Compliance

Conceptual Overview

The origins of a concern with compliance, from a behavioral approach, can be traced to sociolegal, regulatory, and economic research that developed as an alternative to the traditional control-and-command regimes, known as enforced self-regulation, which drew upon the coercive power of the state and the internal control mechanisms of organizations. It was a mode of regulation implemented via a compliance program. The rationale is that, while a person may be deterred from breaching the law by the promulgation of an appropriate regulation, this will not be absolutely reliable in preventing violations. Instead, it is through structuring a program of compliance that the person will be persuaded not to break the law in the first place.

According to the Organization for Economic Cooperation and Development (OECD), compliance focuses on target populations of regulation, the extent to which they comply with regulation, and why they do so. Compliance may be seen as obedience by a target population such as organizational managers to regulatory rules or government policy objectives. Thus, compliance requires management actively to lead and partake in the responsibility of ensuring individuals and organizations do comply with various laws and regulations.

Parker, Braithwaite, and Stepanenko argue that the dominant theme of compliance research over the past two decades has been the regulatory mix of punishment and persuasion. The Australian Law Reform Commission noted that regulators' approaches to enforcement will vary according to mitigating factors: While some might call for more interventionists and harsher treatments, others will call for preventive measures that have a greater focus on securing compliance via education, cooperation, negotiation, and conciliation. Similarly, there is an economic rationale to facilitate a competitive market that supports the notion of a targeted and less interventionist policy that will also safeguard property rights.

The New South Wales Law Reform Commission recommended in a recent report on sentencing corporate offenders that a court should have to take into account as a mitigating factor whether the corporation, at the time of the offense, had in place an active compliance program to prevent crime and detect crimes being committed. Furthermore, it should be an offense for individuals to impede compliance. The Australian Law Reform Commission report on sentencing of federal offenders adopted a similar view.

Standards Australia proposed that organizations should develop systems and codes. In addition, they should establish an internal compliance handling, reporting, and record-keeping regimen. Organizations should also maintain compliance with the training of personnel, active monitoring of any breaches, and reviewing program effectiveness. Such adherence to compliance requirements is clearly not only a form of normative socialization and signaling, but can also act as an effective insurance policy for an organization against malfeasance by any of its officers.

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