Ethics at Work Terris, Daniel
Published by Brandeis University Press
Terris, Daniel. Ethics at Work: Creating Virtue at an American Corporation.Brandeis University Press, 2013. Project MUSE. muse.jhu.edu/book/23072. https://muse.jhu.edu/.
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F successes, there are significant limitations to LockheedMartin’s approach to ethics. Measured against its own standards andthose of the contemporary ethics industry, Lockheed Martin’s programshines. Measured against the expectations of the broader culture, how-ever, the program falls short.
There is a significant gap between how corporate America judges it-self and how its ideas about values and integrity play out in the largerculture. Lockheed Martin’s ethics program, for all its excellent qualities,illustrates that gap. One consequence of this gap is that the corporation’squest to be seen as an active force for good in American life remains, atbest, incomplete. Another consequence is that the company’s program isbetter at responding to the problems of the past than to the problems ofthe future.
Lockheed Martin’s ethics program addresses people, but it does notaddress systems. The exclusive emphasis on lived individual experienceis appealing and in many ways effective. But the impact of a corporationlike Lockheed Martin is not simply the accretion of millions of acts offundamental decency undertaken by , workers. It is also the im-pact of the corporation as a very powerful organization, or, rather, as acollection of very powerful organizations. Lockheed Martin’s program isinnovative in reaching the , employees, but that is not enough.Innovation for innovation, evil will eventually outflank virtue. It thrivesnot in the isolated human heart, but in the very spirit of collective enter-prise that corporations value.
The gaps in the program are most apparent when it is examined in thelight of the long-standing expectations in American life regarding cor-porate behavior. When it comes to addressing the moral character of thecorporation’s leaders, the conduct of the corporation toward its cus-tomers and competitors, the company’s treatment of its employees, its
impact on its various communities, and the ethical considerations re-garding profit within its industry, Lockheed Martin’s programs leavemajor questions untouched. By drawing strict boundaries around theirethics enterprises, American corporations risk losing the public credi-bility that they are working so hard to maintain.
One way to look at this is to ask of Lockheed Martin’s program a se-ries of simple questions that grow out of the historical conceptions ofbusiness ethics that I discussed in chapter :
• Does the program specifically and effectively address the dangersof unethical leadership, of possible misbehavior among the cor-poration’s most senior executives?
• Does the program take into account the dangers of organiza-tional behavior, as well as individual misdeeds?
• Does the program convincingly address the needs and concernsof rank-and-file employees of the corporation?
• Does the program convincingly tackle the full range of issues in-volved in assessing the corporation’s ultimate impact on its local,regional, national, and global communities?
The answers to these questions suggest that Lockheed Martin’s pro-gram fails to go as far as it could, creating potential areas of vulnerabil-ity for the future.
. Leadership: sidestepping privilege and power. The ethics programmakes little special effort to target and address ethics issues involving themen and women at the very pinnacle of the corporate hierarchy. Al-though the program enjoys considerable support from top manage-ment, and senior executives participate in the basic ethics awareness ac-tivities, there is little evidence to suggest that the program offers enoughattention to the specific challenges facing those who have the power andauthority to err on the grandest scale.
. Personal responsibility, collective innocence. Lockheed Martin’sprogram lavishes attention on the individual employee, encouraging astrong sense of personal investment in the corporation’s ethical per-formance. But the program does not take into account the perniciousside of organizational life: the tendency of groups to slide, often unin-tentionally, into habits of misconduct.
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. The corporate family: rewards and resistance. The ethics officehas taken great pains to reach out to the corporation’s employee baseand make the organization supportive, rather than didactic. Neverthe-less, there is always a fine line between social improvement and socialcontrol.
. Policy and mission: ethics and judgment. Lockheed Martin’sethics program focuses on issues of business conduct, with few formalmechanisms for assessing the ethical implications of larger policy orstrategic decisions of the corporation. The separation between “admin-istrative ethics” and “policy ethics,” quite common in American corpo-rate life, leaves a gaping hole that can undermine the credibility of theethics program and its ultimate effectiveness.
For all its successes, these important gaps in Lockheed Martin’s pro-gram may leave the corporation vulnerable to new forms of scandal, andnew sources of public outrage. In describing these gaps, I do not meanto suggest that the company’s performance in these areas is necessarilydeficient. I am saying, instead, that I am not convinced that the ethicsprogram as currently conceived is well positioned to prevent problems inthese areas that might arise in the future. To the extent that a good ethicsprogram is supposed to be preventive rather than reactive, these strikeme as significant shortcomings. In each section, I include recommenda-tions for how the problems might be conceived or addressed in the fu-ture. I realize that I am not aware of all the possible internal constraintsthat might prevent such recommendations from being implemented,but if I am going to criticize, I feel a responsibility to offer starting pointsfor remedies that might serve as the basis for future reflection, debate,and possibly change.
Leadership: Sidestepping Privilege and Power
Many of the most spectacular corporate scandals in the first years of thetwenty-first century have had their origins in the plushest executivesuites. At Adelphia and Tyco, the leaders of the corporations werecharged with naked plunder of the assets of the organization. At Enronand WorldCom, senior executives appear to have gone to extraordinarylengths to deceive government regulators and the public, not to mentiontheir own employees, about the true financial circumstances of the cor-
porations. At Boeing, senior executives acted as though they believedthat ordinary rules of conflict of interest did not apply at the very high-est levels of industry and government. In each of these cases, and in manyothers, the direct or indirect responsibility for the misdeeds landedeventually at the doorstep of the chief executive officer (CEO) himself.Not every scandal originates with corporate leadership, but when mega-corporations grow as large and powerful as those in the United Statestoday, it is obvious that those with the most power usually have the ca-pacity to do the greatest damage. Every once in a while, the scurrilousactions of a minor player will bring down a major international institu-tion, as happened with Baring’s Bank. But it is far more likely that a cor-porate scandal that makes the front page of the New York Times will in-volve senior executives with direct responsibility for millions of dollarsworth of assets and business. There are at least three factors that canpush senior executives to testing the boundaries of ethics and integrity:opportunity, incentive, and the very self-confidence that makes themsuccessful in the first place.
By the nature of their positions, senior executives in any organizationhave more opportunity to act badly on a grand scale. Senior executiveshave more power, more access, more influence, and often less accounta-bility than more junior members of the organization. They control re-sources, they control information, and they make more decisions in-volving more people and more money. Fewer people oversee their work,and those who have the best access to the inner workings of their deci-sions are often powerless to advise or influence those actions. Opportu-nity does not in and of itself create temptation or erode character. Thereis no reason to think that corporate leaders, by virtue of their position,are any less “moral” than others in their organization or the larger soci-ety. But malicious or ill-considered decisions made at the top of the cor-porate hierarchy will by definition be more consequential than thosemade further down the line.
Men and women at the top often also have greater incentive to crossan ethical boundary. Sometimes this is a matter of pure greed and largenumbers. The members of the Rigas family looked at Adelphia’s assetsand saw the chance to siphon tens of millions of dollars from the com-pany’s assets into their personal accounts. With the size and power ofmodern corporations, senior executives can sometimes find themselves
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tempted by almost unimaginable financial rewards if they are willing tobend the rules. Incentive, however, is not just a matter of naked greed.The vagaries of the market in a world of rapidly fluctuating profits andlosses create enormous pressures on senior executives to succeed, or atleast not to fail. These negative incentives place a premium on creatingat least the appearance of a positive financial outlook, especially to theinvestment community. Corporate leaders, whose careers rise and fallon the basis of earnings, assets, and stock performance, have the great-est incentive to rewrite the rules to place their own work in the best pos-sible light.
In addition to falling prey to opportunity and incentive, senior exec-utives can be undone by their own strength of character. Independence,creativity, defying conventional thinking, risk taking—these are quali-ties essential to strong leadership, and they are often justly rewardedwithin an organizational hierarchy, as dynamic leadership over the pasthalf century at Lockheed and Lockheed Martin has shown. They are alsoqualities that can make an individual vulnerable to making choices tosuit his or her own needs and preferences. Again, this is not to argue thatthose who defy conventional thinking about business strategy are des-tined to defy conventional thinking about ethics. But it seems obviousthat some significant proportion of those succeed through brash newthinking will eventually come to believe that their own actions are notonly inherently profitable but inherently “right.” There will always be afine line between self-confidence and hubris.
Lockheed Martin’s own history suggests its vulnerability to renegadebehavior at the top. The global bribery scandals of the s and sinvolved a number of individuals at the upper echelons of Lockheed,men whose work and contacts made it easy to develop special relation-ships and make special payments that lubricated the corporation’s over-seas business. Lockheed’s deepening financial crisis in the early s putenormous pressure on senior management. When corporation presi-dent Carl Kotchian launched his personal campaign to sell the TriStarjet in Japan, he was taking on himself the burden of avoiding a darkerfinancial abyss. Kotchian’s strategy of secret negotiations and paymentsowed something to his confidence in his own commitments, in his con-viction that the good of the corporation was a greater moral good thancertain niceties of business conduct.
History also suggests another challenge for corporate leaders: Thoseat the top face the most complex ethical dilemmas, and encounter situ-ations that are most susceptible to changing moral standards. The nine-teenth-century titans of industry thought of themselves, by and large, asmen of character who put their own stamp of values on the companiesthey built. By their own lights, and by the standards of their youth, theyoperated according to clear sets of principles. But the very success oftheir enterprises created new realities and new environments in theUnited States—a landscape crisscrossed with railroads, vertically inte-grated corporations, and efficient communications networks—that cre-ated whole new generations of ethics issues. What the titans believed wascreative exploitation of opportunity appeared to their competitors and tosucceeding generations to be crass exploitation of people and resources.In hindsight, we recognize that the corporate leaders of the era wereable to think of themselves as beacons of morality because it took yearsfor the public and the government to define and react to new fangledabuses like pools, trusts, deceptive advertising, and the exploitation ofworkers. In some ways, this pattern continued through the twentiethcentury and encompassed the more recent scandals involving Lockheedand other defense contractors. The globalization of American businessduring the s meant that bribery overseas became a way of life, toler-ated as morally acceptable in a world of relative standards. Under theglare of the Washington spotlight, Carl Kotchian portrayed himself as anAmerican patriot and a company loyalist who was the victim of a hypo-critical political vendetta.
In the contemporary environment, the ground is shifting even morerapidly under today’s senior executives, and the ethics issues at the topof the hierarchy are increasingly complex. If a low-level employee know-ingly mischarges labor to the wrong account, or neglects safety checks,or inadvertently shares proprietary information and then tries to coverhis or her tracks, these are straightforward situations that require straight-forward investigations and response. The senior executives at LockheedMartin, however, operate in an environment where their daily decisionshave enormous impact, not only on the corporation itself but also on theoutside world. They operate in a world of relationships and deals andnegotiations where the rules are often not clear-cut, where innovationand success require unconventional approaches, where new arrange-
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ments are shifting the ethical ground. The complex arrangements in-volved in major mergers and acquisitions, for example, create an enor-mous array of ethical minefields. The instigation of complex accountingpractices that might have an impact on investors, the potential disrup-tion for employees, assessing the ethical climate of a takeover target, theprotection and the sharing of proprietary information—these types ofissues create special challenges for senior executives in situations wherea mistake can be enormously costly not only to a career, but to the cor-poration and even the country. Equally complicated is the web of rela-tionships between senior executives at Lockheed Martin, their peers inthe defense industry, and their counterparts in the U.S. government. Themaze of competition and collaborations creates ample opportunities forpersonal and professional favors to trump forthright business practice.
With these factors in mind, it would make sense to expect that a cor-porate ethics program would place special emphasis on issues of powerand leadership, and that it would put special safeguards in place to ad-dress the particular challenges facing those in leadership positions.However broad-based a corporation’s program may be, it makes moresense to judge its merits by its attention to problems at the top of thehierarchy, rather than at the bottom.
Lockheed Martin makes three important claims about its ethics pro-gram in regard to senior leadership. First, the corporation touts the solidand highly visible support of its ethics program by the CEO and othermembers of the leadership team. Second, the corporation makes it clearthat all members of its senior management team not only participatefully in the annual ethics training, but also complete dozens of othermodules each year that are designed for others within their areas of re-sponsibility. Third, the corporation makes clear that the ethics officersare widely available for consultation with members of senior manage-ment. Each of these elements of Lockheed Martin’s ethics program isworthy and important, but they nevertheless fall short of addressing theethical demands of leadership in all their complexity.
Where Lockheed’s corporate leadership was an ethical liability in thes, one of the company’s great successes of the past decade has been toreverse this process, so that the identification of the corporation’s lead-ership with the ethics program is now a strength. CEO Norm Augustinestaked his own reputation on the ability of the company to produce a
high-quality, high-impact ethics program, and he was willing to takechances in the face of considerable skepticism in order to pull it off.Augustine and his successors, Vance Coffman and Robert Stevens, clearlydeserve credit for the strides that the corporation has taken in this areasince .
Personal integrity and strong support for an ethics program are not,however, the same thing as having a system that aims to ensure continu-ous integrity at the top of the corporate hierarchy. Support from theleadership may be necessary to launch a successful ethics program, butthat support provides no guarantee that those same leaders will neces-sarily act for the best in their capacity as corporate decisionmakers. Afterall, it is perfectly conceivable for an individual to offer the strongest pos-sible public support for an ethics program, while violating ethical stan-dards as a matter of habit in his or her day-to-day work. This is knownas hypocrisy, of course, but any strong ethics program should be pre-pared for that possibility. A more common scenario, perhaps, involvesthe subtle but steady erosion of values under the stress of the workplace.A corporate leader may enter a position with a strong set of values andconvictions, only to find them chipped away by circumstances. It casts noaspersions on the personal character and commitment of Norm Augus-tine or Vance Coffman or any other Lockheed Martin leader to suggestthat their public commitment to the ethics program is no more than anecessary starting point. For the program that they have spawned to beultimately effective, it will need to train its sights on the behavior ofthe CEO and other senior executives, skeptically discounting their pro-nouncements and focusing more closely on their actions.
It is a fine thing, symbolically, to emphasize that senior executives atLockheed Martin undergo the same kinds of trainings and modules asthousands of other employees of the corporation. If leadership, however,requires special skills and makes special ethical demands, does it not re-quire an ethics curriculum more suited to its level of complexity? As wehave seen, the corporation’s ethics awareness program and trainingmodules do an excellent job of provoking discussion among a wide rangeof employees, but they tackle ethics issues at a relatively low level of com-plexity. None of these many trainings, as far as I can tell, addresses thespecial ethical demands placed on those at the highest reaches of thehierarchy. Ethics, after all, is ultimately about the just application of
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power. Just as we know that the business situations that senior executivesface are inherently more complex and challenging, so are the questionsabout the proper application of values in any particular situation. Theethics and compliance modules favored at Lockheed Martin make thelaw clear, suggest sources of help, and hint that many situations have nosingle “right answer,” but they do little to encourage the deep, difficultself-examination that can help leaders stave off opportunity, incentive,and their own hubris. The program encourages employees to thinkabout the complexities of applying the rules and regulations, but it doeslittle to encourage those at the top to think about the complex nature ofthe rules themselves. Sheer quantity of exposure to ethics modules can-not replace more searching considerations of the ethical challenges ofpower and leadership. The scandals at Boeing illustrate vividly thatan extensive, broad-based ethics program creates insufficient protec-tions against top executives who believe that they can redefine ethicalboundaries with impunity.
The ethics officers at Lockheed Martin are available for consultationwith the leaders of their divisions, but the effectiveness and extent of thisconsultation depend on personal relationships, rather than on more for-mal practice. Alice Edmonds at the Lockheed Martin Space Operationsdivision in Virginia described to me at length the ways that her companypresident relies on her advice in key situations. And CEO Bob Stevens isknown to drop in for advice at the office of ethics vice-president Mary-anne Lavan. My impression is that these relationships are sometimessubstantial, and that ethics officers have worked their way into positionsof greater trust and responsibility vis-à-vis senior executives in recentyears. But it is a relationship that is wholly at the discretion of the seniorexecutive himself or herself, so it offers a relatively weak wall of protec-tion against misdeeds at the top.
So, while Lockheed Martin’s senior executives have offered consider-able support to the ethics program over the past ten years, the programmakes relatively modest demands on them, and opens up an area of vul-nerability for the future. This is exacerbated by potential weaknesses inthe structure of accountability. Ultimate authority on ethics issues atLockheed Martin lies with the Audit and Ethics (A&E) Committee ofthe corporation’s board of directors. The vice-president for ethics andbusiness conduct reports to this committee, as well as to the CEO, so one
strength of the structure is that there is a formal and direct line of com-munication between the ethics program and the board. The A&E com-mittee does receive reports about higher level legal and ethics violations,and theoretically, at least this committee would be open to hearingconcerns from the ethics office about the behavior of senior manage-ment. The Sarbanes-Oxley Act put significant pressure on corpo-rate boards to play a more active role in overseeing ethics in their or-ganizations, including the threat of holding directors personally liablefor scandals that occur on their watch. So the board does have signifi-
cant incentive to pay close attention to ethics and compliance issues.As with so many corporations, however, the composition of Lock-
heed Martin’s board does little to reassure outsiders that it can serve as atruly independent watchdog of corporate activities. Of fourteen mem-bers of the corporation’s Board in –, four were current or for-mer senior executives at Lockheed Martin, two were senior executives atother major defense contractors, and one was recently retired from theU.S. Air Force. Most have served as directors of other major U.S. corpo-rations, including Enron and Global Crossing. None of the LockheedMartin executives sat on the six-member Audit and Ethics Committee,but its members were nevertheless part of an interlocking web of indus-try and government relationships. E. C.“Pete”Aldridge, a member of theAudit and Ethics Committee, is a former Undersecretary of Defense aswell as a former senior executive at McDonnell-Douglas and the CEO ofthe Aerospace Corporation. Aldridge was a member of Lockheed Mar-tin’s board of directors, while at the same time heading a presidentialcommission that called in spring for privatizing much of NASA.Aldridge told the New York Times that he saw no conflict of interest, de-spite the fact that a division of Lockheed Martin, United Space Alliance,was a potential beneficiary of privatization.1 Even where board membersare individually men and women of impeccable reputations, the mirror-image profiles of so many directors make it difficult to believe fully inthe thoroughness of their oversight, even with looming presence ofSarbanes-Oxley and the federal sentencing guidelines.
The question, then, is whether Lockheed Martin’s ethics program isbest positioned to protect the corporation against misdeeds by its topexecutives, and whether it can identify and stay ahead of emerging ethicsissues that involve the top leadership. Lockheed Martin ethics officers
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fret that a “bad apple” like Michael Sears at Boeing can undo years ofwork, but there is a fatalism in the “bad apple” theory that dodges theissue. The Lockheed Martin does educate senior management about thespecific type of violation in the Boeing case. Indeed, when the newsbroke in December , Vance Coffman ordered that all relevant Lock-heed Martin employees make sure that they were up-to-date on the com-pliance module on offering employment to U.S. government officials.But when it comes to more subtle forms of arm twisting, influence ped-dling, and relationship building, the program is silent. This is a matterboth of education (providing senior executives with the opportunity toexamine ethics issues in a manner suitable to their level of authority)and of accountability (creating credible mechanisms for monitoring theactions of senior executives).
It is also a matter of viewing ethics broadly enough to respond tochanging public perceptions of what is right and what is wrong in cor-porate life. As recently as a decade ago, the salaries of a corporation’s topexecutives were thought of simply as an internal management issue. Butin an era when the gap between the richest and poorest workers in theUnited States has widened considerably, executive compensation has be-come an emerging ethics issue in the American corporate landscape. In, Vance Coffman’s total compensation package was more than$,,, in a year when the total shareholder return for LockheedMartin was down by percent. In a newly skeptical era, this raises sig-nificant questions. Is it “right” for the CEO of a corporation to earn, forexample, more than times the salary of one of the corporation’sethics officers? Is it “right” for senior executives to earn large salaries, andsometimes larger bonuses, at a time when the owners of the corpora-tion, its shareholders, are losing money? When does executive compen-sation cross the line and become simply too much? In other words, whendoes a compensation issue become an ethics issue?2
For Lockheed Martin’s ethics officers, this issue is entirely off thetable. Not a problem in our environment, Brian Sears assures me. “Withall the oversight that we’re getting from the federal government, there’sno way that we’re going to get away with anything excessive,” Sears says.Besides, he goes on, “You couldn’t pay me enough to do Dr. Coffman’sjob—to have to answer to so many constituencies, to work under somuch pressure. He’s worth every penny that they pay him.”
Brian Sears may well be right—perhaps the Lockheed Martin CEO’scompensation would stand up to every test of fairness known to human-kind. The point, however, is not to make a judgment about what VanceCoffman or Bob Stevens earns. The point is that the issue is not registeredin terms of fairness or ethics in the Lockheed Martin environment. With-out that type of scrutiny, the corporation is vulnerable to the kinds ofcozy compensation deals at other companies that have spawned noto-rious headlines in recent years. Even if the deals are not excessive incontemporary terms, a bland disregard for the income gap may be seenas morally blind by a future generation. It is possible that the issue of ex-ecutive compensation receives rigorous scrutiny in ethical terms amongthe corporation’s leadership and board of directors. But even if this is true, the public silence on the issue undermines the corporation’sself-image as an organization willing to tackle the full range of toughquestions.
Taken together, these concerns suggest that Lockheed Martin’s pro-gram has not fully addressed the ethical challenges of corporate leader-ship. Of course, there are limits. At a certain point, any ethics programhas to depend on trust, goodwill, and the efficacy of its initial efforts. Noorganization can station an independent ethics officer behind every ex-ecutive’s desk chair, and none wants to “train” its executives to the pointof numbness. But there are, perhaps, four types of steps that a corpora-tion like Lockheed Martin could take to address both the substance andthe appearance of effective ethics programs for its top management.
. It could develop ethics programs that address the specific problemsand the specific level of complexity of the work of senior executives.Lockheed Martin took a small step in this direction by developing“Ethics Tools for Leaders,” a program for all , managers through-out the corporation. But this program is really aimed at mid-level super-visors and focuses on issues of managing people, rather than issues ofmore generalized power and authority. Perhaps senior executives couldspend less time on compliance modules, and more time examining casesthat pertain directly to decision making at their own level and that en-courage them to look back with a critical eye on decisions that they havealready taken, with an eye toward lessons for the future.
. The corporation could create a stronger and more formal role forthe ethics office in advising and monitoring the actions of top execu-
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tives. Informal consultation is helpful, but it is most helpful to those whoare already inclined to think most carefully about potential ethics prob-lems. A more formal structure for this type of consultation would createone additional opportunity to head off problems before they occur.
. The corporation could appoint members to the board of directorswith specific professional expertise in corporate ethics. Such appoint-ments would strengthen at least the appearance, and perhaps the sub-stance, of independent oversight by the Audit and Ethics Committee.
. Lockheed Martin could be more courageous and transparent aboutframing and publicly tackling emerging ethics issues, such as executivecompensation. The company’s policies in this area (and other emergingareas) may be fully defensible in ethical terms, but this can only be borneout through open discussion of the issues involved. Such openness, in-cidentally, could have positive effects on morale within the company, aswell as bolstering confidence in the larger community about the corpo-ration’s willingness to take on difficult questions.
Experts in the field always insist that a strong corporate ethics pro-gram has to start with character and support at the top. In the past tenyears, Lockheed Martin has been blessed with exactly this kind of vis-ible leadership, and those leaders have helped to create a strong and vibrant program. The irony is that despite this public commitment,ethics-minded corporate leaders like those at Lockheed Martin mayultimately be judged by history as harshly as the nineteenth-century titans of industry—and for the same reasons. They put every issue toan ethical test—except for the special powers and privileges of theirown position.
Personal Responsibility, Collective Innocence
As we have seen, Lockheed Martin’s ethics program places a premium oninforming and empowering the individual decisionmaker. The programis “driven down” to every corner of the corporation, and the code ofethics and the training modules encourage every employee to shoulderhis or her share of the responsibility for maintaining the corporation’svalues. This approach democratically distributes a sense of individualinvestment in the company’s ethical well-being, and it has helped im-prove the company’s performance on business conduct issues. But it also
means that the program bypasses a crucial dimension of organizationalethics: the dynamics of collective decision making.
It is instructive, in this context, to examine the continuing ethics andcompliance problems that Lockheed Martin has faced over the pastdecade. We have already seen that Lockheed Martin is candid about thefact that its programs will never be fully able to eradicate misconduct.The corporation has managed to avoid major scandal since the
merger, but it has still been involved in dozens of cases involving allega-tions of legal and ethical wrongdoing. In , the Project on Govern-ment Oversight (POGO) found that Lockheed Martin (and its heritagecompanies) had been involved in eighty-four instances of alleged mis-conduct and settlements for the period since , with fines and settle-ments totaling at least $,, during that period.3 The corpora-tion was second only to General Electric (eighty-seven instances duringthe same period). These numbers, by themselves, say little about theeffectiveness of the corporation’s ethics program. The POGO databaselumps together settlements, pending cases, and allegations, so the totalsby themselves are somewhat misleading. But they provide a rough indi-cation of the continuing challenge that the corporation’s ethics andcompliance program faces.
More important than the totals is the nature of the violations, espe-cially those that reached a final settlement. The list of Lockheed Martin’sviolations spans the country and the corporation’s many enterprises:
• In , the corporation settled a civil lawsuit for $,, ina case involving environmental contamination in Burbank, Cali-fornia, after it closed its original headquarters; the company hasalso been forced to settle a number of other cases involving envi-ronmental contamination in such locales as Colorado, Vermont,and other California locations.
• NASA won $,, in a lawsuit claiming that LockheedMartin Engineering Sciences Corporation charged the spaceagency for false and fraudulent lease cost claims.
• A judgment against Lockheed Martin Electromechanical Sys-tems in generated a $, fine and $,, in resti-tution for a case where the company charged the U.S. Navy forcosts incurred on its private commercial contracts.
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• Lockheed Martin incurred a $,, fine in for pro-viding information to the Chinese government that could po-tentially be used for developing missiles.
• The corporation’s Naval Electronics & Surveillance Systems com-pany settled a suit for $,, in involving improper useof Foreign Military Sales funds.
• In , twenty-six recently terminated employees of the corpo-ration’s Knolls Atomic Power Laboratory won a judgment ofnearly $,, when they filed suit for age discrimination.
• A settlement of more than $,, addressed cost over-runs on four contracts for the purchase of navigation and tar-geting pods with the U.S. Air Force.4
The POGO database covers only the most public types of legal andethical violations. Lockheed Martin’s own ethics database tracks a muchmore extensive set of investigations and settlements, involving not onlycorporate misbehavior but also the deportment of individual employees.The corporation chooses not to share this data, but the ethics officersassert that their internal statistics show a marked decline in significantcases over the past eight years. Nevertheless, they are still tracking hun-dreds of cases each year, with dozens involving significant violations ofthe company’s code.
Lockheed Martin’s explanation for the range and scope of these settle-ments comes down to one word: size. Yes, ethics officers say, misconductunhappily does occur. It is impossible to rid the organization entirely ofbad apples, when the organization involves , people and morethan $ billion in business each year. Besides, some of these violationstook place in companies that had been recently acquired by LockheedMartin; this means that in some cases the offenses occurred before thecompany was part of the Lockheed Martin “family,” and in other casesthat the corporation’s values had not yet had time to take hold when theviolations occurred. Ethics officers also point out that some of the moredramatic cases were brought by whistleblowers who stood to profit per-sonally by identifying problems within the corporation; in the mis-charging case, for example, a former Lockheed Martin employee wasawarded $. million as part of the settlement.
It is reasonable to suppose that Lockheed Martin’s ethics program has
helped to head off ethics disasters and to reduce the corporation’s over-all exposure to incidences of fraud and abuse. Yet the ongoing list ofcases suggests that size may itself be a catalyst as well as an excuse. Thesheer breadth of corporation activity means that a centralized valuesprogram can only penetrate so far, and that there are nearly boundlessopportunities for chicanery—whether for personal benefit or in sup-port of the company’s bottom line. The sheer size of the company is also,importantly, a protection against the harshest penalty for wrongdoing:loss of business. The evidence suggests that the U.S. military is so de-pendent on a small number of major defense contractors that it cannotafford to withhold too much business from Lockheed Martin and itslargest competitors.5
Even within a gigantic enterprise, the ethics program makes it moredifficult for an individual to perpetrate fraud or abuse either through in-tention or through ignorance. Lockheed Martin’s program puts theonus on the individual to know the legal and ethical rules, and it alertsemployees to illegal or illicit activities of their fellow employees. Theprogram creates an atmosphere where it is, in theory, more difficult foran individual to get away with cutting ethical corners, even if the com-pany has not been as successful as it wants in encouraging employees toreport unethical behavior that they have witnessed. The workshops andtraining modules ensure that ignorance on the part of an employee can-not be an excuse. The program also gives the corporation a measure ofprotection from formal responsibility for the actions of rogue workers.
However, the types of corporate malfeasance illustrated in LockheedMartin’s recent history are seldom the result of a single individual’s ac-tions. Overcharging on a contract with the Navy involves more than asingle person’s manipulation of a spreadsheet. If too much informationis made available to a foreign government in a particular set of businesstransactions, it involves the participation of many individuals who aremaking complex choices together as they try to meet goals and servetheir customer. A pattern of age discrimination likely involves the hiringpractices of dozens of managers, each of whom may be trying to do hisor her job as effectively as possible, but who collectively may be perpe-trating an injustice.
In any organization, the most important decisions are seldom judg-ments made by individuals in their solitary capacity as “decision makers.”
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This is particularly true in an engineering culture, where teamwork,shared information, and cooperation among different groups are thelifeblood of the organization. People work together closely on projects,share ideas, push each other to find innovative solutions to problems, andmake decisions together about how to bring the best ideas to fruition.This work style makes for a productive and exciting environment, but italso creates a particular challenge for living by company values, becausepeople in groups are much more likely to push the boundaries of ethicalbehavior than individuals acting on their own. Several evasions of ethicalresponsibility tempt the individual working in a team. He can say tohimself that if no one else has voiced an objection to a particular courseof action, then it must be acceptable. She can convince herself that thegeneral direction that a team is taking has been endorsed by the teamleader or by a superior in the hierarchy. Or, most simply, an individualcan decide that responsibility for weighing the ethical implications of adecision lies with some other member of the group. Important decisionsdo not simply happen at key moments, but they occur over time, oftenthrough an accretion of actions. Indeed, it is frequently impossible topinpoint the precise moment that a course of action becomes a settledfact, and it is often equally impossible to identify clear responsibilitywhen things go particularly right or particularly wrong. Ultimately, anystrong, sustained ethics program needs consciously to address the elusivedynamic of collective decisionmaking, and to create mechanisms for ad-dressing organizational culture, not just the values of individual actors.
The Lockheed Martin ethics program borrows the form of collec-tive decision making, but the content is focused exclusively on the indi-vidual. In the ethics awareness program, employees talk in teams aboutsituations facing individuals, but nothing in the program’s content chal-lenges them to take on the complex problems of collective responsibility.The program breaks ethics down into a series of discrete, small deci-sions, leaving the larger context of those decisions virtually untouched.The program is cognizant of the potential problem of wayward “group-think,” but it counts on the power of the courageous individual to standup and challenge the collective wisdom that is pushing a decision acrossan ethical boundary. This approach demands a great deal from the indi-vidual actor, perhaps more than is realistic in many situations. More im-portantly, it assumes that key decision points are clear, crisp, identifiable
moments when a right-minded intervention can prevent disaster. Thismay not always be the case.
Furthermore, the vast bulk of the resources of the ethics and businessconduct division is concentrated on relatively minor problems. Ethicsofficers spend a great deal of their time on everyday situations involvingissues like personnel problems, side businesses, and access to pornog-raphy via the corporation’s computers. Cases in the ethics awarenessprogram likewise present scenarios where the stakes are comparativelylow. The by-product of a well-intentioned effort to make ethics issuesaccessible throughout the corporation is a lack of attention to big-picture,systemic forces that lead to major problems.
It is no secret that some of the worst abuses of human values in thelast century have been committed by “decent” men and women whowere simply trying to do their job. Working together, they find them-selves seduced by the goals of their common enterprise: the company,the army, the nation. The greater good of the organization trumps localconcerns: Some people are simply bound to get hurt in the competitionfor profit and survival. Lockheed Martin’s program has responded ac-tively to long-standing concerns about the business practices of Ameri-can corporations, vastly reducing the ability of individual actors to per-petrate fraud and abuse. But the corporation’s vast effort misses themark when it comes to collective action, and this leaves Lockheed Mar-tin vulnerable to modern-day equivalents of the “pools” and “trusts”that besmirched American industry a century ago. It could take steps tohead off these problems in two ways:
. The trainings and modules that the ethics program offers could ad-dress challenges of group dynamics more directly. The discussion-basedapproach to the ethics awareness program is a good start, but the atom-ization of most of the training modules, undertaken by individuals ontheir own computers or PDAs, stresses individual decision making. Amore explicit awareness of collective decision making would help di-minish reliance on the heroic individual.
. The ethics and business conduct division could play a more directrole in helping units audit and assess vulnerabilities in their organi-zational culture, both by dissecting previous cases of collective wrong-doing and by making candid assessments of the current climate.6
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The Corporate “Family”: Rewards and Resistance
If we look at Lockheed Martin’s ethics program through the lens of thelabor environment, we see a highly self-conscious attempt to create anew kind of corporate culture. Ethics officers see their job as not onlyeducation and investigation, but also to provide a unifying theme for afar-flung enterprise, to create unity by creating virtue. This approach hashad some noted successes, but it has also provoked resistance to a pro-gram that can sometimes be seen as condescending and controlling.
Because company policies lie, for the most part, outside the bound-aries of the corporation’s ethics program, it is not obvious what mecha-nisms will allow company values to protect workers in times of financialstress. The program pays a great deal of attention to the actions of indi-vidual managers with respect to individual employees. Cases in thetraining programs focus on issues of sexual harassment, or favoritism,or fairness in promotion procedures, with attention to the actions ofboth workers and their supervisors. Policies involving wage scales, bene-fits, disciplinary procedures, and hiring practices, however, are mattersfor the human resources department. No doubt many of the individualsin human resource departments at Lockheed Martin bring full andcomplex ideas about ethics into their discussions, but there is no sus-tained and consistent method for making ethics considerations a centralfeature of developing employment policies.
Instead of focusing on employment policies, the ethics programconcentrates on molding the lives and minds of individual employeesto encourage them to embody the Lockheed Martin values. There aremodern echoes of Ford Motor Company’s efforts, almost a century ago,to develop the Five Dollar Day and the Sociological Department becausethe demands of the modern assembly line meant that the companyneeded a more reliable workforce. Ford set about deliberately to create acorporate culture that would mold character, reward virtuous behavior,and, in effect, ostracize workers who refused to toe the line. Just as Ford’s“ethics” program responded to an advance in industrial technology—the mechanization of production—so does Lockheed Martin’s. Lock-heed’s challenge lies in the maintaining the integrity of a huge and dis-persed workforce, in an environment where individuals are empowered
by virtue of high-speed communications. Ford needed workers whowould demonstrate their loyalty to the company by showing up on time;Lockheed Martin needs workers who will put the company’s well-beingbefore personal opportunity. The modern corporation cannot, of course,bring its program directly into the home lives of its employees, but it canuse the communications means at its disposal to exhort workers as a reg-ular part of their lives on the job.
This emphasis on organizational values, however, produces its owncounterreaction, fueled both by resistance to conformity and by cyni-cism about the corporation’s intent. Phil Tenney, who conducts the bi-ennial ethics survey, notes a persistent strain of anger among a minorityof the respondents, men and women who find the ethics program op-pressive and too “politically correct.” These comments tend to comefrom areas of the corporation with significant numbers of blue-collaremployees, responding to a gap that they perceive between tidy com-pany rhetoric and the more complex messiness of daily life in any work-ing environment.
This counterreaction took a tragic turn in the summer of at Lock-heed Martin’s aircraft parts facility in Meridian, Mississippi. On July , aforty-eight-year-old assembly-line worker named Doug Williams at-tended his annual ethics training session. Williams, who was White, hada history of altercations involving African American coworkers, and hehad been known to complain about the compulsory nature of the ethicsprogram. Shortly after the training session began, Williams went outsideto his pickup truck, returned to the training room with a semiautomaticrifle and a shotgun, and started shooting. Two men were fatally woundedthere, and Williams then went onto the factory floor and killed threemore employees, before finally turning his gun on himself. DougWilliams was obviously a seriously disturbed individual, whose troubledhistory had been unfolding for many years. Nevertheless, the fact thatthe ethics session proved a trigger for his tragic spree hints at a reservoirof resentment against the dissemination of a culture of values.
The case of Doug Williams illustrates the difficulties in trying to im-pose a system of values on an employee community. On the one hand,to be effective and just, organizational culture must to some extent becoercive when it comes to values. In the weeks before his shooting spree,for example, Williams had taunted Black coworkers by wearing an im-
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provised protective head covering that resembled a Ku Klux Klan hood;his manager had quite properly challenged and disciplined Williams onthat occasion. Williams had done nothing “legally” wrong, but his super-visor recognized that his actions represented a threat to company values,and that strong action was necessary. On the other hand, a sustained at-tempt to create a values-based culture is bound to flirt with a climate ofsocial control, which in turn may provoke resentment and rebellion.From the workers’ point of view, the ultimate test is whether the corpo-ration applies the same standards to its core activities as it does to the be-havior of individual employees.
A case in point is the question of the diversity of the Lockheed Mar-tin workforce. In recent years, the corporation has begun a national pushin this area. With an aging workforce, a decline in Americans studyingengineering, and the changing demographics of the United States, thecorporation has recognized that broadening its pool of potential hires isa business imperative, especially with military spending on the upswing,and the prospect of adding major new projects in the next decade. Yetone can hear senior Lockheed Martin employees discuss “diversity” inthe corporate workforce without making any reference to race or gen-der, or even discussing the possibility that the corporation might have aresponsibility toward underrepresented groups in its ranks. “Diversity”in the Lockheed Martin context is more likely to mean tolerating an en-gineer with long hair or an earring, rather than developing programs tobring more women into engineering positions or making the growingLatino population central to the corporation’s recruiting plans for thefuture. Of course, there is nothing wrong with expanding the company’sdress code or listening to a younger generation’s music at a companyparty. But the corporation’s ethical obligations to underrepresented pop-ulations are off the ethics program’s radar screen. The program does, ofcourse, address and discourage discrimination against current employees.But it is not positioned to implement the corporation’s values when itcomes to promoting diversity in a positive sense through hiring, men-toring, promoting, and retaining minority employees. I do not mean tomake a judgment here about Lockheed Martin’s performance in recruit-ing, retaining, and promoting minority employees. Lockheed Martinhas been subject to lawsuits and federal government investigations re-garding its treatment of African American employees, most recently fol-
lowing the Meridien shootings, but it is difficult to assess the merits ofthose charges across the corporation. 7 The more important point is thatthe corporation’s ethics program shines a spotlight on one possible areaof discrimination (racism or harassment in the workplace) while leav-ing the larger policy questions (hiring and promotion practices) virtu-ally untouched.
The Meridien case represents an atypical extreme, in more than oneway. Nevertheless, the incident provides Lockheed Martin with the op-portunity to reconsider the relationship between its ethics program andits human resources policies. The corporation’s program is highly sensi-tive already to certain forms of workplace issues, especially the relation-ship between individual employees and their supervisors. Explicit discus-sion of the ethical implications of decisions about large-scale workplaceissues could strengthen the program’s credibility both inside and outsidethe corporation.8
Policy and Mission: Ethics and Judgment
Lockheed Martin’s ethics program focuses on the areas of organizationalactivity that fall under the rubric of “business conduct.” The programdeveloped and thrived in response to a series of specific problems andscandals, involving violations of standards of business practice likebribery and mischarging. At Lockheed Martin, the ethics program, ex-tensive as it is, stops at the border of business conduct. As in most othermajor corporations, the ethics program addresses ethical issues withinthe walls of the corporation: the behavior of company employees inhighly specific situations.
American conceptions of “ethics,” as we have seen, go well beyondthese areas of business conduct, encompassing the way that a corpora-tion does business in a larger sense: how it treats its employees, its im-pact on the communities it serves, and the impact of its core business onits society and the world at large. As we have seen in our look at Ameri-can history, the broader public expects corporate ethics to include andembrace a thorough look at a corporation’s policies, strategic decisions,community activities, and even its mission. This seems especially rele-vant for a corporation of Lockheed Martin’s size, importance, and char-acter. With its large employee base and geographical scope, the corpora-
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tion is bound to have an enormous impact both inside and outside of itswalls. As a player in a quasi-public industry, its influence on policy has adisproportionate impact on both national and international events. Andas a weapons manufacturer, in the business of making products that killpeople, Lockheed Martin encounters, in its core mission, a set of moraland ethical concerns that companies in less controversial industriesmight not face.
With these factors in mind, the segregation of ethics from questionsof policy, community impact, and mission raises critical questions aboutthe nature and purpose of an ethics program. What is the point, after all,of trumpeting a corporate ethics program, if it is not willing to take onthe toughest and largest questions about a corporation’s impact on theworld?
Some people believe that this is, in fact, entirely the wrong question.They argue that it is critically important that American corporationsmake a clear distinction between “administrative ethics” and “policyethics.” For Stuart Gilman, former president of the Ethics Resource Cen-ter, combining these approaches leads inevitably to a “muddle” that ul-timately produces paralysis. To Gilman, corporations should focus theirattention on “administrative ethics”—running their organizations withboth clear and consistent business practice standards, accompanied by aclear and consistent set of company values that transcend mere compli-ance with regulations and the law. This approach allows corporations tocommunicate a consistent message, empowering employees to create anatmosphere where integrity and profits can flourish symbiotically.
Gilman argues that if corporations formally incorporate the ethicaldimensions of policy and mission into their ethics programs, they enteran open-ended domain that will ultimately endanger the whole project.He acknowledges that a company like Lockheed Martin faces a wholehost of macro-level moral issues: “Let’s face it, if you’re making bombs,there is an ethics question about how they’re going to be used.” But hecontends that virtually every industry faces a complex series of ques-tions about the nature of its core business that simply cannot be tackledat an organizational level. Automobile manufacturers create productsthat make possible innumerable benefits for modern life, but they befoulthe air and they cost tens of thousands of people their lives each year.Potato-chip manufacturers create products that taste good but make
people fat and bring on heart disease. Defense contractors help protectthe American way of life, but their products can lead to a destabilizedworld. Corporations simply do not have the capacity to address these is-sues internally—these belong to a larger social, political, and philo-sophical debate. Companies are better served by focusing on what theycan do: run a clean organization based on strong values, and trust thatthe implementation of those values will encourage the organization toplay a productive part in the world.
It would appear that Lockheed Martin follows this line of thinking.Its ethics program, as we have seen, concentrates on internal businesspractice matters. The ethics program is entirely separate from the divi-sion that most conspicuously focuses on the corporation’s impact on theexternal world: the “community relations” program. Under this rubric,Lockheed Martin sponsors a host of national and local programs. Itsmost extensive programming in this area focuses on K– education, es-pecially, true to the corporation’s mission, in the sciences. It offers fel-lowships for math and science teachers in California, supports a teacherleadership center in Florida, and promotes interactive learning tech-niques in Texas. Lockheed Martin employees and retirees participate inthe Network of Volunteer Associates (NOVA), tutor children in mathand reading in Dallas, and have developed an online volunteer place-ment system in Owego, New York. The corporation supports music anddance companies in the state of Washington, and sponsors exhibitionsand performances at such institutions as the National Museum ofWomen in the Arts, the Baltimore Museum of Art, and the John F.Kennedy Center in Washington, D.C.
These are worthy programs, and they represent a type of effort thatmakes an important contribution to American life. These activities alsohave important public relations value for the corporation, and as such,they represent a business strategy. The trend toward creating and mar-keting a corporate “soul” remains undiminished since the era docu-mented by Roland Marchand. Indeed, if anything, the trend has in-creased, as pressure from the government, from public interest groups,and from consumers has persuaded companies to redouble their socialoutreach efforts to counteract negative publicity regarding their core ac-tivities. There is nothing inherently wrong with mixed motives. If a cor-poration’s outreach programs benefit the company as well as the com-
: Ethics at Work
munity, then both can win. Both can win, that is, as long as the big pic-ture, the overall impact of the corporation’s impact on its communities,remains in view.
A strict separation between “ethics” and “community relations” illus-trates the problem with separating “administrative ethics” and “policyethics.” A corporation may give generously and create vibrant, positivecommunity programs with one hand, while the other hand institutespolicies and products that breed death and destruction. When PhilipMorris aggressively advertises its community contributions, the companybreeds cynicism, because its efforts are so obvious an attempt to distractthe public from the lethal nature of its core products. When an indus-trial polluter helps support after-school youth programs, those activitiesring hollow in light of the adverse effect of the toxins on children’shealth. These examples may represent the obvious end of the spectrum,but the principle holds just as true for organizations with less drasticpublic relations problems. Being a good corporate citizen is the wholepackage, not simply an accounting of dollars spent in schools and clinics.
By strictly separating ethics from corporate social responsibility,Lockheed Martin and other corporations evade a searching considera-tion of the big picture. The impact of the corporation’s core business onthe local economy, on government, on the environment, and on itsneighbors remains unscrutinized in a formal way. But the bifurcationopens up a gaping hole that has the unfortunate effect of making bothethics and corporate social responsibility (CSR) look like window dress-ing. The ethics program appears to have an artificial border that protectsthe corporation from opening up delicate areas of concern; the CSR pro-gram appears to lack sensitivity to the overall impact of the corporation.
Lockheed Martin ethics officers respond to this concern by pointingout that it is not possible for every set of corporate activities to comeunder the auspices of the ethics office. Furthermore, they say, the corpo-ration has to trust that the existing ethics program will encourage em-ployees to apply company principles to all aspects of their work, includ-ing the impact on local communities. At some point, an ethics programshould empower people to do their best, not simply police them.
Trusting people to do their best, however, makes the most sense whenthe issues are simple, and where a single individual has enough infor-mation and capacity to make the best possible decision. The relationship
between one of Lockheed Martin’s businesses and its surrounding com-munity, however, is a complex and dynamic network of exchanges, likelyto involve hundreds of people in different capacities. Each individualmay undertake his or her part with the utmost care and conscientious-ness, but the sum total of their actions may still do harm in unintendedand unforeseeable ways—unforeseeable, that is, if there is no frameworkin place to encourage a collective understanding and analysis of the eth-ical dimensions of the corporation’s relationship with the community.
For Lockheed Martin, the segregation of the ethics program from largerquestions of policy and mission is especially sensitive, given the natureof the corporation’s business. After all, Lockheed Martin makes moneyby designing, manufacturing, and servicing machines that destroy prop-erty and human life. Indeed, these machines have been put to extensiveuse in the past decade, as the high-tech American military of the latetwentieth and early twenty-first centuries has been deployed in theMiddle East and around the world. Making money on fighter planes,missiles, and spy equipment puts the company squarely up against theAmerican tradition of discomfort with the ethics of war profits. Lock-heed Martin’s ethics program is entirely silent on the moral dimensionsof its core business. As long as it refuses to engage its constituenciesabout this crucial issue in an honest and sophisticated manner, Lock-heed Martin will remain the subject of suspicion and hostility among abroad cross section of the American public.
As in the past, the debate over the ethics of weapons manufacturingis cast today in the starkest terms. Critics of weapons manufacturersportray the industry as corrupt, self-interested, and heartless; the “mer-chants of death” theory is still alive and well, all the more invigorated bythe size of the corporations and the size of the weapons that they maketoday. On the other hand, supporters of the defense industry tend to in-sinuate that raising questions about the morality of the business is sub-versive and un-American.
Deliberately outrageous in its presentation for the “prosecution,” buttypical in its content, is Michael’s Moore’s treatment of Lockheed Mar-tin in his film Bowling for Columbine. The documentary explores
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the landscape of American violence, drawing provocative but casual con-nections between the attitudes of gun lovers, the actions of the Ameri-can military, and the motivations of manufacturers of weapons. Lock-heed Martin is one of Moore’s favorite targets, since it happens that thecorporation is one of the principal employers in Littleton, Colorado,the site of the deadly shootings at Columbine High School. For Moore,the presence of the defense industry giant is no coincidence. He filmstrucks laden with long-range missiles rolling through the streets of Lit-tleton in the middle of the night, and he challenges a nervous LockheedMartin public relations representative at the factory about how he feelsabout making weapons of mass destruction. No wonder, Moore sug-gests, that our children feel they have license to pick up guns and unloadon their classmates, when they live in a community where destruction bythe ton is the principal source of employment and pride. Throughoutthe whole film, Moore keeps returning to Lockheed Martin as a conven-ient symbol and target. In another sequence, he blames the corporation’sparticipation in the welfare-to-work field for a tragic incident where asix-year-old boy is shot while playing with an unattended handgun; theboy was left alone, Moore suggests, because the Lockheed Martin pro-gram forced his mother into an unnaturally long commute. The pictureis clear. In Moore’s diatribe, Lockheed Martin is a soulless corporategiant, cynically peddling violence on a global scale, and directly contrib-uting to a culture of wanton killing within the United States.
Lockheed Martin has an equally one-dimensional perspective on theethical dimensions of its core activities: We are in the freedom business.From the corporation’s point of view, its products deter violence, ratherthan instigate it. Moreover, the defense industry simply serves the needsand demands of a democratically elected federal government. When Itell Brian Sears that some people I know consider ethics in the weaponsbusiness to be something of an oxymoron, he bristles. He reminds methat Lockheed Martin is part of the defense industry, with an emphasison defense. “It is not unethical for a country to defend itself,” he says,jolted a bit from his usual laid-back manner. “The opposite is closer tothe case. It is unethical for a country not to defend itself. If someone isbreaking into your house, would it be ethical to shoot him? I can say thisfor sure: If someone were breaking into my house and I had a gun
(which I don’t, by the way), I would have no qualms about shooting thatperson. Not to defend my family would be irresponsible, immoral, andindefensible.”
Sears is proud, he goes on, of Lockheed Martin’s contributions to thecountry, and he is realistic about their impact.“I know that our productshave been used in battle. I know that our products kill people. Hope-fully, it’s the bad guys who are being killed. I simply don’t view ourproducts as immoral. Even though our products kill people, it’s killingpeople in the service of protecting ourselves.” Sears understands that thecorporation has and will continue to have its critics. “We’re never goingto be warm, fuzzy friends with Greenpeace or any other group that’s forpeace at all costs. The Sisters of St. Francis are never going to love us.They’ll buy their shares of stock and show up at our shareholders’meeting and say their thing. And that’s fine. The peace activists willnever like what we do. We understand their position. We just don’t agreewith it.”
There is something profoundly unsatisfying about this debate, orrather, about this lack of a debate. Moore makes an unambiguous (andsometimes sophomoric) case that the weapons business is inherentlycorrupt, that the industry has a stake in the demand for killing machinesthat makes manufacturers morally responsible for the deaths thosemachines cause. His is the modern variant of the “merchants of death”position that gripped the nation in the s. Sears and Lockheed Mar-tin, for their part, make a case for the inherent righteousness of the de-fense industry’s cause, for weapons systems as an indispensable tool ofliberty. Both parties seem to insist that there is no possible discussion,no avenue for conversation between the corporation and its critics onthis crucial issue.
But what, after all, is an ethics program for, if it is going to put asidealtogether the questions at the very heart of the organization? Withoutjudging the merits of the case, it seems unarguable that there are pro-found ethical questions about the nature of the weapons business thatdeserve sustained attention. What responsibilities do weapons makershave for how their products are used? To whom should those productsbe sold, and under what circumstances? Do weapons manufacturers di-rectly or indirectly contribute to causes of warfare by generating the
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need and demand for their products? What is the collateral impact onthe larger culture of investing so heavily in massive military systems?
From Lockheed Martin’s point of view, there are two principalreasons—one stated, one unstated—why questions like these are off thetable. The stated reason is that, after all, Lockheed Martin’s ultimate re-sponsibility as a defense contractor is to serve the interests of the U.S.government. “At Lockheed Martin, we never forget who we’re workingfor,” is one of the corporation’s most oft-cited mottoes. The ethical con-siderations, in other words, belong to the client, not to the manufacturer.As long as the corporation follows the law scrupulously and observes fairbusiness practices in selling to the American military, it is fulfilling itsethical obligations both to the letter and in spirit. Questions about howand whether the weapons are used, who has access to which systems, theprosecution of warfare, collateral damage to civilian populations—theseare considerations for the military and civilian leadership of the nation,not for the private sector. Of course, Lockheed Martin has both a legaland ethical obligation to be extremely careful when selling its productsto customers other than the U.S. government—but those situationsmost definitely are treated extensively in the corporation’s ethics pro-gram, in units regarding the protection of proprietary and classifiedinformation, rules for dealing with foreign governments, and related is-sues. When it comes to selling to the U.S. military, however, the corpo-ration’s only real ethical obligation is to provide the best and most reli-able products.
The unstated reason is that no organization wants to take the risk ofopening up sensitive questions about its fundamental reason for being.Lockheed Martin has been in the weapons business for a very long time,and it has developed a tradition and culture built around excelling in that field. It is perfectly fine for critics from outside to voice theirconcerns, but no corporation has an obligation to examine itself intoextinction.
There are merits to both of these reasons for silence on the ethics ofweapons making. It is quite true that moral considerations about the useof force lie in the domain of military, more than corporate, ethics.Furthermore, it is difficult for any high-powered organization to do itswork with the speed and vigor necessary to pursue excellence if its mem-
bers are wondering too much about whether what they are doing is, inthe end, “right.” Indeed, to the contrary, Lockheed very much dependson the moral certainty of patriotism as one important incentive for em-ployees to work their hardest and their best to meet crucial deadlines.Philosophical musings might very well undermine the zeal that enablesthis corporation to do its best work.
Yet silence on this core issue threatens the integrity and the credibilityof the entire ethics program. Whoever buys its products, Lockheed Mar-tin helps to make some of the deadliest man-made objects on the face ofthe earth. To claim that this fact has no ethical implications for the man-ufacturer is, on the face of it, absurd. Loss of civilian life and other formsof “collateral damage”; the dangers to humankind posed by the manu-facture of nuclear missiles; the social costs of an enormous defensebudget—while many people and organizations may share responsibilityfor these issues, it is difficult to argue that the corporation that makes theproducts bears no ethical responsibility for their consequences. Thisdoes not mean that the company should abandon its core mission, butit does mean that it is difficult to take seriously the depth of its commit-ment to ethics if this issue cannot even be discussed.
Passing the ethical issues along to the government is an evasion of re-sponsibility, especially in an interconnected world in which the relation-ship between the corporation and the government is much more thanprovider and client. If individual employees tried to avoid hard ques-tions about their own ethical dilemmas by sloughing them off on the ac-tions of supervisors or coworkers or the demands of the customer, theywould run afoul of company values. If honesty and integrity and respectare going to mean something at the individual level, they must meansomething at the institutional level as well.
Blind allegiance to the corporation’s largest customer, by the way, mayultimately lead to its own problems. The corruption scandals of thes were not the result of a handful of renegade employees, but of asystem of glad-handing and favoritism involving both the governmentand the private sector. Misdeeds were implicitly justified by the patrioticimperative to build up the country’s defenses in order to win the ColdWar. Compliance with the letter and spirit of the laws and regulations ofthe United States is certainly important. But companies like LockheedMartin would also do well to maintain a watchful eye on the ethical di-
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mensions of the very laws, regulations, and procedures of the govern-ment itself. The U.S. government has uncovered many scandals, but it hasspawned them as well. A defense contractor has a better chance of pro-tecting itself if it keeps core questions open, rather than closing them off.
The controversy over Halliburton’s role in the Iraq War and its after-math in and illustrates this problem vividly. The defense ser-vices company won a series of large contracts from the U.S. governmentrelated to the rebuilding of Iraq, but found itself the target of scathingpublic criticism on two fronts. First, Vice-President Dick Cheney hadserved for several years as Halliburton’s CEO, leading to widespread spec-ulation that Halliburton had directly or indirectly traded on Cheney’sinfluence to win the contracts. Second, in an echo of the “warhogs” de-bates of the twentieth century, Halliburton was accused of making ex-cessive profits on some of its services, essentially taking advantage of awartime climate to obtain unfair advantage. Halliburton is a signatoryof the Defense Industry Initiative, and the corporation has all the key el-ements of an ethics and business conduct program. But if anything, theexistence of these programs simply made Halliburton a more invitingtarget for public criticism, because it made the appearance of the gap be-tween principles and actions seem all the greater.9
One way that a defense contractor might narrow the gap betweenprinciples and action is through public discussion of the moral and eth-ical dimensions of specific choices in defense policy and weapons sys-tems. This, after all, is the way that other industries have begun to weaveethics into policy, without undermining their core mission. The auto-mobile industry does not grind to a halt because of ethical concerns over, deaths a year in the United States. Car manufacturers have, how-ever, made safety concerns a part of their public discourse—partlyunder pressure from the government, partly for marketing reasons, andpartly out of a growing internal sense of responsibility. The defense in-dustry can likewise participate in public discussions about its ownstrategic decisions as well as decisions of the federal government, with-out damaging the case for its own existence.
In an industry where competition and collaboration with other cor-porations is a way of life, dealing with the ethical macro-issues mightbest be handled collectively. The Defense Industry Initiative (DII) was agroundbreaking idea in , when a group of fierce competitors came
together to address collectively the series of business practice scandalsthat had beset their industry. Over the past two decades, the DII hasserved as the nation’s most creative industry consortium, nurturing aspirit of commitment to excellence in ethics programs and to full-fledgedvalues efforts. The DII is strong enough to take on more than just ad-ministrative ethics. Together, the major corporations in the defense in-dustry could take a lead in embracing and confronting the full range ofethics questions that face their industry, in partnership with the federalgovernment itself. What kinds of weapons does the United States need?What are the moral and ethical implications of manufacturing, or of notmanufacturing, certain weapons systems? Can certain manufacturingcapabilities be put to nonmilitary use? Together with its competitors,who are its partners in the DII, Lockheed Martin could help transformthe nature of public debate over the defense industry. Indeed, it couldhelp create a reasoned debate, in place of the strident polemics that char-acterize the discourse today.
In summary, there are at least four directions that Lockheed Martincould pursue in integrating ethics in its fullest sense into the enterprise:
. A more formal role for senior ethics officers in strategic and policydecisions would be an important first step. Informal consultation is nosubstitute for “a seat at the table.”
. The corporation could build a bridge between its ethics programsand its efforts in the area of corporate social responsibility. That frame-work of that bridge need not be burdensome. There is no reason forethics programs to become ethics empires. But the clear line at LockheedMartin between ethics and social responsibility suggests a habit of seg-regation that threatens to undermine the ultimate effectiveness of bothendeavors. The divorce between “ethics” and “corporate social responsi-bility” may make sense in terms of the bureaucracy, but it makes nosense at all in terms of a strand of public thinking that sees businessethics in terms of a corporation’s role amid its neighbors.
. Lockheed Martin can make the ethical dimension of discussion ofspecific business decisions part of its public discourse. Such opennesswould go a long way toward combating public cynicism and hostility to-ward the defense industry, which has heightened in the wake of accusa-tions regarding business practices during the Iraq War.
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. The corporation can take a leadership role in urging the DII to ex-pand on its outstanding role in business practice, and to take on thethornier issues of the ethical dimensions of the defense industry as awhole. This kind of leadership would ultimately pay off in better deci-sion making for the nation, which would in turn pay dividends in morecredibility and more dependable business relationships in the industryitself.
Raising questions about the corporation’s core business need not un-dermine the entire program. After all, people who adopt Michael Moore’sperspective simply will not work at Lockheed Martin. But having theconfidence to face these questions directly, allowing for a flexible giveand take, and developing a more nuanced vocabulary for discussing thecorporation’s core business would strengthen every part of the ethics en-terprise. By raising and tackling the largest questions honestly, the com-pany would send a signal that it expects similar depth and courage infacing the full range of ethics issues that each of its employees confronts.Lockheed Martin is not about to abandon the weapons industry, norwould consideration of the ethical complexities of that industry lead itto do so. But it would be a stronger, more vibrant, more credible corpo-rate citizen if it had the courage to search for a more supple approach todiscussing both the opportunities and the perils of its mission.10
Lockheed Martin offers a case study in American virtue. By the stan-dards of its industry, its ethics organization is doing an exemplary job. Ithas produced a sturdy and innovative program that introduces impor-tant concepts to the whole organization, reinforces a consistent message,and generates a concerted effort to strengthen fidelity to appropriatestandards of business conduct.Yet for all its successes, two nagging ques-tions remain. First, has the corporation fully addressed the root causesof potential ethics issues? And second, do the corporation’s programsmeasure and address the corporation’s full impact on the wider world?
The Lockheed Martin ethics program echoes one of the oldest Amer-ican stories: the tale of one so confident and secure about his compe-tence and righteousness that he makes himself vulnerable to the dangersthat lurk in the world, and the evil that lies within himself. Americans
like to think of themselves as upright, but they are often loathe to lookat the larger picture of their circumstances: the gross inequalities thatpersist despite the rhetoric of equality; instances of greed masked incomplicated financial reports; violence done in the name of keeping the peace. Americans live in a society that has become expert at present-ing a moral face, while defining morality so narrowly that they are constantly letting themselves off the hook when it comes to the largerissues of justice and fairness. Lockheed Martin’s program exemplifiesthis spirit: Its dedicated ethics officers pursue their work with innova-tion and diligence, but no one is asking or permitting them to take onthe larger picture. It is threatening to do so, but it is equally dangerousto ignore the big questions, which have a way of creating disruptions atunexpected moments.
This tension has long-standing roots in American history and cul-ture. One particularly dramatic rendition of that tale, although it isnearly years old, vividly illustrates how fine the line is between tri-umph and catastrophe.
In his novella Benito Cereno, Herman Melville tells the story ofAmasa Delano, captain of an American trading ship, who comes acrossa mysterious, half-wrecked Spanish vessel, the San Dominick, floating off
the coast of South America. Delano and his crew board the ship, wherethey find its captain, Don Benito Cereno, in a puzzling state of apathy.Don Benito tells the Americans a long and complicated story of storms,disease, and death en route from Africa, where they picked up a cargo ofBlack slaves. Delano looks around the ship and is disgusted by what hesees: a slovenly, decaying vessel where the Spanish sailors mope aroundindifferently, and where the Blacks, equally sullen, appear slow to obeythe commands of the crew. Delano is particularly affronted by the liber-ties taken by a slave named Babo, Don Benito’s personal attendant, whostrikes the American captain as lurking on the brink of insubordination.The American captain can draw only one conclusion from what he seesaboard the San Dominick: The tribulations of the voyage have somehowdimmed the minds and capacities of Don Benito and his men.
At a crucial moment, however, Delano’s perceptions are turned up-side down, as the Blacks aboard the ship cast off their chains, take uparms, and attack the American boarding party. The instant reveals thatthe situation aboard the Spanish ship has been an elaborate sham: The
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Blacks, not the Spanish, have all along been in charge, led by that veryBabo who appeared to wait so obsequiously upon Don Benito. Weeksearlier, the slaves had successfully risen against the crew, killing most,and demanding that they be taken back to Africa. Delano and his menmanage to strike back, bring the ship under control, and restore orderand the proper authority, but the American captain remains puzzled byhow the situation aboard the slaver could have gone so awry.
The point is that Delano could not imagine an alternative reality out-side of his rigid moral framework. He had a clear-cut view of socialstructure and authority: On board a ship, a captain is in charge, andeveryone is subject to his orders. Members of the crew carry out their as-signed tasks, and if one gets out of line, he is punished accordingly.People generally act for the best, as long as their instructions are clearlyand fairly delivered. Arriving aboard the Spanish ship, Amasa Delanoplaced his faith in human nature, in the radiant power of his ship and his country, and in his own intuition. Presented with a set of mysteri-ous circumstances—ominous drumming, slinking shadows, and oddbehaviors—he can interpret them only in terms of his existing world-view: He sees weakness in the Spaniards, rather than strength in theBlacks. His blindness to the reality of his circumstances, to a system ofpower and motivation outside the boundaries of the world as he knowsit, nearly costs him his ship and his life. He simply cannot envisage a sit-uation where the Blacks are in charge.
Even after this disillusioning experience, Delano remains upbeat, try-ing to talk a depressed Don Benito Cereno back to cheerfulness. Delanohas drawn a lesson from this experience: Evil can lurk beneath the sur-face of appearances. Those who appeared to be docile slaves turned out,in the end, to be murderous savages. The American captain will be morecareful in the future, perhaps. His fundamental outlook, however, re-mains intact.
The reader realizes, however, with Benito Cereno, that Captain De-lano has completely missed the point of his own experience. Delano be-lieves that evil lay in the murderous nature of the Africans. We recognize,however, that Delano is blind to the real evil: the legal trafficking inhuman lives that is fundamental to the social and economic life of hiscountry. The slaves may have been murderous indeed, but we cannotjudge their violence outside of the context of the violence that has been
done to them. Delano never sees this. He cannot penetrate beneath thesurface of events because he lacks the capacity and the will to questionthe moral framework in which he operates. He is a thoroughly decent,upstanding, good-hearted citizen and soldier whose ethical system op-erates within strict and impermeable boundaries. His inability to stretchthose boundaries nearly cost him his life, but he seems doomed to repeatthe experience in other circumstances, because he has failed to absorbthe lesson of the San Dominick.
Delano’s mind set is the habit of American virtue: We trust in ourown fundamental decency. We consider moral questions in a tightlycontrolled sphere. And we assume that evil is an aberration, somethingoutside ourselves, something to be fought and challenged and con-quered when at last it rears its head. Ethics focuses on individual beha-vior within our sphere, rather than addressing challenging questionsabout the nature of the social or organizational enterprise itself.
This mindset is not limited to corporate America. It also characterizesour political life, at both ends of the ideological spectrum. We tend toconstruct moral systems that appear wholly consistent from within, butare impervious to the perspective of the wider world. Sometimes thiscan take the form of a U.S. crusade to bring liberty and enlightenmentto distant parts of the world, with little respect for indigenous view-points about how best to construct a fair and just society. Sometimes thiscan take the form of a crusade to purge American life of bigotry, its par-tisans unable to see the consequences of their own forms of intolerance.A values-based corporation, a democratic world, a tolerant nation—it iseasy to be swept up in the nobility of the ideals, and to evade the lesspleasant task of searching self-examination.
Much can be accomplished this way. Melville suggests that Delano’sship was a model of efficiency and decorum, expertly managed withinits domain. So, too, Lockheed Martin’s ethics program is in many ways asplendid model. The corporation has been a leader in bringing a formalconsideration of ethics issues into the very center of its enterprise. Notonly is Lockheed Martin a better organization for those efforts; throughcooperative arrangements, its programs have had a salutary effect onothers both inside and outside of the defense industry.
The sheer earnestness of Lockheed Martin’s ethics program is re-markable. The men and women like Dave Sanders and Brian Sears and
: Ethics at Work
Wendy Donaldson who make up the company’s ethics team have pro-duced a program with a clear sense of mission, and have imbued thecompany with a remarkable esprit de corps. Their ethics program isneatly packaged and scrupulously documented, with “contacts” countedby the thousand. In the decade since the mega-merger created LockheedMartin, the company has managed to escape sensational scandal. Itsethics program has been hailed for its innovations and its scope. Itsefforts in this area have been copied by its competitors, and the corpo-ration has been hailed (and rewarded) by its largest customer, the U.S.government, for its improvements in this area. By this yardstick, Lock-heed Martin’s programs have been a terrific success.
But there is also something chilling about the tidiness of the corpora-tion’s ethics package. The game boxes are clever and attractive; the casesto discuss are thoughtful and well-balanced. The flowcharts that illus-trate the investigations process are clear and unambiguous. The surveydata are splendidly thorough and quantified. All this tidiness, however,seems out of step with the business of human malfeasance, in all itsmessiness and complexity. By its very nature, ethics resists completionand closure. Rules and codes and cases tend to reduce ethics to a check-list, rather than to a process of self-examination that explores gray areasand intractable dilemmas. To their credit, Brian Sears and others atLockheed Martin have recognized this, and have tried to incorporatecomplexity into their program through emphasizing multiple “perspec-tives” on problems. The corporate culture of problem solving, however,is irresistible. It is hard to resist the conclusion that, in the end, LockheedMartin’s executives are most comfortable with a kind of ethics engi-neering, flawless in design, but not necessarily so perfect in the unpre-dictable circumstances of real-world conditions.
Lockheed Martin has created the tidiness of its ethics program bybuilding it inside a sturdy compartment and then carefully making surethat the package remains intact. This is a careful strategy, aiming to buildmorale within the Lockheed Martin community, and to build confi-
dence about the ethics program among those who work for the U.S. gov-ernment and in the larger arena of public opinion. This strategy doesnot diminish the program’s successes within that compartment. But itdoes mean that the program will inevitably meet at best only a portionof public expectations, because not everyone accepts the notion that
ethics should be so strictly contained. If business ethics means the fullmeasure of the impact that a corporation has on its world, then com-partmentalizing an ethics program will always be unsatisfactory. A nar-rowly defined ethics program may thwart hackers, cheaters, and thieves,but it is poorly positioned to consider and prevent the greatest harmsthat a powerful organization can inflict on its communities, and on theworld.
With all that Lockheed Martin’s ethics program has accomplished inthe last fifteen years, it may seem unfair to chide the corporation aboutwhat lies outside the “box”: attention to the specific challenges faced bysenior management; the ethics of collective decision making; the inter-face between ethics and social responsibility; and the ethics of the coreenterprise itself. But the challenge lies precisely in the corporation’s suc-cess. What it has accomplished inside the box is so substantial that it hasthe effect of strengthening the box itself. What is inside gets more treat-ment, more attention, more clever additions like online “infomercials”and film festivals. The matters beyond the box become more distant,major questions that are someone else’s problem.
Corporations in the United States have changed the face of the worldthrough innovations in engineering, marketing, and business practice.Can they bring this same spirit to embracing a fuller conception of an“organizational culture” built on ethics? This is the next test of Ameri-can power.
: Ethics at Work
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