The essence of the theory of regulatory compliance has to do with the law of diminishing returns as one approaches full 100% regulatory compliance. This effect related to diminishing returns applies to all industries and not just to the human services. Another tenet of the theory is the nature of regulatory compliance data being skewed and the resultant difficulty in identifying the top performers because so many mediocre performers are in the mix. With regulatory compliance, the data distribution will not be normally distributed.

The implication of the above is the need to search for the right rules rather than having full compliance with all rules. It is not cost effective or efficient to emphasize full compliance when there are specific rules that have a disproportionate impact on overall regulatory compliance and outcomes. The use of abbreviated inspections, such as key indicators and risk assessment become options in this search for the right rules. Searching for these most effective rules then makes for a more efficient monitoring system, i.e.: differential monitoring.

These are the major tenets of the theory of regulatory compliance and its implications for the regulatory science field.