working relationships established between underwriters and their contacts at car dealerships, between event planners and the scheduling staff at host venues, between lawyers or accountants and the office staff at the businesses they serve, and even between distinct vendors or contractors whose overlapping service areas mean that they perform distinct services on projects for the same clients, and need to coordinate in order to avoid unnecessarily disrupting each other's workflows. Some of these relationships can require a delicate balance to maintain, as they frequently demand a high degree of collaboration that lacks the formal structure provided by internal company hierarchies or by a direct business-to-business relationship. 

Relationships Between Organizations

While all relationships in business are to some degree relationships between individuals, the relationship between two organizations can similarly be guarded or congenial, supportive or adversarial. Learning to steer your organization so as to navigate a territory often strewn with pitfalls can be challenging – but at the same time, ensuring that your business has a strong history with each of its partners can yield enormous long-term rewards. 

In many cases, clear contracts developed through a collaborative negotiation process can help to lay the groundwork for a positive ongoing business-to-business relationship. An experienced New York business law attorney from Schwab & Gasparini may be able to guide you through some of the most effective strategies for building a solid foundation for a business-to-business relationship. 

What Is the Value of Business Relationships? 

Strong business relationships can provide several different types of value to a business, depending on the industry and the structure of the relationship involved. In general, however, some of the advantages professionals and organizations most commonly seek to achieve by building strong business relationships include: 

• Reputational excellence 
• Knowledge of key resources in the industry 
• Familiarity with contacts who can facilitate important deals or provide timely information 
• New business referrals 
• Helpful recommendations for providers of important services 

While the above is by no means a complete list of reasons why professionals at every level seek to foster strong working relationships for themselves and on behalf of their companies, it encapsulates some of the core considerations that come up in discussions about the value of relationships in business again and again. 

What Is the Difference Between a Business Relationship and a Partnership? 

A partnership is a specific type of business relationship. While it is common in some circles, such as public relations, to use the term "partner" in a relatively loose way, to refer to any organization with which a company cooperates in support of a shared objective (such as an event sponsor or contracted vendor), for formal tax reporting purposes the Internal Revenue Service (IRS) a partnership is one type of "pass-through" business structure, so-called because the profits (and tax liabilities) "pass through" the company directly to each of the partners. In its pass-through taxation structure, a partnership is similar to a sole proprietorship, a structure with which many business owners who got their starts as solopreneurs will be familiar; the difference is that in a partnership, the profits and liabilities are distributed among the partners.

While many of the taxation implications of a partnership are regulated at the federal level, generally speaking the requirements for formation and dissolution of a partnership are determined by the laws of the state in which the business is registered. The specific rights and obligations of each partner with respect to the other partner(s) are typically outlined in the partnership formation documents – but the contents of these documents are also subject to state laws, which vary in the granularity of their requirements. Article 4, Section 40 of Chapter 39 of the Consolidated Laws of New York ("Partnerships"), outlines a detailed set of rights and responsibilities for all members of a partnership formed within the state; any agreement between business partners will need to align with these requirements mandated by state law in order to be considered legally valid. 

Strong Business Relationships Are the Foundation to Success

Regardless of industry, every professional and every company can benefit from forming strong relationships in business. Developing a reputation for excellence and integrity demands consistency and commitment to not only delivering a quality product or service but to entering negotiations or troubleshooting sessions with an orientation toward solving shared problems, not just competing to see who can carry the day. While strong, positive business relationships are foundational to individual and organizational success, the reality is that relationships in business are often complex affairs, structured by individual personalities, company hierarchies, and potentially conflicting interests. Our seasoned New York business law attorneys have extensive experience navigating complex professional relationships across multiple industries and within and between businesses of all sizes, and we welcome the opportunity to confer with you regarding your business strategy needs. Reach out to us today to schedule your consultation by calling any of our convenient New York offices. Dial (315) 422-1333 in Syracuse, (518) 591-4664 in Albany, or (914) 304-4353 to reach our teams in Hudson Valley or White Plains. 

Wed Aug 7 2024, 8:02am