20161005 publicly induced self regulation presentation martin de bree
TRANSCRIPT
Publicly induced
self-regulation
Next Generation Compliance and Enforcement
Tools, Theory, and Practice
Beijing, October 20 &21, 2016
Martin de Bree
Institute of Business-Regulation Management
Rotterdam School of Management
Erasmus University
CONTENT
Publicly induced self-regulation
• Why?
• How?
• Problems & solutions
• Conclusions
WHY?
• Public regulation has not enough resources
& knowledge to keep up,
• companies need public scrutiny and
• public regulation shifts from a technical to a
social challenge, so …
Regulator should understand, influence
and use potential for self-regulation
Source: Downer 2010
HOW?
Compliance
Conformity with legal requirements
Compliance management system
Internal management system designed and used
by a regulated company to assure compliance*
Compliance = compliance assurance
Compliance = the goal of compliance
assurance
* Preferably the spirit of the law, not the letter of the law
Compliance
Company
checks own
compliance
Company
corrects non-
compliances and
takes action to
prevent in the
future
HOW?
Public regulator Regulated company
Compliance
assurance
Risk identification
Risk analysis
Risk control
HOW?
Source: Sparrow 2012
Public regulator Regulated company
Compliance
assurance
Risk identification
Risk analysis
Risk control
HOW?
Public regulator Regulated company
Compliance
assurance
Risk identification
Risk analysis
Risk control
Compliance
management
system
HOW?
?
? =
1. Holding companies
responsible for compliance
assurance
2. Assessing compliance
assurance
3. Stimulating compliance
assurance
Compliance
assurance
Risk identification
Risk analysis
Risk control
Compliance
management
system
Public regulator Regulated company
HOW?
Source: Van Dorp 2016
Assessing compliance assurance
HOW?
Stimulating compliance assurance
HOW?
Stimulating compliance assurance
Compliance
management
system
(Non)
Compliance Actions
Traditional inspections
(= single loop learning)
System based supervision
(= double loop learning)
Source: Argyris 1974, Meerman 2014
HOW?
PROBLEM #1
Decoupled compliance management systems:
work as imagined (on paper) is not implemented (work as done)
Sources: Meyer 1977, Bromley 2012, De Bree 2016, Sandholtz 2012
SOLUTIONS #1
• Check feasibility regarding target industry*
• Adequate tools to assess compliance management* and ***
• Giving feedback to company/industry about gaps between goals, management system, practice & result**
• Making arrangements with company/industry to recouple layers and close plan-do-check-act cycle***
• Adequate policy to support this*:
– Assessment and stimulation of compliance assurance
– Reluctant with penalties for violations by those who are willing and acting
– Strict penalties for violations by those who do not demonstrate preparedness to assure compliance
Sources: * IMPEL Guidance for Compliance Management Supervision 2014
** Perezts 2014, Tilcsik 2010, Stoopendaal 2016
*** De Bree 2016
Procedures,
instructions,
measures
Governance
codes, Codes of
conduct Work as
imagined
Goals, mission?
Processes &
procedures suitable
and documented?
Implemented &
effective? Work as
done
SOLUTIONS #1
Source: De Bree 2016
Co
mp
an
y c
ultu
re
PROBLEM #2
Black & white thinking:
A single non-compliance does not mean that compliance management system is not effective
AND vice versa:
Absence of non-compliances does not mean that the compliance management system is
effective
SOLUTIONS #2
• Check feasibility regarding own inspectorate*
• Commitment from top management inspectorate and
political leaders that prevention is better than fire fighting*
• Adequate intervention strategy*
• Training and coaching of inspectors*:
auditing,
system thinking and
communication
• Learning by doing, interacting with company**
Sources: * IMPEL 2014
** Perezts 2014, Tilcsik 2010, Stoopendaal 2016
CONCLUSIONS
1. Modern public regulation cannot do without smart use of self-regulation potential
2. Publicly induced self-regulation does not mean that public regulator is passive; it
requires a different role: hold companies responsible for assuring compliance and
actively assess and stimulate self-regulation
3. Publicly induced self-regulation requires customized regulation approach
penalties may be counter productive. “one size fits no one”
4. Tools and policies are available, tested and effective
5. Main pitfalls are
• decoupled companies (what-you-see-is-not-what-you-get)
• black-and-white thinking of regulators
FURTHER READING Argyris, C Schon, Donald A. 1974. Theory in practice: Increasing professional effectiveness. Oxford, England: Jossey-Bass
Bromley, P., Powell, W.W. 2012. From Smoke and Mirrors to Walking the Talk: Decoupling in the Contemporary World, The Academy of Management Annals, 6:1
Bree, M.A. de, Stoopendaal A. 2016. Recoupling through System Based Regulation, forthcoming
Dorp, R. van, Bree, M.A. de, 2016, Safety lessons from aviation for regulation of road transport, forthcoming
Meerman, P., Bree de, M.A. 2014. Compliance Assurance through Company Compliance Management Systems, in Paddock, L., Wentz, J. (Eds.), Next Generation
Compliance and Enforcement: 301-312, Washington DC: Environmental Law Institute Washington
Downer, J. 2010. Trust and technology: the social foundations of aviation regulation, The British Journal of Sociology, Vol. 61 Issue 1.
Meyer, J.W., Rowan, B. 1977. Institutional Organizations: Formal structure as a myth and ceremony, American Journal of Sociology, 83, Issue 2
IMPEL, 2014. Guidance CMS Supervision (Available here) & Compliance Assurance through Company Compliance and Environmental Management Systems
2013/15 – 2014/1; (Available here)
Perezts, M., Picard, S. 2014. Compliance or Comfort Zone? The Work of Embedded Ethics in Performing Regulation, Journal of Business Ethics, Vol. 131, Issue 4:
Sandholtz K.W. 2012. Making Standards Stick: A Theory of Coupled vs. Decoupled Compliance, Organization Studies, 33(5-6)
Sparrow. M.W. 2012. Crime reduction through a regulatory approach; Joining the Regulatory Fold. Criminology & Public Policy. American Society of Criminology.
Volume 11, Issue 2
Stoopendaal, A., Bree, M.A. de, Robben, P. 2016. Reconceptualizing regulation: a formative evaluation of the experimental project of
System Based Regulation in Dutch healthcare, Evaluation, forthcoming October 22(4)
Tilcsik, A. 2010. From ritual to reality: Demography, ideology and decoupling in a post-communist government agency, Academy of Management Journal, Vol. 53,
No. 6
