The emotionality of regulation: emerging thoughts

Paul Richter (Newcastle University Business School)

Simon Down (Anglia Ruskin University) Jane Pollard (CURDS, Newcastle University)

the received wisdom in the UK (Baldwin, 2004; FSB, 2011)

• small businesses disproportionately affected by regulatory requirements (higher compliance costs; less resilient to regulatory shocks/uncertainties; lack regulation specialists…)

• regulation can undermine competitiveness, capacity to grow, viability

• ‘better regulation’ (taking into account SMEs circumstances) needed

reflected in government policy: regulations – one of the ‘enemies of enterprise’

The deluge of new regulations has been choking off enterprise for too long. We must move away from the view that the only way

to solve problems is to regulate. (Business Secretary Vince Cable, 2010)

‘Freedom day’ (5th April 2013)

Setting business free from the restrictions that hold back enterprise is a compulsory

step on the road to growth. We’ve listened to firms and taken prompt action where

regulation presents barriers - but there is a huge amount still to do.

(Business Minister, Michael Fallon)

the critique

• regulation as burden – a simplification… • ‘business-burden’/‘cost-compliance’ statistical analyses are simple snapshots

(at best) of firm attitudes

• various forms of resistance and compliance contingent on business resources and market contexts (Blackburn et al., 2005; Edwards, et al., 2003)

• often a low awareness of (H&S) regulation within small firms; varied response strategies – Avoiders/Outsiders; Reactors; Proactive learners (Vickers et al. 2005)

• regulatory compliance may in fact promote business performance by acting as an enabler or motivator to beneficial change (Kitching, 2006, 2007; Kitching et al., 2008, 2013, 2015)

• aspatial, acontextual and asocial conceptualisation of firms…context matters • firms as material geographical constellations of relations and practices,

territorialized networks of interdependencies (Storper, 1995; Dicken and Malmberg, 2001; Herod, 2007) in which learning, the accumulation of knowledge and rules and norms shape expectations, beliefs and decision-making in conditions of uncertainty (Hodgson, 1988)

outcomes insights for small firms

encouraging better regulation to support growth deepening the knowledge base

the project REBEL (REgulation in Business Employing a

Longitudinal perspective) Simon Down, Jane

Pollard, Paul Richter, Monder Ram

project focus How are regulatory

changes understood and internalised by SMEs?

How significant are sectoral and spatial variations?

How do SME’s understandings/responses to regulation change over

time?

what we did 14 growth-oriented small firms in the North East and East Midlands

over 28 months (3 sweeps)

workers at all levels

interviews with policy makers/trade bodies

sample of firms Sector Firm Approx size Year

founded Location

Bio-Business Bio 1 (bio-tech software development) 30 1989 North East

Bio 2 (drug manufacture) 50 2008

Bio 3 (drug delivery technologies) 15 2002 East Mids

Bio 4 (drug development) 52 2007

Environmental Services

ES 1 (waste treatment ) 20 2002 North East

ES 2 (environmental testing service) 40 1999

ES 3 (pollution control ) 10 1995

ES 4 (sustainable energy) 20 2007 East Mids

Security S1 (vision technology) 32 1992 North East

S2 (imaging technologies) 40 2003

S3 (clothing/armour protection) 40 1989 East Mids

Film & Media FM 1 (digital communications) 10 2000 North East

FM2 (design agency) 7 1990 East Mids

FM3 (TV facilities company) 7 1998

prospective academic contributions

• A relational examination of regulation and the entrepreneurial small firm

• organisational activities and behaviours prompted by regulation should be seen through a relational epistemology and ontology

• Financial intermediaries and the regulation of small firms

• integrates usually disparate literatures in economic geography and management concerned with regulation, production networks and financialisation

• Emotionality of regulation…

compliance – more than a ‘cost-resource’ burden?

• dominant views of the act of regulatory compliance • impassive (cerebral, prosaic, formalised, technical)

• …or where portrayed in more emotional terms, overriding sentiment – frustration (at having to comply with externally derived directives, diverting attention/scarce resources)

• our data suggest this representation is inadequate • complying with certain regulations can give rise to a

set of intensely personal, emotional effects

emotionality and management: contributions from organizational emotion theory

• persuasive critique of the idea that organization is (and should be) a rational, unemotional endeavour (Ashforth and Humphrey, 1995; Callahan and McCollum 2002; Fineman, 2003; Rafaeli and Worline, 2001; Rumens, 2005; Sturdy, 2003)

• traditionally, “both managers and organizational theorists conspired to keep emotion out of organizations and organizational theory” (Rafaeli and Worline, 2001: 99)

• something to be kept under control/regulated – construed as “feminine and therefore secondary, personal and weak” (Rafaeli and Worline, 2001: 100)

• more recently…“even the most intractable managers must now come to understand that the management of emotion is an inherent component of managerial work in the 21st century” (Rumens, 2005: 117)

• concept of ‘emotional intelligence’ has gained traction

• at the same time…self-management of emotion in the service of corporate objectives takes on darker overtones – ‘emotional labour’ (Hochschild, 1979, 1983 and many others since)

• viewed through an emotionality lens: What does our research say about the emotionality of regulatory compliance?

the small firm experience of redundancy regulations

• previous studies (Kets de Vries and Balazs, 1997; Wright, 1998) have conceptualised the ‘executioner’s burden’ from corporate downsizing – less is understood about the small firm setting

• our research data support this phenomenon, but…we are concerned to understand the emotionality of specific act of regulatory compliance (not wider event)

• importantly, compliance event tends to be framed by a fear of legal action – hence, firms secure professional HR guidance …I think there was an element of…being

concerned about being taken to tribunal (Operations Director, drug delivery

technology firm)

once you realise the consequences of not going through the process in the right way, and the cost

implications of it…we did decide to bring in... (CEO, drug delivery technology firm)

…being watchful of treating new staff with kid gloves a little bit because you’re fearful of what

could happen, I think is a real concern for businesses

(MD, digital comms firm)

emotional burden of compliance: sticking to the script

…we had to be very, very careful because we couldn’t actually let anybody in [the principal lab] know because you have to go through this process of consultation…what we had to feed back to managers

was – and no doubt the rumours would get round – very limited sketchy information. Because the consultation process started by

notifying the…whole of [secondary lab], that we were no longer in a position to maintain that level of business, we had to cut costs. The

only way we could see cutting costs was to close [secondary lab] and put those guys at risk

(Director, environmental services firm)

What you had to do was, you had to have a meeting with them and talk to them about, 'We are considering…' so you had to kind of pre-warn them, and then you had to have like a 4 week stay of…where you had to leave that time in between you informing them that you are 'thinking about' redundancy, and

they may be made redundant, to actually 4 weeks later going to them and saying, 'You are made redundant.' And I just thought it was really cruel!

(MD, digital comms firm)

‘Stick to the script.’ ‘Stick to this’… ‘do not deviate from the script’. And if I did, she would interrupt

…they seriously mentored me through the whole of the redundancy

process

emotional burden of compliance: regulating emotion

I was very conscious of the wording – because you get the wording wrong, someone may pick you up on that and may trip you up on that. And you lose the personal

touch. You can’t sit there as I’m talking to you, having a friendly chat, it becomes formalised…it becomes very formal. I mean, to the point, you’re having to really look that person in the eye and say ‘the business isn’t working and you’re at risk,

there’s nothing else I can do’. (Director, environmental services firm)

…it's very emotional, because you've built your company up, you're doing something you don't want to do, a lot of the staff you're letting go are often very good…

It was horrific, absolutely…It was terrible. It was inhumane really. And it made me a far worse boss, I felt, having to sit there to listen to them give me the reasons why I should

keep them on…It was dreadful. It’s really ill-conceived and giving people false hope and all of that, dreadful, dreadful.

…I really hated it, it was horrible. If you think about, not just in terms of how you are restricted legally…but it's part of business and I know that, and I did it as gently as I

could, but the legal side of it kind of made me act completely out of character… (MD, digital comms firm)

Does regulation have to assume employers are all ‘bastards’?

What I'd rather have done – and I don't know, this is probably protecting employees or something against crappy employers – I wanted to sit down with them and say, 'Listen, I need to protect the

business and I have to make these redundancies, I am going to give you as much notice as possible.' I'd rather have given them 8 weeks' notice rather than this charade of, 'I am consulting you that I may be making you redundant.' And a lot of them felt that there was still hope to retain their jobs, even though…I mean, I followed it by the letter in terms of what I was meant to say. You had to

give them an option to come back to give you a reason why they could stay, so they were all writing these documents to say why they should be kept. It was just really unfair and it made me look really

ruthless.

So I think from a legislative point of view…it needs to be looked at because it's really out of kilter with a small business. Maybe in a much bigger business it maybe works because you're not as close to the individuals. I don' t know…I mean, I bought them all presents when they left. I felt terrible! And I gave them all a reference and tried to give them as much…time off to get to go to interviews

and stuff like that…

I think there has to be more of a hand in glove approach. It’s not an ‘us’ and ‘them’ (MD, digital comms firm)

[maternity regulations are] built on a premise that all employers are bastards;

[“I’m not out to screw people”] (CEO, drug development firm)

emotional relief of compliance

…it was probably one of the hardest things I’ve ever had to do…

I did find it traumatic making the decision

…we didn’t really know how best to go about it. But, basically…I guess what we had to do was put in place a fair process for selecting the person that was going to be made redundant because we only had to lose one person. And, I think, it was good that we had to think about that, you know, how to do it.

(Operations Director, drug delivery technology firm)

So she was fantastic for that. But if she felt the employee wanted to go down a certain path, she just wouldn’t let that happen, which was great for me to be honest. So having gone through it once – and it sounds awful – I have no qualms about doing it again, I really don’t, because it toughens you up. I’m not going to say it’s easy because it’s very difficult if the

person on the other end is someone you connect with, somebody who’s done a good job for you. It’s not the person you’re actually making

redundant, it’s the function. And once I got that clear in my head, it’s still tough but you’re letting the function go, not the… Well, you are letting the

person go but you know what I mean. It’s not personal” (Director, environmental services firm)

Now although I was paying £170 a month, it was more about having that surety, and if I had any complexities that I

needed to deal with, anything, because I think employers are really frightened of

employment law, then I'd go to them straight away, and they were really good, and the

lawyer is on the end of the phone, really

excellent advice, they really get to know the

company, and it was just great.

(MD, digital comms firm)

emerging thoughts… • while organizational theory has moved the debate on from a time when managers faced with difficult

processes (layoffs, downsizing) were advised to ‘remain calm and try not to display any emotion’ (cf. Moore, 1997:10), our research suggests that compliance with redundancy regulations are inspiring exactly that kind of outmoded approach

• more…rather than management practice ‘celebrating’ (Ashforth and Humphrey, 1995) emotionality, the experience of regulatory compliance can imply the suppression of emotion, and with it, authenticity and empathy

• Can we locate the small firm owner-manager alongside Hochschild’s service agents in engaging in

‘emotion work’, raising the possibility that acts of regulatory compliance can inflict ‘emotional scars’ (see Fineman, 2003) on managers (as well as workers)?

• HR advisor acts to re-draw relationship boundaries by creating distance between ‘executioner’ and ‘executed’ – presence de-personalises the process, giving rise to emotional ‘scarring’ and/or relief

• Whose interests are being served by the enactment of redundancy regulations designed to protect workers?

• our data locate the origins of self-regulation beyond organizational rules/aims, implicating powerful ‘external’ actors – professional advisors/state legislature

• the small firm setting (often characterised by intimate employee-employer relations) offers a particularly rich site for exploring these phenomena