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Poor organizational design and structure

Decisions about how to structure regulatory organizations should take these tradeoffs explicitly into account. • Structuring a regulator vertically to be independent confers a number of benefits, including providing a stable environment for the regulated industry and more durable policy decisions, all while encouraging regulatory personnel to develop deeper expertise. At the same time, independence can come at a cost, including raising concerns about public accountability, transparency in decision-making, and the potential for regulatory capture, a situation in which the regulator serves the benefit of the regulated industry instead of the public interest. Similarly, structural decisions about whether regulators should be headed with political appointees or career civil servants reflect a tradeoff between democratic accountability and technocratic expertise. • Similarly, regulators that are horizontally structured so as to have both regulatory and non-regulatory missions or, alternatively, that implement a diverse set of regulatory programs can experience goal ambiguity, which can increase management challenges and reduce employee motivation and effort. Yet, at the same time, combining missions can enable the regulator to realize synergies in sharing information and reduce inefficient duplication within its larger administrative apparatus. The reality is that while structure matters, a regulator’s performance is not fully determined by its structure, whether vertical or horizontal. Management still matters. The recognition of the importance of nonstructural aspects of regulatory organizations is important because a regulator’s structural design is typically not something in the control of the regulator itself. Rather, it is often determined through a complicated political process involving a multitude of stakeholders with divergent agendas that may care little about how a policy is actually implemented. Even so, despite seldom having control over their organizations’ formal structures, regulatory leaders can still use their management of the nonstructural aspects of their organizations to foster performance success. The starting point for achieving success is to be attentive to and understand the sometimes hidden promises and pitfalls that exist in both the vertical and horizontal structures of their organizations