Arbitration

Arbitration, nonjudicial legal technique for resolving disputes by referring them to a neutral
party for a binding decision, or “award.” An arbitrator may consist of a single person or an
arbitration board, usually of three members.

Arbitration is most commonly used in the resolution of commercial disputes and is distinct
from mediation and conciliation, both of which are common in the settlement of labour disputes
between management and labour unions. In mediation, the parties resort to a third person to offer
a recommendation for a settlement or to help them to reach a compromise. Such intervention by
a third party, which also occurs in international disputes between states in the form of diplomatic
intervention and good offices, has no binding force upon the disputants, unlike the arbitrator’s
ruling.

Commercial arbitration
Commercial arbitration is a means of settling disputes by referring them to a neutral person, an
arbitrator, selected by the parties for a decision based on the evidence and arguments presented
to the arbitration tribunal. The parties agree in advance that the decision will be accepted as final
and binding.

Historically, commercial arbitration was used in resolving controversies

between medieval merchants in fairs and marketplaces in England and on the European continent
and in the Mediterranean and Baltic sea trade. The increased use of commercial arbitration
became possible after courts were empowered to enforce the parties’ agreement to arbitrate. The
first such statute was the English Arbitration Act of 1889, which was later consolidated into an
act of 1950 and adopted by arbitration statutes in most countries of the British Commonwealth. It
was followed in the United States by an arbitration statute of the state of New York in 1920 and
the Federal Arbitration Act of 1925. The latter dealt with the enforcement in federal courts of
arbitration agreements and awards in maritime transactions and those involving interstate and
foreign commerce. Most U.S. states adopted, sometimes with minor changes, the Uniform
Arbitration Act of 1955, as amended in 1956, which had been promoted by the Commissioners
on Uniform State Laws and recommended by the American Bar Association. This act provided
for the judicial enforcement of an agreement to arbitrate existing and future disputes and thereby
made the arbitration agreement no longer revocable, as it had been under common law. It also
provided for the substitution of arbitrators in the event of a party’s failing to select an arbitrator
and for a suspension of any court action instituted in contravention of a voluntary arbitration
agreement. The courts thereby play an important role in implementing arbitration agreements
and making judicial assistance available against a recalcitrant party. This concept of modern
arbitration law, which recognizes the irrevocability of arbitration agreements and the
enforceability of awards, also prevails in the arbitration statutes of nearly all countries.
Function and scope

Arbitration customarily has been used for the settlement of disputes between members of trade
associations and between different exchanges in the securities and commodities trade. Form
contracts often contain a standard arbitration clause referring to specific arbitration rules.
Numerous arrangements between parties in industry and commerce also provide for the
arbitration of controversies arising out of contracts for the sale of manufactured goods, for terms
of service of employment, for construction and engineering projects, for financial operations,
for agency and distribution arrangements, and for many other undertakings.

The usefulness and significance of arbitration are demonstrated by its increasing use by the
business community and the legal profession in many countries of the world. An advantage of
arbitration can be the speed with which controversies can be resolved by arbitration, compared
with the long delays of ordinary court procedure. The expert knowledge of arbitrators of the
customs and usages of a specific trade makes testimony by others and much documentation
unnecessary and thereby eliminates some expenses generally associated with court procedures.
The privacy of the arbitration procedure also is much valued by parties to the controversy;
situations unfavourable to the party’s credit or deficiencies in manufactured goods revealed in
arbitration proceedings do not become known to outsiders. There are, however, disadvantages in
the arbitration process. Because in Anglo-American practice abitrators generally do not have to
provide any reason to accompany an award, it has been difficult to develop guidelines for the
conduct of business relations. Moreover, this uncertainty makes the arbitral decision less
predictable. Further obstacles to the wider use of commercial arbitration are the divergences in
municipal laws and court decisions that result in different interpretations of similar arbitration
questions and the fact that awards usually are not published.

Procedure
Because the arbitrator’s ability and fairness are the decisive elements in any arbitration, the
selection process is an important aspect of arbitration. Generally, both parties select an arbitrator
at the time a conflict arises or at the time the arbitration agreement is concluded. The two
arbitrators then select a chairman, forming a tribunal. The selection of arbitrators often is made
by agencies administering commercial arbitration under preestablished rules of procedure. These
organizations—various trade associations, produce exchanges, and chambers of commerce in
many countries—maintain panels of expert arbitrators. The parties may either make their own
selection or entrust the appointment of the arbitrators to the organization.

Challenges to the arbitration process are not uncommon. For example, a party may claim that no
valid arbitration agreement existed because the person signing the agreement had no authority to
do so or that a condition precedent to arbitration was not fulfilled. More often, arbitration is
contested on the ground that the specific controversy is not covered by the agreement. In such
cases, the issue of whether the arbitrator has authority to deal with the conflict is usually
determined by a court. The arbitration process is also sometimes challenged on the grounds that
an arbitrator lacked impartiality. Any such challenge generally can be maintained only after the
arbitration has been concluded, as courts are reluctant to interfere with the arbitration process
before an award has been rendered.

The arbitration process is governed by the rules agreed to in the arbitration agreement; otherwise,
the procedure is determined by the arbitrators. The arbitration proceedings must be conducted so
as to afford the parties a fair hearing on the basis of equality. The arbitrator generally has the
authority to request the parties and third persons to produce documentary evidence and to
enforce such a request by issuing subpoenas. If a party fails to appear at a
properly convened hearing without showing a legitimate cause, the arbitrator in most instances
can proceed and render an award after investigating the matter in dispute.

Under the law and arbitration practice of most countries, an award is valid and binding upon the
parties when rendered by a majority of the arbitrators unless the parties expressly request a
unanimous decision of the arbitrators. The statutory law of various countries and the rules of
agencies administering commercial arbitration contain provisions on the form, certification,
notification, and delivery of the award, with which requirements the arbitrator has to comply.

A much-disputed question in commercial arbitration concerns the law to be applied by the

arbitrators. Generally, the award must be based upon the law as determined by the parties in their
agreement. This failing, the arbitrator must apply the law he considers proper in accordance with
the principles of the conflict of laws. In both cases, the arbitrator must take into consideration the
terms of the contract and the usage of the specific trade. If a compromise is reached by the
parties during any arbitration proceeding, that compromise may be recorded as an award by the
arbitrator.

Appeals to the courts from the award cannot be excluded by agreement of the parties, since the
fairness of the arbitration process as a quasi-judicial procedure has to be maintained. However,
any court control is confined to specific matters, usually enumerated in the arbitration statutes,
such as misconduct of the arbitrator in denying a party the full presentation of its claim or
refusing a postponement of the hearing for good cause. A review of the award by a court
generally does not address the arbitrator’s decisions as to facts or his application of the law. The
competence of the courts usually is restricted so as not to make the arbitration process the
beginning of litigation instead of its end. Recognition of an award and its enforcement will be
denied when it appears to be contrary to public policy. An arbitration award has the authority of
a court decision and may be enforced by summary court action according to the procedural
law of the country in which execution is being sought.

International commercial arbitration

International commercial arbitration between traders of different countries has long been
recognized by the business community and the legal profession as a suitable means of settling
trade controversies out of court. The procedure in international commercial arbitration is
basically the same as in domestic arbitration. In the mid-1960s, in order to establish more
uniformity in procedure and to make access to arbitration facilities more easily available,
the United Nations economic commissions published new rules applying to international
arbitration for Europe and Asia.

The development of international commercial arbitration was furthered by uniform arbitration

legislation prepared by the UN Conference on International Commercial Arbitration in 1958 and
by the Council of Europe and the Inter-American Juridical Committee of the Organization of
American States. One particularly difficult problem of international commercial arbitration is the
enforcement of awards in a country other than the one in which they were rendered. Statutory
municipal laws usually do not contain provisions for the enforcement of foreign awards, and
parties are faced with uncertainty about the law and practice of enforcement procedure in a
country other than their own.
International agreements facilitate the enforcement of foreign awards to the extent that no further
action is necessary in the country in which the award was rendered; the opposing debtor must
establish that the award has been set aside or that its effects have been suspended by a competent
authority, which thus shifts the burden of proof of the nonbinding character of the award to the
losing party. Further development of international commercial arbitration has been encouraged
by the UN Commission on International Trade Law, which aims at promoting the harmonization
and unification of laws in the field of international commercial arbitration.

Labour arbitration
Labour arbitration—the reference of disputes between management and labour unions to an
impartial third party for a final resolution—is usually the last step under a collective-
bargaining agreement after all other measures to achieve a settlement have been exhausted.
Unlike commercial arbitration, labour arbitration is not an auxiliary avenue of justice and thereby
a substitute for ordinary court procedure. It is also a technique used for settling or avoiding
strikes.

Two major aspects of labour arbitration are usually distinguished: arbitration of rights and
arbitration of interests. Arbitration of rights refers to the arbitration of an existing
labour contract when a dispute over its application arises between labour and management.
Arbitration of interests refers to arbitration between labour and management during the
negotiation of a new labour contract.

Arbitration of rights
Arbitration of rights under the terms of a collective-bargaining agreement is employed in
the United States far more frequently than in most other countries. Outside the United States,
labour courts, industrial courts, or conciliation and arbitration commissions perform the function
of arbitrating rights. These bodies usually are appointed by the government, and recourse to them
is frequently compulsory.

More than 90 percent of the collective-bargaining agreements in the United States provide for
arbitration as a last step in the grievance procedure. For example, employees, through their
union, may present for arbitration complaints concerning such matters as discipline, discharge,
and violations of working conditions. Other issues frequently submitted to arbitration
customarily concern premium payments and incentive rates, overtime and vacations, holiday
bonuses, seniority rights, and fringe benefits, such as pension and welfare plans.
The arbitrator’s decision must be based on the collective-bargaining agreement, which provides
for the application of an existing contract to the grievance presented. The arbitrator, not the
court, usually is responsible for determining whether the various steps in the grievance procedure
have been complied with before the initiation of the arbitration process. However, the question of
whether the disputed issue is covered by the collective-bargaining agreement is determined by a
court and not by the arbitrator. In the United States, this authority of the courts was upheld by
the Supreme Court in 1960.
The choice of arbitrator is made either by naming him in the agreement or, more often, by
leaving the choice open until a dispute has arisen. Frequently, only a single arbitrator is
appointed—usually an expert in the field of industrial relations. Alternatively, tripartite
arbitration boards can be established, with each party appointing its own arbitrator, who acts
somewhat as an advocate. A neutral chairman is selected either by the parties or by the two
party-appointed arbitrators.

A further technique of arbitration of rights is the appointment of a single permanent arbitrator to

resolve disputes for the duration of the collective-bargaining agreement. This type of arbitrator is
intimately acquainted with the various economic, financial, and other aspects of the particular
industry and is familiar with the past relationship between management and union. This
permanent system originated in the United States in the anthracite-coal industry at the beginning
of the 20th century and has been employed in other industries (e.g., newspaper publishing and
clothing).

Labour arbitrators render binding decisions and are not bound by strict rules of court procedure,
especially as regards burden of proof and the presentation of evidence. Arbitrators have the
power to subpoena persons and written evidence. They tend to evaluate factual evidence rather
freely and often reduce penalties imposed upon employees by the management for breach of the
labour contract. In order to establish precedents in the operation of the plant, even minor
questions, such as the use of company time by employees for breaks, are submitted to arbitration.
However, arbitrators generally are not bound to follow previous decisions. Decisions of labour
arbitrators are seldom reviewed by the courts, as awards are usually fully complied with by both
parties.

Arbitration of interests
Arbitration of the terms of a new contract, referred to as arbitration of interests, may be instituted
if management and the labour union are unable to agree on a new contract. However, in most
countries, management and union are seldom inclined to resort to lockouts and strikes in an
attempt to obtain favourable new contracts, and interest arbitration is thus rarely used.

Compulsory arbitration, directed by legislative fiat, has been a controversial issue in the
settlement of industrial disputes. It has been favoured in disputes in the transportation industry,
which may involve great public inconvenience, and in disputes in the public-utilities sector when
an immediate danger to public health and safety might occur. Compulsory arbitration has been
declared unconstitutional in some states of the United States, though it has been adopted as a
regular procedure for the settlement of disputes with municipal employees in some U.S. cities.

International arbitration
Controversies between sovereign states that are not settled by diplomatic negotiation or
conciliation are often referred, by agreement of both parties, to the decision of a third
disinterested party, who arbitrates the dispute with binding force upon the disputant parties. Such
arbitration between states has a long history; it was used between city-states in ancient
Greece and also in the Middle Ages, when the pope often acted as the sole arbitrator.

Historical development
The modern development of international arbitration can be traced to the Jay Treaty (1794)
between Great Britain and the United States, which established three arbitral commissions to
settle questions and claims arising out of the American Revolution. In the 19th century, many
arbitral agreements were concluded by which ad hoc arbitration tribunals were established to
deal with specific cases or to handle a great number of claims. Most significant was the Alabama
claims arbitration under the Treaty of Washington (1871), by which the United States and Great
Britain agreed to settle claims arising from the failure of Great Britain to maintain its neutrality
during the American Civil War.

Commissions consisting of members drawn from both disputant countries (“mixed arbitral
commissions”) often were used in the 19th century to settle pecuniary claims for the
compensation of injuries to aliens for which justice could not be obtained in foreign courts. Such
was the purpose of a convention in 1868 between the United States and Mexico, by which claims
of citizens of each country arising from the Civil War were settled. Boundary disputes between
states were also often settled by arbitration.

International arbitration was given a more permanent basis by the Hague Conference of 1899,
which adopted the Hague Convention on the pacific settlement of international disputes, revised
by a conference in 1907. The convention stated:

International arbitration has for its object the settlement of disputes between States by judges of
their own choice and on the basis of respect for law. Recourse to arbitration implies an
engagement to submit in good faith to the award.

Members of the Permanent Court of Arbitration.

A Permanent Court of Arbitration, composed of a panel of jurists appointed by the member
governments, from which the litigant governments select the arbitrators, was established at The
Hague in 1899.

Twenty cases were arbitrated between 1902 and 1932, but from that year until 1972 only five
cases were dealt with, largely because the importance of the Permanent Court of Arbitration
was diminished by the establishment of the Permanent Court of Justice (1922) and its successor,
the International Court of Justice. More recently, the International Court of Arbitration
(established in 1923), which was originally devised for the settlement of disputes between states,
has offered its services for the arbitration of controversies between states and individuals or
corporations. By the beginning of the 21st century, the court had arbitrated more than 10,000
disputes.

Arbitration provisions of international treaties

There are several multilateral treaties that provide for the settlement of international disputes by
arbitration, including the Geneva General Act for the Settlement of Disputes of 1928, adopted by
the League of Nations and reactivated by the UN General Assembly in 1949. That act provides
for the settlement of various disputes, after unsuccessful efforts at conciliation, by an arbitral
tribunal of five members. Other such treaties include the General Treaty of Inter-American
Arbitration, signed in Washington, D.C., in 1929, and the American Treaty on Pacific Settlement
of Disputes, signed in Bogotá, Colom., in 1948. The Council of Europe adopted the European
Convention for the Peaceful Settlement of Disputes (1957). Arbitration is also mentioned as a
proper method of settling disputes between countries in the Charter of the United Nations, as it
was in the Covenant of the League of Nations.
The UN’s International Law Commission submitted to the General Assembly in 1955 a
Convention on Arbitral Procedure. Its model rules would not become binding on any UN
member-state unless they were accepted by a state in an arbitration treaty or in a special arbitral
agreement. However, the model rules were not adopted in any arbitration arrangement between
disputant governments, though in 1958 the General Assembly recommended the model rules for
use by member-states when appropriate. It seems clear that states prefer flexibility in the
resolution of their disputes by arranging the rules and proceedings of an arbitration according to
circumstances.

There are great impediments to the acceptance of international arbitration, especially in cases in
which disputes between governments and foreign private parties are involved. In such cases the
state will often insist that its own local remedies—administrative and court proceedings—have
been exhausted. Generally, the government of the national who advances a claim against a
foreign government will require evidence that the injured party has pursued all remedies in the
foreign country before it presses a claim for international negotiation and adjudication.
Contracting parties may agree in their contract that they need not exhaust local remedies before
resorting to arbitration. The Convention on the Settlement of Investment Disputes (1965) states:
Consent of the parties to arbitration under this Convention shall, unless otherwise stated, be
deemed consent to such arbitration to the exclusion of any other remedy. A Contracting State
may require the exhaustion of local administrative or judicial remedies as a condition of its
consent to arbitration under this Convention.

The arbitration agreement in a general multilateral treaty, a bilateral convention, or a specific

contractual arrangement between two states often does not deal with particulars, such as the
selection and appointment of the arbitrators, the procedure to be followed in the arbitration, the
subject matter of the dispute, the specific issues to be submitted, the presentation of evidence, the
place of the hearings, the law to be applied by the arbitrators, and the time when the award has to
be rendered. These questions usually are dealt with in a compromis, a submission agreement
between the parties to the dispute. If the compromis fails in some particular (e.g., to define the
applicable law), the arbitrator generally applies the relevant principles of international law.

An award rendered by an arbitral tribunal is customarily complied with by states. In fact, unless a
state is prepared to comply with an adverse decision, it generally will not submit the dispute to
arbitration. The difficulties in the use of international arbitration thus consist less in the
enforcement of arbitral awards than in persuading states involved in disputes to submit them to
arbitration.

The Impact of Globalization on Human Resource Management

In the past two decades, globalization has become prominent because of rapid technological
advancements and increased interconnectedness worldwide. Its roots can be traced back to the
establishment of the gold standard in the 1800s. Moreover, post-World War II, countries broke
the trade barriers and started promoting free trade across countries, leading to the establishment
of global organizations.
Today, globalization has enabled most companies to tap into diverse markets and expand their
operations across borders and various sectors. One prominent sector that has witnessed
significant change due to globalization is Human Resource Management (HRM).
 To help you learn more about its impact on HRM, this article will discuss the basic nuances,
advantages and disadvantages, and challenges of globalization.

What Does Globalization in Human Resource Management Mean?

HRM is the practice of overseeing and managing the people who work within an organization. It
involves hiring, training, compensation, and ensuring a positive work environment.
Globalization, on the other hand, refers to the process of increased interconnectedness and
integration among countries, economies, and cultures.

When this concept is applied to HRM, it means that organizations are expanding their operations
across borders, hiring talent from various parts of the world. Globalization in HRM involves
adapting HR practices to suit international hiring, such as:
 Managing a global workforce,
 Dealing with cultural differences,
 Adhering to diverse employment and labor laws.

What Are Commercial Contracts?

Commercial contracts define and regulate business relationships, whether a standard employment
agreement or more complex agreements like merger and acquisition contracts. Today’s
increasingly litigious environment has made it critical to understand and master the principles
guiding commercial contracts, how to protect your interests, and minimize commercial litigation.
Using contract lifecycle management (CLM) software to manage your commercial contracts is no
longer just “nice to have.” You need it to keep pace with today’s regulatory and general business
uncertainty. Read on to understand commercial contracts and how you can streamline your
contracting process with CLM software.
What are commercial contracts?
Commercial contracts are agreements regulating business relationships between individuals or
businesses where they agree to perform some actions or refrain from doing others. Commercial
contracts are usually in writing, but they can also be verbal. A written commercial contract is easier
to enforce and provides parties with guidance on how to perform their obligation under the
transaction.
Examples of commercial contracts
Commercial contracts are critical for your business’s success. No business can operate alone
without the support of other businesses or individuals providing key services for business
operations. For example, your business entered a software license agreement with the vendors of
all the software you use in your organization. Other examples of commercial contracts include:
 Joint venture agreement
 Shareholders agreement
 Business purchase agreement
 Purchase and supply agreement
 Sale and distribution agreement
 Franchise agreement
 Non-disclosure agreement
 Employment contracts
 Intellectual property license and assignment
 Partnership agreement
 Loan and finance agreements

Definition of Commercial Relationship

The meaning of “
Commercial Relationship
” differs based on where it is used. We list many below, then combine them into one or more
market-standard definitions.
How is Commercial Relationship defined in a legal contract?
 Commercial Relationship means any association of a commercial nature, whether
contractual or not. This relationship could arise from various transactions, including but
not limited to trade transaction for the supply or exchange of goods or services,
distribution agreement, commercial representation, factoring, leasing, engineering,
licensing, investment, financing, insurance, concession, joint venture and various other
forms. Seen in 2 SEC filings
 Commercial Relationship means a contractual agreement that holds commercial
relevance or brings benefit to [the organisation]. Seen in 1 SEC filing
 Commercial Relationship means a connection, alliance, involvement, investment, or
participation in an activity related to the functions of trade or services, in any form. Seen
in 1 SEC filing
 Commercial Relationship means a written agreement that sets up a paid or significant
marketing relationship between [the organisation] and marketing partner, wherein [the
organisation] must offer significant payment or bartered consideration. Seen in 1 SEC
filing
Note: The Genie AI Legal Assistant pulled this data out of the SEC EDGAR Database of
500,000 records from the past 22 years of filings. We regularly update this page as new filings
and definitions come in.
Search EDGAR for 'Definitions of commercial relationship' yourself to verify these results. We
are always keen to point people to source documents.
‍
Which definition should you use?
🤔 Our AI Legal Assistant has combined and improved the above descriptions to create market-
standard 'Genie definitions' below, with guidance on which documents and which industry to
use for each.

Genie Definition 1
Commercial Relationship means a contractual or non-contractual connection between
[organization] and another party, related to profit-oriented activities or transactions.
Relevant Contract Types
 Service Agreement
 Partnership Agreement
 Joint Venture Agreement
 Distribution Agreement
 Supply Contract
 Consulting Agreement
Relevant Circumstances
 Establishing new partnerships
 Expanding business operations
 Engaging service providers
Relevant Sectors
 Technology Sector
 Manufacturing Sector
 Retail Sector
 Construction Sector
‍
Genie Definition 2
Commercial Relationship means a marketing agreement between [organization] and a partner,
involving a contractual obligation of payment or barter by [organization].
Relevant Contract Types
 Marketing Agreement
 Advertising Agreement
 Affiliate Agreement
Relevant Circumstances
 Engaging a marketing agency
 Outsourcing advertising activities
 Initiating a barter deal
Relevant Sectors
 Marketing Sector
 Advertising Sector
 Media and Entertainment Sector
‍
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Commercial Relationship
" in your document?
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What is the most popular definition of '
Commercial Relationship
'?
Commercial Relationship means a contractual or non-contractual connection between
[organization] and another party, related to profit-oriented activities or transactions.

Business Relationship Purpose, Types & Examples

Frequently Asked Questions
What are the types of business relationships?
The various types of business relationships include peer-to-peer, employee-to-manager, and
employee-to-customer relationships. Each has distinct characteristics that determine its
applicability.
What are the key relationships in business?
The three key relationships in business are: functional relationships, which involve customer
interaction; strategic relationships, which strengthen and extend the business' scope through
exchanging ideas and other support, such as financial aid; and personal relationships, which
depend on the ability to interact with other stakeholders in business, such as peer-to-peer
interaction
.
What is a Business Relationship?
A business relationship is a link between enterprises that makes up the functionality of
commerce in running any business. The relationship is enhanced by stakeholders such as
employees, employers, business associates, and other business partners involved in the running
of commerce. From the above description, it can therefore be argued that a business relationship
comprises various partners that collectively participate in creating an internal or external
relationship.

Effective communication, loyalty, and trust can foster a successful business relationship.
Subsequently, it motivates employees' performance, satisfies their needs, and improves their
overall job satisfaction. Moreover, an established business relationship between all stakeholders
promotes unity of direction, a positive corporate culture, and variables that help develop a
competitive edge.

Purpose of a Business Relationship

A business relationship aims to sustain a long-term relationship with stakeholders such as
customers, business partners, suppliers, employees, or any other participant involved in the
business process. Moreover, an established business relationship places the business in a better
position regarding cohesiveness and responsiveness.

Types of Business Relationships

There are different types of work relationships, including peer-to-peer, employee-to-manager,
and employee-to-customer relationships. A peer-to-peer relationship in the workplace promotes
a positive work environment and job satisfaction. The relationship between a manager and
employee is not characterized by friendship. Rather, they communicate when instructions are
being issued or when authority is delegated.

An employee-to-customer relationship is characterized by open communication to better fulfill

their needs. In return, customers will likely remain loyal and give positive reviews. Ultimately, to
understand the different types of business relationships, one must analyze each of the
aforementioned variables independently.

Peer to Peer Relationships

Peer-to-peer relationships are the interactions workers engage in with each other in the
workplace, whether negative, positive, or a blend of both. In essence, employees are at a
relatively equal level in an organization and can easily interact. A positive peer-to-peer
relationship is characterized by collective participation, trust, and respect.
Collective participation is enforced by joint problem-solving, sharing ideas, and encouraging
each other. Through trust, peer employees can openly share their problems and help come up
with solutions to such issues. Respect within peer-to-peer relationships reduces the chance of
conflict, gossip, and inappropriate competition.

Employee to Manager Relationships

An employee-to-manager relationship is characterized by mutual respect between the two.
Mutual respect promotes collective participation and productivity through the willingness to
provide assistance and perform effectively. It is also characterized by differences in
responsibilities as the two perform distinct work.

Another characteristic is the difference in reporting structures, with employees reporting to

managers while the managers report to senior management. Finally, the two also have different
accountability levels, with the manager being accountable to senior personnel such as the general
manager. On the other hand, employees are accountable to their immediate supervisors.
A sound management system encourages and motivates employees toward achieving
organizational goals. Moreover, the employees feel valued for their performance, reducing the
chances of job turnover or engaging in risky projects. This relationship also makes it easy to
resolve conflict rationally in the workplace, whether between employees or management.
Excellent manager and employee relationships contribute to a positive work environment by
fostering a dynamic working environment.
Examples of Business Relationships
Lesson Summary
A business relationship refers to the connections between those engaged in commerce. Business
relations affect a firm because it impacts communication, interactions between various
stakeholders and their participation. There are various types of business relationships,
including peer-to-peer, employee-to-manager, and employee-to-customer relationships. Peer-
peer relationships incorporate relationships between employees who are at a relatively equal
level within a firm. Conversely, an employee-to-manager relationship is characterized by a
difference in reporting structures, accountability levels, and responsibilities.
Finally, employee-to-customer relationships are maintained for better customer satisfaction and
retention. However, the level of this interaction is not very important because it is not internal.
Among those involved in this type of relationship are sales and account managers. These people
interact with the customers and act as company representatives in creating and maintaining
positive relationships with the customers. All in all, these types of relationships play a
fundamental role in the success of an enterprise.