Red tape can be helpful!
Red tape is causes massive costs and frustrations. Legislative demands, if not managed effectively, increase overheads, create waste or, if ignored, increase the risk of costs and penalisation.
Even when most reasonable people would agree that there is sense and reason behind the legislation, if the implementation and enforcement of it is not controlled then we create empires and jobs that carry extensive authority but no financial responsibility, they do not necessarily contribute to the overall competitiveness of UK plc.
Wiser organisations however recognise that there is value in complying with not only the letter, but also the spirit of standards and legislation. These requirements are founded on past mistakes and expensively learned lessons.
From the mistakes of others, a wise man corrects his own
Syrus Publilius (42 BC)
Prevention is usually far less expensive than cure; lessons learned from other peoples’ mistakes can be a powerful tool in preventing them in your own business. Standards, including those for quality management, management of health and safety, effective use of employees’ capabilities, legislation on employment, accounting, the avoidance of corruption and fraud and others, are designed to ensure that businesses operate effectively without risks to customers, employees, stakeholders, the environment and communities. It is the strategy for deploying and monitoring rules that render them either helpful and beneficial or costly and ineffective, and that is where joined up thinking is important.
Often, one of three approaches are used to deal with all of this legislation;
- Ignoring it; waiting until a problem arises and then dealing with it. This approach is worryingly common but the consequences for the business are expensive, potentially terminal and, for its owners and managers, may lead to criminal prosecution. Lawyers love it, the time and cost incurred in resolving a problem are way higher that those which would have prevented it. Customers and shareholders, on the other hand, hate it; costs and margins, delivery schedules and quality are most at risk.
- Appoint someone to delegate responsibility to. The trouble is that each type of legislation requires specialist knowledge; we have separate departments for quality, safety, environment, business continuity, finance, HR, IT, (need I go on?). Without an overall integrating strategy and authority that approach leads to escalating costs and to procedures that are developed in isolation and cause confusion, duplication and contradiction. When that happens people disregard systems and controls since they are too difficult to comprehend; audits then routinely uncover non-conformances or other issues.
This is the worst scenario since the business and its personnel are at equal risk to scenario 1 but vast amounts of money have been spent in the process. Unfortunately this is an all too common scenario.
- Align risk management to value stream processes, manage only what matters. Minimise costs and derive value from management systems. This is world-class thinking and, like all good ideas, it is simple; it happens as a result of clear strategy.
“Karen encouraged me to take time out to re-assess my goals and I’ve since made changes to help me realise my ultimate goal of financial freedom. With this in mind I know exactly what I need to do over the next 10 years to achieve them and it will help me keep business on track.”
Anna Hart, Property Consultant