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Pure Business Project

Project Overview - Understanding the Issues

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"The real difficulty in changing any enterprise lies not in developing new ideas, but in escaping from the old ones." - John Maynard Keynes

Labour Market Policy Group
Department of Labour

April 2004

Version 3.0 Final
IDT and external

Table of Contents

Document control

People Involved in the Preparation of This Document

Name Appointment
Richard Whatman Project Leader
WEB Research Researchers
Nicole Brown Project Advisor
Sue Taylor Project Advisor

Review Version history

Release Date Author of version Version Changes
January 04 Richard Whatman / Nicole Brown SME Project Overview Jan 04 Initial Project Overview statement
February 04 Richard Whatman / Nicole Brown SME Project Overview Feb 04 Refined for team member feedback
16 Feb 04 Sue Taylor / Nicole Brown SME Project Overview V1.0 Draft including project management perspective
9 March 04 Sue Taylor / Nicole Brown SME Project Overview V2.4 Incorporates comment from Sue, Nicole and team
15 March 04 Richard Whatman SME Project Overview V2.5 Richard’s review and re-write of regulatory debate
19 March 2004 Sue Taylor SME Project Overview V2.6 Incorporate feedback from R&E and Research Plan
29 March 04 Sue Taylor and Richard Whatman SME Project Overview V2.7 Final changes incorporated, incl Julian’s comments
26 April 04 Sue Taylor and Richard Whatman SME Project Overview V2.7 Final Inclusion of V3.0 Final of Research Plan. Circ to IDT3
30 April 04 Sue Taylor and Richard Whatman SME Project Overview V3.0 Final Final changes including updated budget, and V3.0 Final of Research Plan – for sign off

Authorisation – Department of Labour Project Sponsors

Appointment Comment Name/Signature Date
Geoff Bascand      
Bob Hill      
Andrew Annakin      

Intended Audience

Appointment Comment Date

DoL Senior Managers
Project Team
External parties as appropriate

    

Executive Summary

The Small Medium Enterprise (SME) "Good Regulation" Project has as its overall purpose:

"to enable SMEs to thrive in a regulated world"

This organising principle is deliberated focussed on both SMEs and the the pervasiveness of regulation. This principle is intended to produce an approach to regulation that is centred on the daily practice of SMEs - that is being based on the reality of being 'the regulated'. It is also focussed on ensuring a thriving environment for SMEs, where regulation is more than just an unnecessary evil.

The Project takes a broad view of what 'regulation' is. In this project it is much more than 'the rules'; it is seen to be a complex social system, where successful change to that system can only occur through a thorough understanding of the regulatory activity as a whole.

The Project concentrates on SMEs and regulation because of the importance of SMEs to New Zealand's economic and social life, and because SMEs and regulators often report facing their biggest hurdles in dealing with each other. SMEs face difficulties because they lack resources - of skill, time and money and the cost of complying is disproportionately greater. Regulators face problems because SMEs are usually scattered, hard to help and lack resources. The SME "Good Regulation" Project is designed to develop an 'open space' so that government and SMEs can come up with better ways of working with each other - to make each others' jobs easier. It is intended to assist both by reducing unnecessary 'compliance costs' and improving SMEs ability to meet the goals of regulation.

SMEs face managing risks in three broad areas: commercial, environmental and social (mostly human resources risks and risks to the general public). These areas of risk are heavily regulated and there are a number of regulatory agencies with responsibility for those regulations. Regulators tend to have responsibility in one of these three areas, but generally not for all risks that SMEs face. This can lead to overlaps in regulation, and unintended consequences from the actions of several regulations or regulators acting on SMEs at once. The debate (internationally and in New Zealand) about what makes 'good' regulation has developed over the past two decades, moving from a 'deregulation' (more or less) regulation debate to a nuanced one of seeking to understand 'regulatory regimes' as a social activity in order to produce better regulatory outcomes.

Applying the lessons from this debate and the organising principle of "enabling SMEs to thrive in a regulated world", the SME "Good Regulation" Project has the following specific objectives, to:

  1. Identify the nature of the problem that regulation poses for SMEs and regulating agencies.
  2. Promote and support an understanding of regulation as a social activity.
  3. Support regulatory agencies and SMEs to develop mutually beneficial solutions to regulatory concerns.
  4. Actively disseminate and support improvements in the way that regulation is developed and utilised by SMEs and regulatory agencies.

The intended outcomes for the project are that:

  • Agencies and SME have a more sophisticated understanding about regulation as a social activity.
  • Means of developing and using regulation are improved in ways that make SMEs and regulator's work easier, i.e:
    • the costs and difficulties for SMEs in complying with regulatory requirements are minimised
    • regulatory compliance processes generate relevant, meaningful information for the management of enterprises
    • the supply of information needed by government from regulatory compliance processes is improved (at a reduced cost).
  • Agencies and SMEs use shared processes to collectively develop and apply regulation in an ongoing fashion.

This is a research project, developmental in nature. The objectives and intended outcomes will change as the project grows, and the understanding of the problems and possible solutions grows with it. The project is attempting to use a method, designed to understand and change activities, to address the regulatory 'knots' that are frequently found between SMEs and regulation. The method is called Development Work Research; it is an approach that has not been applied in this way to regulation and SMEs in New Zealand or overseas. It has, however, been successfully applied in New Zealand in the development of private sector organisations (Formway Furniture and EDS).

Because the approach examines the system of regulatory activity, there are a wide range of stakeholders that need to be involved for the project to be successful. These include Ministers, public servants from all parts of regulatory agencies, SMEs, their employees and advisers, and the media. The SME "Good Regulation" Project has been structured to progressively develop the network of stakeholders needed for it to be successful.

To do this, the SME "Good Regulation" Project has been divided into three Phases:

  • Phase One - Understanding Issues (June 2003 to June 2004)
  • Phase Two - Developing solutions (July 2004 to December 2005)
  • Phase Three - Implementing solutions (from January 2006)

This Overview and Management Plan describes in detail Phase One of the project, and outlines the purpose of Phases Two and Three. Because the project is developmental, these subsequent Phases will be planned as the project unfolds and issues and solutions become apparent.

The project was initiated by the Department of Labour (DoL) using funding from a successful application for the Ministry of Science, Research and Technology's Cross-Departmental Research Pool (CDRP). The funding from this source for these Phases is $127,000, 403,000 and $120,000 respectively. The funding is granted on the expectation that agencies involved will contribute further resources to the project.

The project application was supported by the IRD, Ministry of Economic Development, and Ministry for the Environment and Statistics New Zealand. Currently the project involves the Department of Labour, IRD, Ministry for Economic Development and New Zealand Trade and Enterprise, Statistics New Zealand and the Accident Compensation Corporation (ACC). SME representatives are also in the Project.

Phase One of the project involves agencies and SMEs gathering and exchanging information on the activity of regulation of SMEs. This is done through 'exploration groups'; these are selected people from the agencies or from amongst SMEs or their advisers, who can reflect on the experiences of the agency or SMEs in a focussed way. From these groups 'visitors' are selected, the visitors attend other exploration groups and gather further information and reflections on the process of regulating SMEs - both the problem areas and good practices. The visitors and researchers meet as an Interim Design Team (IDT) to further their understanding of the issues, develop a proposed research process for Phase Two the project and management structures needed for that phase.

The findings of Phase One and the proposed way forward for the Project will be presented to a broad group of stakeholders at a 'launch' on 23 June 2004. This will be a venue for testing the ideas that have been developed, and ensuring that the networks needed for the success of Phase Two have been established.

This Overview and Management Plan provides detail on:

  • The background to the project
  • Project goals and stakeholders
  • Method of delivery
  • The project plan for Phase One
  • The research methodology (Appendix One)
  • Funding from the CDRP (Appendix Two)
  • The 'regulatory debate' (Appendix Three).

It is the main document for understanding the work streams of the project for Phase One, why it is conceived in the way that it has been, and the goals of the project and the roles of those involved in it.

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