Thriving in a complex regulatory landscape

13 Novemer 2011

Businesses have always had varied and complex rules and obligations placed upon them by regulators. If these are not properly managed, they can put a huge burden on the business and the wider economy.

While the coalition government has actively pledged to review and reduce unnecessary bureaucracy and red tape, there remains a constant need for organisations to understand and abide by relevant legislation.

Making sense of it all

ORC International has been conducting compliance and regulatory research for a number of years. Although traditional research methods still play a large part in evaluating the impact of policies and legislation, we have also been using more innovative techniques to maximise the insight of the work we do.

Recent work for the National Audit Office (NAO) and BIS allowed our research team to utilise its expertise and a range of innovative, cost-effective methods to provide insight into the wider compliance landscape.

Lessons learnt

Based on the extensive range of studies we have conducted, some of the key compliance issues that we see businesses facing in this area include the following:

Common sense

We find that generally businesses understand the need for regulation and often welcome the statutory framework for the protection it provides. However, if they feel they are being restricted by bureaucratic requirements with no clear basis in good practice, frustrations can arise.

Feelings of discontent have been particularly prevalent in the areas of health and safety and employment law. Organisations want enforcers and policy makers to show a common sense approach to the volume and content of statute, and for the law to demonstrate that they understand the practicalities of running a business.

Business behaviours

Regulations exist to guide business activity within a legal framework. Often, as a result of regulation, business behaviour can be impacted in indirect ways outside of the intended scope of any legislation.

Businesses often end up changing their practices to operate within the regulatory landscape in the easiest possible way. Research carried out for one regulator identified that some chemical manufacturers deliberately limited their use and storage of hazardous substances to ensure that they were kept out of scope of specific (and onerous) legislative obligations. A knock-on effect of this behaviour meant that they were restricting their production operations in a way that was potentially detrimental to the efficient running of their business.

Cost burdens on smaller organisations

Regulation sometimes fails to take into account the wide scope of the businesses it will impact upon. Smaller organisations often don’t have access to expertise in areas like law, finance, HR, health and safety and therefore end up incurring the costs of outsourcing that expertise on an ad hoc basis. We have also found that business owners are bogged-down with back office tasks, which detracts from their role of actually running the business.

Trying to comply

Very few organisations intentionally try to avoid following regulation. We find that where businesses are not complying, it is simply down to an inability to do so or a general lack of awareness.

Accessible information and guidance

Often businesses waste time with unnecessary concerns over broader legislation by allocating time and resources to investigating regulations that don’t apply to them. It is key that any guidance and supporting information is as accessible as possible and clearly states the necessary requirements and obligations and how they apply to different businesses.