Research: Effective corporate self-regulation

An upcoming article in Administrative Science Quarterly sheds new light on organizational self-regulation—a strategy often advocated as a replacement for direct government regulation of the workplace.

“Making self-regulation more than merely symbolic: The critical role of the legal environment” concludes that organizations were more likely to effectively self-regulate when their industry was subject to heavy regulatory surveillance and when self-regulation was voluntarily adopted. By contrast, poor performers were much less likely to effectively self-regulate, suggesting that self-regulation may not be an appropriate strategy to improve compliance among such companies.

This paper provides further empirical support for the long-standing criticism of self-regulation: internal regulatory structures tend to be improperly influenced by managerial priorities within the organization. Crassly, when the inmates are in charge of the asylum, rehabilitation tends to give way to baser impulses. Where this article provides new insight is into specific circumstances when self-regulation works better and poorer.

The specific results were really quite interesting. Organizations disclosing violations that were not facing regulatory threats and which committed to self-regulation exhibited improved outcomes in the future. By contrast, facilities disclosing violations while facing regulatory threats did not improve their outcomes. This supports the notion that heavy-handed government intervention can undermine organization’s motivation to effectively self-regulate. At the same time, high levels of state surveillance appear to make an important contribution to promote the effective self-regulation, even when not accompanied by punishment.

The researchers also found that organizations with poor histories of compliance tended not to show the same improvements as companies with better compliance histories when asked to self-regulate. In this, we may be seeing organizations using self-regulation as a smoke screen to hide from enforcement behaviour.

This research has direct application to Alberta. Here, the government runs a Partners in Injury Reduction program wherein employers are encouraged to self-regulate and receive various workers’ compensation premium rebates based on obtaining a Certification of Recognition (COR) and their injury claims records.

The April 2010 Auditor General’s report called into the question this program as some employers with CORs “do not comply with OHS orders and their workers are much more likely to get injured on the job, yet these employers continue to receive Partners in Injury Reduction financial rebates and use their COR to bid on contracts with major companies in such industries as construction, and oil and gas” (p.42).

It will be interesting to see how the government grapples with the complexities of self-regulation as it continues to cope with the public attention to Alberta's workplace injury problem.

-- Bob Barnetson