Exploring issues about regulation – chapter review of the book Regulatory Delivery (on culture)

In November 2019, Professor Jeroen van der Heijden reviewed briefly the book Regulatory Delivery: Introducing the Regulatory Delivery Model, Graham Russell and Christopher Hodges, editors, (2019), Hart Publishing Oxford, 504 pages.

This article is the second of a series of brief chapter reviews from that book. The chapter reviews will outline the key themes of the chapter, with brief commentary about them in respect to New Zealand experience.

Chapter 10 – Culture – Culture is one of three prerequisite elements of a ‘Regulatory Delivery Model’ that the authors describe as being useful as a map, a diagnostic tool or a predictive model to guide thinking about regulatory delivery. The model overall is made up of three prerequisites: Accountability (ch 7), Culture (ch 10) and Governance Frameworks (ch 3), and three practices: Outcome Measurement (ch 13), Risk-based Prioritisation (ch 16) and Intervention Choices (ch 20). Each chapter ends with a set of ‘Key Lines of Enquiry’ that can be used to assess the current picture in a regulatory organisation.

The chapter defines culture as a collective understanding and purpose that manifests itself in the visible behaviour of the regulatory agency: ‘the way things are done around here’.  Culture can be both positive and negative in the sense that it can support and drive improvement but can also be a barrier to desired behaviours and change. Culture is important for all organisations, but particularly for regulatory organisations for two key reasons:

Public Sector agencies don’t have commercial influences such as profitability and competition that might drive improvement.  Culture therefore has a more significant role to play in ensuring effective delivery and improvement

Regulators exercise the coercive power of the state, usually with a significant degree of discretion, which can raise questions about unfairness and inconsistency.  Culture has a significant bearing on the exercise of discretion.

The chapter notes that there are many influences on culture including, the governance framework that applies to the agency, leadership, the pre-existing culture of those employed and the context in which it operates. These things evolve and culture will change and be subject to other influences over time – for example relationships with regulated entities, other regulators and government bodies, the nature and direction of political influence and court decisions about the regulator’s decisions. There is no ‘one size fits all’ culture but it is likely that a ‘good’ culture would be described using words and phrases like strong and healthy, commitment to good outcomes, collaboration, good practice, sustainability in terms of long-term outcomes and resilience.

Further, the chapter describes the key indicators of regulatory cultures as:

Leadership – on the basis that leaders are the primary influence on the development of culture and should model and embed appropriate behaviours

Values – as they play an important part in determining a regulator’s culture and its approach and relationships

Professional Competency – noting OECD guidance relating to the importance of training and managing inspectors to ensure professionalism, integrity, consistency and transparency.

The thrust of this chapter resonates strongly with work done in New Zealand by the Productivity Commission (Inquiry into Regulatory Institutions and Practices, 2014). This work highlighted the importance of culture, leadership and workforce capability, having identified problems in each area. 

This post was written by Keith Manch, the Chief Executive and Director of Maritime New Zealand. He has worked in the public sector since 1977 and brings extensive leadership experience in a number of policy and operational senior leadership positions in regulation, compliance and response.

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