Regulation issue

Citation

Heap, J. (1999), "Regulation issue", Work Study, Vol. 48 No. 3. https://doi.org/10.1108/ws.1999.07948caa.001

Regulation issue

Regulation issue

Regulations exist to inhibit certain behaviours ­ and, of course, to promote others. Regulations are layered in a complex hierarchy. At the top level there are legal regulations ­ in the case of the UK, at both the national level and at the level of the European Union. Most sectors of industry and commerce also have regulations that apply to their own sector. Some of these are mandatory; others may be voluntary ­ in the form of codes of practice. Then, individual organisations will have their own internal policies and regulations.

Purchasers and users of goods or services feel reassured because of the existence of the regulations. They are afforded a degree of confidence that disallowed or discouraged forms of behaviour will not be practised. They are secure in their understanding that the control process built around the regulations will actually prevent the disallowed behaviour or that sanctions will be applied to those who contravene the regulations (and thus they will be persuaded not to do it).

We all know, however, that regulations are broken. This may be accidental or deliberate. If the regulatory framework, and associated "policing" processes, is effectively designed, such breaches should be identified quickly in time for swift corrective action to be applied. Where the breach is owing to a wilful disregard for the regulations, the perpetrator may be smart enough to cover his/her tracks over and across the second level checks.

When this happens, there is usually some form of enquiry and review of the regulations. There is often a plea to toughen and/or widen the regulations. (This is particularly true for high profile, publicly visible situations where politicians can use the "offence" to make political capital.)

However, first it is wise to consider the "other side of the coin". Regulations, though always well-meaning, can have unintended consequences. In restricting behaviours identified as harmful or antisocial, regulations can also restrict behaviours which are entrepreneurial. They can prevent flexibility, innovation, creativity and competitiveness.

It is trite ­ but true ­ to say that all regulatory frameworks must strike a balance between prohibiting undesirable behaviours and inhibiting desirable ­ though perhaps "maverick" ­ behaviours.

Most activities carry some risk. Here the risk of some undesirable outcome (and its likely consequences) must be weighed against the risk of (and the lost opportunities associated with) inflexibility.

Risk management is not standard practice within UK industry. Of course, risk avoidance does take place. It is, however, often arbitrary ­ based on imperfect information and an imperfect understanding, and analysis, of what information does exist. Risk management works best when a considered assessment of the various risks, their probabilities and their consequences is undertaken.

Perhaps we need regulations to ensure that all organisations undertake risk management!

John Heap