Reduce red-tape at your peril
Author : Tim Fryer
02 November 2010
Cutting red-tape will reduce one of SMEs biggest headaches say the government. I think this will just play into the lawyers hands!
‘Enterprise Tsar’ now seems to be a proper job function rather than a headline gimmick, but none-the-less, congratulations to Lord Young of Graffham on his appointment to this role. He is charged with reducing the red-tape that small and medium sized companies have to endure. Most of the UK’s electronics firms are SMEs, and SMEs represent half of the country’s output and 60% of the workforce, so this sounds like it should be an important step down the path of liberation! Sadly I fear that this will not be the case.
Cutting red-tape ranks alongside closing tax loop-holes and improving operational efficiency as favourite crowd-pleasing soundbites during election time. But the soundbites, although well intentioned, are often far harder to implement than the over-zealous politicians imagine. The problem is that it is not the red tape that is the problem. The problem runs much deeper. The red-tape is actually the time-consuming and unwieldy solution.
There are any number of examples that affect all of industry – HR, health and safety and accounting are the obvious examples – and there are those that will have more relevance specifically to the electronics industry, like certification and supply chain accountability. What they all have in common is that the red-tape is there to cover every possibility of things that could go wrong in order to protect every side in the customer/supplier relationship. Every time that something new does go wrong, a new ‘red-tape bandage’ is introduced to cover it. So ultimately we have this tangled web of paperwork that covers every eventuality and every area of responsibility.
Don’t get me wrong, if there were ways of streamlining the process and reducing duplication then I know it would be great for all concerned, but that would only scratch the surface of the problem and, potentially, cause what many SMEs hate more than anything else – a new red tape system to learn.
The reason why I have doubts about the effectiveness of ‘reducing red tape’ is that I think that the problem is a deeper one. Unfortunately I believe that a culture of sensible accountability has over the years degenerated into a culture of blame. Along with blame inevitably comes financial penalty and possibly legal proceedings. And thus companies actually need the red-tape to protect themselves.
Removing red tape for the sake of it, therefore, would only play into the hands of lawyers. Any recourse to the legal profession is initially likely to be more expensive than servicing the company’s paperwork requirements, and ultimately marks the end to any positive relationship between customer and supplier.
I am sure the red tape obligations on SMEs could be made less onerous, but they do serve a purpose.
Lord Young has initially been tasked with preparing a report within a month. It will be interesting to see what conclusions he comes to.
Don’t forget electronica!
Regular readers of this blog and this newsletter will not need any reminding that next week is electronica – the global electronics industry’s big event. Rather than go through the pros and cons of visiting the show, can I just point interested readers in the direction of our preview, which has masses of information about the show and many of the exhibitors. There is much valuable information in the preview even for those who are not going to the event.
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