Regulation, in the corporate world, is generally thought of as something to move around, over, or through.
Complying can be very costly, and many will do what they can to avoid red tape.
Yet others can’t imagine operating without some regulation, and go as far as to say they’re happy to pay for it.
Still others are somewhere in between, opting to influence regulators by speaking out, or even writing their own rulebooks. A birds-eye view of these actions reveals what works — and what doesn’t — for mid-sized companies.
An aerospace manufacturing and delivery company based in California, Composites Horizons, took matters into its own hands.
“The reality is, we have to comply to industry standards. We all fly. We all know what we want that airplane to do for us. So, the aerospace industry developed a voluntary, self-regulating system, which costs us $50,000 a year," says Jeff Hynes, the company's CEO.
The company uses standards from International Organization for Standardization (ISO) to evaluate its own safety performance, which the Federal Aviation Administration then uses to make its own judgment on how the company is doing. The process costs Composites Horizons five percent of its annual operating profit.
For Hynes, this is a no-brainer investment because ISO's reach — as the world's largest developer and publisher of international standards — lends credibility to his company.
“I’m a free market guy, but in our industry you just have to expect that you’re going to have audits. But if you keep your nose clean, a lot of these regulations are just good business requirements,” adds Hynes.
Food manufacturer Bellisio Foods is a private company that also sees regulation as necessary, and even positive. As a producer of meat and chicken products, the [U.S Department of Agriculture], USDA maintains a daily inspection presence in their facilities.
"Our interest are aligned with the regulators — to protect the American consumer. Do they get it right all the time? No, but they do an amazing job keeping our food safe," says CEO Joel Conner.
According to Conner, the cost of compliance is roughly 15 to 20 percent of the $200 million a year Bellisio spends on manufacturing. He claims the company would make this investment with or without the enforcement of regulators.
While food safety has an obvious link to Bellisio's bottom line, he says the food industry is not the only one that depends on regulators; "You can look at any number of industries, and say, we really rely on the government to establish and enforce minimum standards of consumer safety. I think the attitude that all regulation is bad is simply inappropriate.”
Conner's take on regulation, however, may put him in the minority. According to consulting giant Deloitte's new study of middle market executives, a majority perceive regulation negatively, citing it as an obstacle to American competitiveness.
Lighting Science Group 's Chief Technology Officer Fred Maxik puts it bluntly: "Products going on sale in foreign markets six to eight months prior to sale in the US means utility regulation is out-dated and onerous."
The mid-sized LED lighting manufacturer complies with “Energy Star”—run by the US Environmental Protection Agency—which certifies the efficiency, quality, and longevity of their products. The company also complies with Underwriters Laboratories (UL), a safety regulator required by local municipalities around the country.
“Between the two [EPA and UL], they are really slowing down the ability of small companies to come out with products fast enough, and it is greatly increasing the expense of bringing products to market,” says Maxik.