What Does it Mean to Comply

1
What Does it Mean to Comply?

• Exploring Business Reponses to Labour Regulation

2
Compliance from the perspective of regulators

• Overly simplistic to think that compliance is
  simply about regulators comparing the way in
  which actual behaviour conforms the requirements
  of published rules or standards
• Compliance from the regulators perspective is
  not just a single event, but a process of
  extended and endless negotiation (Manning, 1988)
• Parties build up social relationships and mutual
  trust which enables bargaining relationship to be
  maintained

3
Why?

• Business regulation more often than not imposes
  ongoing (or continuing or repetitive) obligations
• It may take considerable time for organisations
  to organise themselves to reach the required
  standards

4

• 2. Rules and standards are often unclear about
  what is meant by compliance
• Complexities of language
• Impossible to standardise required performance
• Preference for broad, inclusive rules

5
Consequences of ambiguity of standards

• Provide regulators with significant discretion in
  interpretation
• Interpretation may be the result of extended
  negotiation between policy makers, field
  inspectors, regulated, and advisers of the
  regulated

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• 3. The interpretation of facts may be challenging
• Sources of the problem and solutions may need
  constant negotiation and re-negotiation

7
Working Definitions of Compliance

• Full compliance the set of conditions
  regulators are aiming at (legal and
  administrative definitions)
• Temporary definitions of compliance less than
  full compliance, but tolerated in the short term
• Acceptable non-compliance
• Unacceptable compliance

8

• Aggregated compliance look at matters (general
  approach and response to legal requirements) over
  a period of time
• Judgments about compliance often build in broader
  moral considerations

9
Choice of enforcement approach

• One influencing factor is characterisation of
  regulatees and their responses to regulatory
  strategies (see Kagan and Scholtz, Hawkins,
  Hutter, Black, Ayres and Braithwaite)
• Amoral calculators (rational actors)
• Political citizens (inclined to comply, but wont
  if dont agree with goals etc)
• Organisationally incompetent (inadequate
  knowledge or internal controls)
• Irrational non-compliers (malicious,
  ill-intentioned, ill-informed)

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Business Reponses to Constitutive Regulation
Project

• A study of study on the way in which business
  firms respond to legal rules in three areas of
  labour law
• (i) occupational health and safety (OHS)
  regulation,
• (ii) unfair dismissal law, and
• (iii) equal employment (EO) and sexual harassment
  law.

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Constitutive regulation

• Uses legal norms to constitute structures,
  procedures and routines which are required to be
  adopted and internalised by regulated
  organisations, so that these structures,
  procedures and routines become part of the normal
  operating activities of the organisation.
• The aim is for legal norms to infiltrate deep
  into the organisation to require the
  organisation, and the individuals within it, to
  act responsibly (Hutter, 2001)

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Research Questions

• What steps do business organisations take to
  comply with the legal obligations? What
  difficulties or problems did they experiences?
• Can corporate cultures, impacting upon
  compliance, be identified?
• What factors influence corporate culture eg size
  and organisational structure etc external
  factors (industry, place in contractual hierarchy
  etc) regulation?

13
Conceptual Framework for Business Responses

• Haines (1997) identified two kinds of
  organisational responses to workplace fatalities.
  
• Some organisations responded in a virtuous
  manner, ensuring that as much thought as possible
  went into the changes that were made and that the
  response was far reaching .
• Others took a blinkered response, confining
  themselves to obvious changes, to limiting legal
  liability, and leaving broader issues unexamined.
  

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Varieties of organisational responses to
regulatory requirements

• Conformity accept and adopt regulatory (i)
  goals and (ii) institutional means
• Innovation accept (i), but achieve with means
  other than (ii)
• Ritualism reluctant to accept (i), and
  implement (ii) perfunctorily
• Retreatism no engagement with (i) or (ii)
• Rebellion reject (i) and (ii) and substitute
  with antipathetic goals and means
• (Braithwaite, 1993, building on Merton,
  1968)

15
External pressures shaping business responses

• Haines (1997) showed significant external
  pressures which affect organisations ability to
  conform or be innovative in complying with
  regulatory requirements.
• Organisational culture was the touchstone
  (Haines, 1997 216). (An organisations
  assumptions about how success was to be
  achieved). A virtuous culture made a virtuous
  response possible, and a blinkered culture was
  likely to lead to a blinkered response.

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• Organisational behaviour and organisational
  responses to regulation could only be understood
  when the social context ( the regulatory
  space) was taken into account.
• The regulatory space is affected by the size of
  the organisation, the industry within which it
  operates, industry competitiveness, and the
  organisations position within the industry.