Utility Players

The compliance function is expanding by the day as it absorbs ever-increasing regulations and liabilities. At NRG Energy, it’s an element of culture

Power and utility companies in the United States are among the most-scrutinized and regulated enterprises in the country. This control and oversight became even more stringent when the Energy Policy Act passed in 2005, which the Federal Energy Regulatory Commission (FERC) described  as making “the most significant changes in the commission’s authority” since the mid-1930s and the days of the New Deal.

There are more stringent regulations that will go into effect soon. Developed and enforced by the North American Energy Reliability Corporation (NERC),  these regulations assign a low, medium or high designation to almost every power-generating asset in the country.

At NRG, a transformational energy company that serves more than three million retail customers, the responsibility of complying with all of these federal guidelines falls to Michael Bramnick, the company’s senior vice president and chief compliance officer. He points out that when he first joined the company in 2004, the focus on fulfilling these types of obligations was very different.

“Although they’ve always been important, compliance and ethics have really come into their own in recent years,” Bramnick says. “They weren’t predominant areas of focus when I was starting out, but now they’ve truly evolved into integral elements of strategy and business operations.”

Whether he is focused on corporate compliance matters or meeting FERC and NERC standards, Bramnick feels the most effective strategy is to make compliance a holistic part of NRG’s overall culture. That requires a focus on educating everyone in the company not only on what the enforceable rules are, but also on the company’s mission, values, and expectations.

“We can’t talk about codes of conduct and making ethical decisions without talking about how we’re regulated and what it means to make those kinds of decisions in that environment,” he says. “Beyond that, I want my colleagues making the right choices and behaving a certain way because doing so is part of NRG’s culture and values. If they’re focused on that, then they’ll make the right regulatory decisions.”

The company’s culture can be divided into two areas: one sets general standards for its employees; the other guides its mission and business practices. Internally, the company stresses its STRIVE values: safety, teamwork, respect, integrity, value creation, and exemplary leadership. Its mission is to develop smart energy choices, and it does so by emphasizing sustainability among its employees through environmental efforts and its supply chain. This extends to “Go Green” initiatives to support a low-carbon economy; providing customers with the latest energy management tools and energy-efficient options; and balancing traditional energy generation with lower-carbon fuels, renewables, and other innovative technologies.

Bramnick’s approach is to leverage the company’s mission and purpose to unite and align employees toward their goals and all aspects of compliance.

“That’s what’s exciting about being here,” he says. “Our mission is nothing short of transforming the way people use and think about electricity and energy. If employees believe in the mission and how we’re going about executing it, then you get compliance and ethical decision-making as an added positive outcome.”

Bramnick’s leadership style is based on trust and respect. When he was appointed NRG’s general counsel, he found himself suddenly supervising a department made up of highly experienced professionals who had been his peers. He decided the best approach was to show that he trusted them and would support their success.

He carries that philosophy into managing corporate and regulatory compliance. Rather than attempting to police colleagues and staff, he chooses to provide supportive advice combined with effective monitoring. “I want our team to be viewed as a safe place for seeking guidance,” he says.

Bramnick adds, “I believe in leaving talented people alone to do what they’re good at. For example, seasoned industry veterans don’t need my input on what terms should be in an agreement. We consult on strategy and approaches, but my meddling would only slow things down.”

Bramnick believes transparency is essential in order to achieve compliance goals, so he relies on a multipronged strategy.

First he focuses on facilitating cooperation from all employees by ensuring they understand the requirements and expectations and why they are being enforced. This means, for example, making them aware that it isn’t the chief compliance officer, but the Foreign Corrupt Practices Act, that prohibits giving certain gifts to a foreign official. “It helps everyone do their work appropriately if those kinds of details and the context of the requirements are clarified right at the outset,” Bramnick says.

“As more and more items fall in the cracks between traditional corporate functions, the CCO is an easy place to assign responsibility and accountability to the point that we become the Swiss Army Knife in the C-suite.”

His second priority is ensuring transparency with NRG’s board of directors. This means that the board’s audit committee is assured of not only receiving updates on corporate and regulatory compliance programs at each meeting, but also of receiving immediate notification of specific types of allegations and concerns. These notices are published on the company’s intranet. “Once you establish and embed the kind of transparency within which the board is comfortable, management understands its role, and employees are clear on their responsibilities, you create an environment that can foster trust at all levels,” Bramnick says. “It’s part of the culture of our company and part of the currency we need to do our jobs effectively.”

This open approach extends to the corporate and regulatory groups’ relationships with the rest of the business. Rather than working exclusively from its headquarters in New Jersey, members of the compliance groups travel frequently to work directly with internal management teams at plants and offices around the country. These face-to-face interactions create more productive give-and-take and facilitate better communication among parties. Bramnick says there have been many occasions on which colleagues he has met with in-person have later contacted him directly for advice—something they probably would not have done without the personal connection.

Emphasizing these interactions is probably related to the characteristics Bramnick feels are important for chief compliance officers (CCOs) to be successful (and which have more than likely played large roles in his own success in the industry): curiosity, the ability to delve deeply into an issue, and strong interpersonal skills.

“When you get right down to it, these are strengths you need to help you see what may be coming around the corner, so you can effectively advise clients and help to steer the business in the right direction,” he says.

Looking Ahead
Bramnick plans to roll out a gamification initiative to increase employee engagement with and knowledge about compliance activities and regulations. Online instruction will present critical code of conduct information in a competitive gaming environment. Individuals will be able to test themselves and compare their scores to those of their colleagues.

“This is a great alternative to traditional PowerPoint presentations and lectures that aren’t very inspiring,” Bramnick says. “And honestly, I think presenting the material as part of a scored game will be very effective at bringing out the innate competitiveness that NRG folks typically have.”

Bramnick say the number of topics and responsibilities that fall under the CCO umbrella is increasing, characterizing them as “multiplying by the day.” Because compliance means different things at different companies, topics range from product safety to political action committee compliance and, in some organizations, even social media. “As more and more items fall in the cracks between traditional corporate functions, the CCO is an easy place to assign responsibility and accountability to the point that we become the Swiss Army Knife in the C-suite,” he says.

Far from being a negative assessment, he feels this evolution provides tremendous opportunity for CCOs to learn more about their businesses and become more integrated into the strategic decision-making process. For this to happen, the CCO has to understand how the business earns its money, serves shareholders, and conducts day-to-day operations.

“By mastering the big picture, the CCO can lend his or her voice to a range of diverse issues, gain insight into connections between compliance and strategy, and, hopefully, offer education and context that’s invaluable,” Bramnick says. “Ten years from now, CCOs will be more associated with a broader range of key business decisions than they are today.”

It’s all part of an evolving future in which Bramnick sees behavior-based approaches taking on increasingly important roles and in which universally accepted, systemized, and flexible sets of standards will be implemented across industries. He predicts the results will be business environments that allow companies’ missions and cultural values to be more directly and dynamically translated into ethical decision-making within an accepted framework.