Human Resource Management, 10e
Lloyd L. Byars and Leslie W. Rue
Ethics
Video Case: Ethics: The Fabric of Business at Lockheed Martin (10:00)
In the last several years ethical violations and illegal activities in many corporations shattered careers and
corporate reputations, wiped out some firms, and eroded public and employee confidence in corporate America.
In a global business environment where the emphasis on ethics seems insubstantial at best, some
organizations do build and promote a strong ethical framework throughout their operations. One is Lockheed
Martin, an international company based in Bethesda, Maryland, whose core business is advanced technology,
including aeronautics, space systems, electronic systems, information and technology services, and integrated
systems.
Ethics plays a vital role in all of Lockheed Martin’s operations. Integrity, the foundation of its ethics initiatives, is
highlighted in the corporation’s vision—Powered by innovation, guided by integrity, we help our customers
achieve their most challenging goals—and values: Do what’s right, respect others, perform with excellence.1
Lockheed Martin goes to great lengths to foster a culture of ethics through training, communication, and
leadership, and to ensure that ethical policies are followed through accountability programs. All employees must
sign the company Code of Ethics and take part in yearly awareness training and business conduct compliance
training. Even the board of directors receives the same ethics training as the employees.
Lockheed Martin has an ethics and business conduct department that works with the human resources
department to set policies. Human resources, which transmits policies and ensures they are understood, serves
as an important link between management, the ethics department, and employees.
Lockheed Martin executives believe that building and maintaining a culture of ethics in a large international
operation requires consistent and regular communication. To reach all organizational levels and all 135,000
employees worldwide, Lockheed Martin uses several tools: the Lockheed Martin Today, a daily internal
newspaper; the Integrity Minute, an ethics video; LM1, a monthly video; an ethics website; and electronic
messages from CEO Robert J. Stevens. Lockheed Martin executives and managers set the tone of ethics for
the entire corporation. “It’s really important that we communicate clearly our expectations and our values,” he
says. “The best way to do that is to lead by example, to try to emulate a standard of excellence and integrity in
our own behavior every day, and to find examples across our workforce of employees who have taken an action
we very much admire.”
Lockheed Martin’s acknowledgement of employees who practice ethical standards has been incorporated into
performance evaluation. Using a vehicle called the Full Spectrum Leadership template, performance reviews
examine not only the results an executive or manager has achieved, but also the methods and behaviors used
and the respect demonstrated for fellow employees. Several other tools help insure ethics accountability.
Employees are encouraged to take questions or issues to the ethics department, which emphasizes the
importance of preventing ethical misconduct rather than correcting it after the fact. Employees can raise
concerns or report unethical behavior anonymously through the Ethics Helpline. An appeal process allows an
employee to take a complaint up through the levels, all the way to the board of directors if the employee
requests.
Discussion Questions
1. Why is management buy-in critical to building an ethical organization?
2. What role does training play in fostering organizational ethics?
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