A634.7.4.RB_RuggerioSteven

CEO Ethics and Behaviors

The United States Air Force controls the skies.  Whether flying over the Middle East or in its own backyard, the aircraft deployed by the U.S. is unmatched in air superiority and maneuverability.  One of the key defense contractors responsible for their success is Lockheed Martin.  Holding the title as the largest defense contractor in the world, Lockheed has designed, built, and fielded a number of weapon systems used by nations all over the globe. 

I spent 20 years on active duty with the United States Air Force (USAF) and am now embedded with them as a Lockheed Martin (LM) employee supporting the F-22 Raptor.  As an Airman, I learned the importance of core values, ethical principles, and teamwork.  One of the great rewards of working for Lockheed Martin are the values I prided myself in while on active duty are now the same values espoused by Lockheed Martin.

In the USAF, we were taught, Integrity First, Service Before Self, and Excellence In All We Do.  As a Lockheed employee, my new (similar) values are Do What’s Right, Respect Others, and Perform With Excellence.  Whether my business attire was USAF blue or LM gray, ethics and excellence undergird everything we did.  However, even a strong ethical culture cannot eliminate all indiscretions.  Therefore, there must be a system that both rewards positive ethical behavior and punishes individuals who violate the company’s ethical code of conduct.

The current CEO of Lockheed Martin, Marillyn Hewson said, “Lockheed Martin has always been a company driven by its values.  While we are known for breakthrough innovations and exceptional performance, we are defined by our commitment to ethics and integrity” (Lockheed Martin, 2013).  In Lockheed’s code of ethics, Hewson said, “Being honest and ethical in all our dealings builds trust and secures our future.  Acting with integrity is the responsibility of each Lockheed Martin employee, and it goes beyond simply complying with laws, rules, and regulations that govern our business.  It requires embracing our values in every decision we make and every action we take” (Lockheed Martin, 2013).

Employees have quit, retired, and been fired from Lockheed since their inception and short of an office party, a luncheon, or some cubicle gossip, much else isn’t said.  However, when an executive leader, the next CEO is asked to resign, it gets plenty of attention.  Christopher Kubasik, Lockheed’s chief operating officer was slated to become CEO on January 1, 2013.  However, he was asked to resign after the company discovered he was having an inappropriate relationship with a subordinate.  In short, Kubasik, who is married, was caught having an affair with a junior employee (Ratnam, 2012).

The Lockheed code of ethics states, “All employees are responsible for adherence to the standards of conduct set forth in this code.”  More specifically, the code has a section labeled: Avoid Personal and Organizational Conflicts of Interest.  Under the heading, it states, “You must avoid situations in which your personal interests might conflict with, or appear to conflict with the interest of Lockheed Martin.”  And for Kubasik, the real kicker was the following requirement: Examples of How a Personal Conflict of Interest Could Occur: Having a close, personal relationship with a subordinate employee (Lockheed Martin, 2013).  Kubasik was quoted as saying, “I regret that my conduct in this matter did not meet the standards to which I have always held myself” (Ratnam, 2012).

In Chuck Gallagher’s Unethical Continuum, Kubasik slid right past what’s good for the customer and the company, and camped out in the areas of policy violation and unethical behavior.  So far as we know, there was nothing illegal about Kubasik’s actions, but it most certainly proved unethical (Gallagher, 2013). 

While Kubasik provides a virtual buffet of water cooler gossip and unethical organizational behavior, his replacement, Marillyn Hewson shows great ethical vision.  One of the first initiatives of Hewson was renewing Lockheed’s commitment to sustainable business practices. 

In her message title, “Tomorrow Matters: Building a Sustainable Future,” she said, “Sustainability encompasses many activities that promote responsible growth, protects our environment, and strengthens our workforce and our communities.  It means that we will continue to act with integrity in everything we do, and we will take action to: ensure the safety and health of our employees, develop a diverse and inclusive workforce, increase the environmental and social benefits of our products, and make our operations greener, volunteer in our communities, and support science and technology education” (Hewson, 2013).

Hewson stresses ethics and integrity.  She leaves no stone unturned.  She discusses the environment, the people, the community, and the products.   One of the ways Hewson demonstrates Weinstein’s framework of ethics is her motivation for community involvement and volunteerism.  She recognizes, as Weinstein stated, “When you make people feel better, it makes you feel better” (Weinstein, 2012).

As an employee of Lockheed Martin, my hat is off to Ms. Hewson.  Her ability to step in and take the reigns of a company this size after the unethical fall of her predecessor shows great courage, deep leadership, and a vision for people and the product that isn’t easily attained.

Steve

References:

Gallagher, C. (2013). Business Ethics Keynote Speaker: Chuck Gallagher Shares Straight Talk

about Ethics. Retrieved from http://www.youtube.com/watch?v=gUJ00vNGCPE

Hewson, M. (2013). CEO & President Marillyn Hewson Addresses 1Q Results. Retrieved from

            http://www.lockheedmartin.com/us/employees/enr/0426-hewson.html

Lockheed Martin Corporation. (2013). Code of Ethics. Retrieved from

            http://www.lockheedmartin.com/us/who-we-are/ethics/code-of-ethics.html

Ratnam, G. Lockheed’s Incoming CEO Kubasik Quits After Relationship. Bloomberg

Businessweek. Retrieved from

http://businessweek.com/printer/articles/361862?type=bloomberg

Weinstein, B. (2012). Keynote Speech Excerpts from The Ethics Guy. Retrieved from

            http://www.youtube.com/watch?v=eLxbHBpilJQ

A521.5.4.RB_RuggerioSteven

                                                            A Business of Values

While traveling to Rwanda in June of 2009, Howard Schultz, CEO of Starbucks, visited with the farmers and families partly responsible for producing some of their world famous Arabica beans.  Celebrating Schultz’s visit and his commitment to their continued collaboration, thousands of jubilant Rwandans stood shoulder-to-shoulder hanging on his every word.  In his book Onward, he writes, “Never before had the human side of the equation that guided Starbucks—a commitment to balancing people and profits—been so palpable.  Less than 50 feet away from me were thousands of lives that Starbucks had the power to help—or to hinder” (p. 290).

And the people cheered.

After the deregulation of the energy markets in 1998, Ken Lay and Jeffrey Skilling of Enron employed nearly 22,000 people and were voted America’s Most Innovative Company for six consecutive years from 1996 to 2001 (Yukl, 2010, p. 433).  However, all was not what it appeared.  With the help of accountants and attorneys, top executives created subsidiaries that looked like partnerships and made it possible to sell assets and create false earnings.  Under Lay and Skilling, unethical practices ran rampant.  When the gig was finally up, Enron sunk and thousands of individual hopes and futures went down with it.  It would become the biggest and most complex bankruptcy case in U.S. history (Yukl, 2010, p. 434).  

And the people cried.

Schultz (2011) said, “How leaders embody the values they espouse sets a tone, an expectation, that guides their employees future behaviors” (p. 294).  Ken Lay, shortly after his arrest by the FBI, said he took responsibility for Enron’s collapse but denied that he did anything wrong.  “I continue to grieve, as does my family, over the loss of the company and my failure to save it,” said Lay, speaking forcefully. “But failure does not equate to a crime” (Crawford, 2004).

Peel back the layers of most leadership failures and you’ll find a thin veneer of values.  Behind the fancy suits and corner office are many men and women driven by greed, power, and control.  Incompetence and ignorance, while disappointing and frustrating, can be forgiven.  Malicious dealings and unethical practices done solely for profits cannot.

Hemingway & Maclagan (2004), in their article Managers’ Personal Values as Drivers of Corporate Social Responsibility said, “Individual managers’ organizational decisions are driven by a variety of personal values and interests, in addition to the official corporate objectives” (p. 36).

Organizational values start with leadership.  Period.  No excuses.  What leaders say and do flow down to their people.  The ethical value of an organization is a reflection of its top-tiered leadership team.  In the competitive world of corporate business, churches, sports, or retail services, the values of its leaders—at all levels—ultimately influences the depth of its decision making.  Understanding ones personal values and the values of the organization is the starting point for aligning and synergizing those values.

Stephen Denning (2011) identifies four different types of values:

1. Robber barons – firms whose only value is to crush the competition by whatever means.
2. Hardball strategist – these firms avoid illegality, but in all other respects they pursue a single-minded focus on winning.
3. Pragmatist – these firms pursue instrumental values, that is, values that are a central part of the organizations business strategy.
4. Genuine ethical values – firms that identify values as a principle motivating force; values that go beyond what is necessary for the business strategy and that possess a genuine moral basis.

Rather than discover six months or a year into a job, individuals should have a rich understanding of their values and principles.  Highlighting workplace values such as, work/family life balance, truth and honesty, environmental consciousness, stability, and clear advancement tracks can steer potential employees toward a fulfilling position with a pragmatist and genuine ethical organization.

Employees who value competition, strong financial rewards, power, and adventure may find themselves more confortable in an organization led by robber barons or hardball strategist.

Mother Teresa would never work for Steve Jobs.  Billy Graham would never work for Donald Trump. Compatible values between employer and employee are instrumental factors toward an employee’s job satisfaction and an employer’s ability to motivate their workers to increase profits.  Identifying the corporate atmosphere is key to revealing its value set.

Denning (2011) identifies three components of an ethical community and atmosphere.  The first is trust: general expectation among members that their fellows will behave ethically toward them. The second is loyalty: acceptance of the obligation to refrain from breaching one another’s trust and to fulfill the duties entailed by accepting that trust.  And lastly, solidarity: caring for other people’s interest and being ready to take action on behalf of other, even if it conflict with personal interests (p. 132-133).

As an employee of Lockheed Martin, I have experienced each of these components in various forms.  For instance, in my supervisor’s absence, he asked me to fill his position as team lead.  When there have been disagreements about aircraft performance or logistical challenges, each member of our team has been able to communicate and disagree without being disrespectful. 

Lockheed core values identified as “do the right thing, perform with excellence, and respect others” complement my personal values very well.  Dr. Randall Hansen’s values assessment led me to identify my top five workplace values as (1) integrity and truth, (2) opportunities for influence, (3) friendship and warm working relationships, (4) stability and security, and (5) work/life balance. 

Lockheed Martin policies and directives support and enhance my top five values.  In times of tight budgets and leaner organizations, job security can be a factor.  However, Lockheed has shown in the event positions are eliminated, they diligently work to place employees in other positions.  If they cannot come to an agreement with the employee on a job, they offer strong severance packages and transitional assistance.

Denning (2011) said, “Shared values in an organization create trust.  People have confidence that others will do what they say” (p. 149).  With nearly 120,000 people employed at Lockheed Martin, it would seem difficult to ensure their core values persist through every division.  I believe they have been successful because they recognize and reward employees who do the right thing and perform with excellence.  Like any company, there are individuals that test the limits of values, in these instances; the company response reaffirms its commitment to ensuring their values are in tact.

In Built to Last, Jim Collins (1994) debunked the myth that most successful companies exist first and foremost to maximize profits.  He said, “Contrary to business school doctrine, maximizing shareholder wealth or profit maximization has not been the dominant driving force or primary objective of visionary companies.” “Yes,” he added, “they seek profits but they’re equally guided by a core ideology—core values and a sense of purpose beyond just making money” (p. 8)

On April 26, 2013, Marillyn Hewson, CEO of Lockheed Martin sent an email to all Lockheed employees that read; “One of the qualities that distinguish Lockheed Martin is our constant focus on the future. We never stop thinking about what’s ahead and how we can make tomorrow’s world better than today’s. Our progress on that front will be measured not just by our balance sheet, it will be measured by the value we create for everyone who’s counting on us, including our customers, our communities, our partners and our shareholders, and you, our employees.”

From what I’ve seen, she means it.

Legacy values.

Steve

References:

Collins, J. (1994). Built to Last. New York, NY: HarperCollins.

Crawford, K. (2004). Lay Surrenders to Authorities. Retrieved from

http://money.cnn.com/2004/07/08/news/newsmakers/lay/

Denning, S. (2011). The Leader’s Guide to Storytelling. San Francisco, CA: John Wiley & Sons,

            Inc.

Hansen, R. (n.d.). Workplace Values Assessment. Retrieved from

http://www.quintcareers.com/workplace_values.html

Hemingway, C.A. & Maclagan, P.W. (2004). Managers’ Personal Values as Drivers of

            Corporate Social Responsibility. Journal of Business Ethics, 50(1), 33-44.

Schultz, H. (2011). Onward. New York, NY: Rodale.

Yukl, G. (2010). Leadership in Organizations. Upper Saddle River, NJ: Pearson Prentice Hall.