Evan Davis on... compliance

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Evan Davies: Compliance has become a dreaded business buzzword over the last couple of decades. Companies have compliance officers and compliance departments designed to ensure that people are sticking to rules of one kind or another.

Now, many people think compliance has gone too far, that it's embroiled in red tape, that it's really about ticking boxes, it's about compliance officers making sure that everybody sticks to the letter of a rule, disregarding really common sense or good form or discretion as to whether the rule is proportionate or being sensibly applied in a particular case. Could compliance be taken too far?

Well, it's worth, in this regard, I think, thinking about what a company is and what its objectives are. It's easy to think of a company as a sort of a rational organisation with a leader and an objective all pointing in the same direction - in which case one wouldn’t really think that compliance would get out of hand. It would all be about serving the corporate goal. That compliance is there, perfectly sensible, rational, at the right scale for what the company needs, and that is, I think, a very sensible way of thinking about a company; a rational, single oriented company.

But equally it can be very important to think about the company in more complicated ways - as an organisation that isn't led in one direction by some leader but as a sort of competing mélange of different interest groups, each with their own agenda, and in that kind of context, and when one looks at those kinds of theories as to how organisations work, well then compliance might get out of hand. Maybe the compliance department starts enjoying its power, starts enjoying the authority it has over everybody else, starts inventing rules and enforcing rules more fiercely because, of course, it makes and aggrandizes the position they have within the corporation.

And I think, actually, compliance provides a very good example of one of those areas where thinking about the company in different ways, and in particular not just as the rational organisation that just is out there to make profit or to serve the shareholders or to sell the goods to the customers, but thinking about it in this more complicated ways of competing organisations and constituencies is very useful.