In their budgets, many managers take a conservative approach to compliance with environmental, health, and safety regulations. They think it is smarter to be safe and overspend on inescapable compliance costs than under spend and be left holding the bag if some-thing goes wrong. Says Copeland: “This sometimes-irrational fear prevents managers from thinking as clearly or imaginatively as they should about how to save money on compliance, so they gold plate their investment requests.” Recommendation: To avoid unnecessarily conservative and costly compliance spending, ask managers to analyze and report on compliance practices at other companies.
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