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Lockheed is Doing Right and Doing Well

In 2001, a man named Ron Covais, a vice president for business development at aerospace giant Lockheed Martin, received an “inappropriate request for payment” during the bidding process for a contract with a foreign customer. Covais not only turned down the bribe request flat but also immediately removed his company from the bidding process. He reported the incident to his bosses and met with top-level U.S. and foreign officials to discuss the matter. His action cost his employer a multimillion-dollar business opportunity.




    But in March 2002, Covais was presented with the first annual Chairman’s Award, a crystal bowl symbolizing “the highest standards for integrity and business conduct.” Lockheed Martin’s chairman and CEO, Vance Coffman, presented the award in a special ceremony. “Ron’s action in resolving this complex ethical issue followed our ethical guidelines to the letter,” Coffman declared. In March 2003, the second annual Chairman’s Award was presented to Vic LaRosa, a software engineer who inadvertently received two e-mails containing proprietary information belonging to a competitor. LaRosa immediately deleted the messages and reported the incidents to his manager.


    These aren’t the kinds of stories that get much ink these days. There’s much more interest in plumbing the murkier depths of the military-industrial relationship. But perhaps the primary reason why Lockheed Martin, unlike Boeing and Halliburton, has been out of the headlines lately is that the formulation, dissemination and enforcement of ethical standards is one of the company’s strategic priorities. It is this company-wide commitment that singled out Lockheed Martin as the 2004 Optimas Award winner for Ethics.


    “Our belief is that good ethics is good business,” says Maryanne Lavan, Lockheed Martin’s vice president for ethics and business conduct. “The competition in this business is fierce, but if our company wins through underhanded means, we don’t consider it a win. Because eventually there’ll be someone uncomfortable enough to report it.” Lavan emphasizes that her company’s ethics policy, in effect since the 1995 merger of Lockheed and Martin Marietta, works from the top down. To illustrate, she points out that each year, every senior leader in the company is asked to find an example of exemplary ethical behavior in his business unit and recommend the responsible employee for the Chairman’s Award. If he fails to do this, he receives a negative evaluation.


    No one, from the CEO down, is exempt from inquiries and complaints phoned in to an anonymous ethics hotline. Every one of Lockheed Martin’s 130,000 employees–again from the CEO down–receives a mandatory hour of ethics training each year. To carry out such ambitious tasks, Lockheed Martin employs 65 ethics officers, divided among its Bethesda, Maryland, headquarters and its five business units. The ethics department produces training materials that stress guided role-playing exercises simulating “gray area” ethical quandaries. For instance, what do you do if you accidentally receive information from a U.S. government employee about a rival company’s bid? If a manager asks you to fudge financial information on an internal report? If a vendor’s representative offers to pay for TGIF drinks for your entire work team? Many of the scenarios are based on actual experiences of workers at Lockheed Martin and other corporations.


    To keep its messages fresh, the Lockheed Martin ethics department turns out a newspaper and calendar and an “Ethics Zone” site on the company intranet. There is even an annual Lockheed Martin Ethics Film Festival. Prizes are awarded to the best tongue-in-cheek amateur ethics “infomercials” submitted by auteurs from throughout the company. Some of the entries are surprisingly well produced and powerful. Some are not, but the ethical messages still get through. In 1997 the company contracted with Dilbert creator Scott Adams to spice up the training materials with pertinent examples of his satirical comic strip. Then-CEO Norman Augustine, a particularly vocal advocate of ethical conduct and education, appeared with Dilbert in an introductory video.


    The roots of Lockheed Martin’s ethics program go back to the 1970s, when Lockheed was caught in a messy scandal involving kickbacks to foreign customers, which resulted in a major congressional investigation and the passage of the Foreign Corrupt Practices Act. In the intervening years, there has been much heated discussion about the cozy relationship between the defense industry and the U.S. government as well as some of its more byzantine contracting and pricing methods. It’s a measure of the company’s progress that when the Sarbanes-Oxley Act was passed in 2002, Lockheed Martin was already in compliance with most of its provisions and proscriptions.


    Calculating the ethics program’s return on investment is difficult, especially since its budget, about which Lavan will say only that it’s “millions of dollars,” is secret. But another way to look at it is that in an era when Enron, WorldCom, Parmalat and Tyco have become household names, public scrutiny is closer and illegal corporate conduct costlier. Last year’s ethical lapse by Boeing–to be precise, an ex-employee’s pilfering of proprietary information connected to an Air Force missile contract–cost the Chicago-based company an estimated $1 billion. Says Brian Sears, Lockheed Martin’s director of ethics services, “You lose a billion dollars in business, it gets people’s attention in a hurry.”

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New Ideas Draw Older Workers

Many economists say that in the coming decade, worker shortages will cause companies to scramble for ways to recruit and retain older workers. At Baptist Health South Florida, a nonprofit health-care provider with 10,000 employees, preparation for the graying of the American workforce is already in full swing.



    Unlike most industries, health care faces severe worker shortages right now, especially in areas like nursing and technology. But at Baptist, turnover is only 9 percent annually, about half the industry average. Turnover among employees 50 and older is only 7 percent. And employee surveys indicate that the most satisfied workers at Baptist are those over 50.


    The company is taking advantage of new pension laws that can encourage older employees to stick around longer. Like many other firms, the company used to lose older workers because of a quirk in the laws governing defined-contribution retirement plans. Employees who wanted to tap into their retirement savings before age 65 had to officially retire. Many found other jobs. Baptist quickly changed its plan in 2002, when a new law allowed workers to draw from the plan at age 59 1/2. Some older workers use this policy to reduce their work hours while using their retirement savings to keep a steady salary. “It’s better to have a part-time worker than no worker at all,” says Carl Gustafson, corporate vice president of human resources.


    Baptist also implemented a “Bridgement of Service” policy, which allows anyone who quits and comes back within five years to pick up where they left off in terms of seniority and benefits. Any worker can also accrue up to 1,000 hours of paid time off, which some use for longer vacations as they near retirement to test whether they want that much free time.


    Eighteen months ago, Baptist added two recruiters who deal only with internal transfers. About 25 percent of their time is devoted to helping older workers move to less physically demanding jobs. Two years ago, Baptist installed spring lifts in laundry containers so that housekeepers wouldn’t have to bend down to retrieve the loads. A $500,000 pilot project is under way with “minimal lift” equipment that helps nurses move heavy patients. Gustafson says that such initiatives could reduce the company’s yearly $1.2 million costs for workers’ compensation claims.


    The company also takes care to give older workers due process. Any worker with 15 years of service cannot be demoted, fired or have a pay cut without a review by a three-person committee of high-ranking executives, including Baptist’s president. Gustafson notes that 25 percent of Baptist’s 10,000 employees are over age 50, a number that will climb in the coming years. The new policies are not just right, they are necessary, he says. As the workforce ages, many companies will find that they must do similar things to fill key positions. And they couldn’t find a better model than Baptist Health, the 2004 Optimas Award winner for Innovation.


Workforce Management, March 2004, pp. 44-46 — Subscribe Now!

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The Center of Attention

Wachovia Corp.’s director of recruiting solutions, Denny Clark, has an unusual guiding principle. He calls it “centralized decentralization.” This seeming oxymoron isn’t really a contradiction. It actually describes how Clark’s multi-dimensional operation was designed to meet the specific needs of Wachovia managers at different locations around the country while simultaneously achieving strategic goals for the nation’s fifth-largest banking company.



    Clark, who has worked at Wachovia’s headquarters in Charlotte, North Carolina, since 1985, was named to his position four years ago. He supervises a staff of more than 300 recruiters, most of whom are stationed at facilities in Florida, South Carolina, Connecticut and New York. The operation is centralized. Clark can direct resources to places where they’re needed and assign workers to various corporate projects. But the system also is decentralized so that the recruiters are in the field, working directly with individual business units. The arrangement makes it possible for them to learn firsthand about the requirements of the specific business and to be better able to anticipate its recruiting and staffing needs.


    “While the recruiters are part of my organization, the internal clients feel as if they are working for them,” Clark says. “It’s the best of both worlds.” He says that developing multi-dimensional relationships makes it possible for the recruiter to be proactive. Because his staff members are closely involved in planning at a local level within Wachovia units, they’re in a position to support business initiatives from the start. When the company began expanding its retail operations into Manhattan last year, for example, Clark’s recruiters were able to move quickly to staff 10 new branch offices, two of which are already open. In working with Wachovia’s General Banking Group in Philadelphia, Clark’s staff looked at the sales increases that would be necessary to meet revenue goals, calculated that 20 to 30 new salespeople would be needed to make the sales and set about to recruit and deploy them.


    At the same time, being simultaneously plugged into all the far-flung business units enables Clark to use all his resources to meet a need in one area. When Wachovia recently had to restructure its investment banking unit because of declining revenues, a large segment of that unit’s employees faced layoffs. Clark’s team analyzed the investment banking specialists’ skill sets and backgrounds, with an eye to figuring out how the employees could be used in other areas of the Wachovia organization, and then marketed them to those business units. The result: half of the displaced investment bankers who wanted to stick with Wachovia were able to find new jobs elsewhere in the company. The bank saved “some pretty significant dollars” in severance costs and, more important, was able to hang on to some workers “with leadership and sales skills that we didn’t want to lose.”


    “Sometimes in the past, we may have been focused too much on filling jobs,” says Clark, who anticipates making 27,000 to 32,000 new hires. “Now we want to find the talent first, and then look for the job that fits.” For developing a system that accomplishes that goal, Clark and Wachovia win this year’s Optimas Award for Service.


Workforce Management, March 2004, pp. 51-52 — Subscribe Now!

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The Language of Cooperation

Four book-manufacturing companies in Ann Arbor, Michigan, shared a common problem. Some of their employees spoke so little English that they couldn’t understand the books they were binding, read safety signs or fully communicate with coworkers. Yet none of the small bookmakers could afford to launch an on-site English-as-a-second-language program alone. Their solution: pool money to fund a single program that would be developed through a local group, Washtenaw Literacy. Some of the companies also agreed to change their pay policies so that the students and tutors, who were recruited from employee ranks, were paid for the time they spent in the learning sessions.


    Book manufacturing in Ann Arbor is a century-old industry, and the book companies began meeting in 2000 to find ways to improve the profession’s image. First they ran joint newspaper ads to recruit workers, who were then in short supply. “We needed to have a basic level of trust and cooperation to put aside our competitive spirit,” says Pam Lindberg, training manager at Malloy Inc., one of the book manufacturers that took part in the literacy program.


    Those meetings also revealed common communication problems. Some of Malloy’s 320 employees were Albanian-speakers from Kosovo, and others were West Africans who spoke tribal dialects and French. Another bookmaker, Edwards Brothers Inc., had among its 800 employees a sprinkling of people who spoke only Vietnamese or Chinese. The language barriers were compounded by cultural differences. At company potlucks and employee-recognition lunches, Malloy used to serve things like German potato salad with pork, unmindful that many of its West African employees were Muslims who didn’t eat pork. “Now we make sure there is food for everyone,” Linberg says. “This experience has been eye-opening.”


    For their ability to combine resources to create a unique program, the Michigan book producers, Washtenaw Literacy and the Washtenaw Development Council are the 2004 Optimas Award winners for Partnership.


    The ESL program began with a six-hour sensitivity- and communication-training session for tutors and supervisors. In one exercise, participants were given directions in a language they didn’t understand, so that they were more likely to identify with the frustration of their non-English-speaking colleagues. Each learner is matched up with one tutor. The tutors agreed to meet with the students for at least one hour a week for a minimum of six months. In most cases, the pairs got so involved that they met twice weekly. The program often expands beyond teaching language skills to helping students cope with personal business such as applying for a driver’s license. “This has been fantastic for everyone,” Lindberg says. “The learners have become happier and more confident. The tutors have an opportunity to be in a leadership role.”


    Since mid-2001, about 20 learning teams at the companies have gone through the program, with six still active. Lindberg estimates that the payroll cost is about $2,000 a year for each team, which she considers “next to nothing,” given the results. Several of the ESL workers have earned promotions. Overall productivity and morale are improving. But it is the human payoff that is the most important to Lindberg. When Ali Berisha, an assistant printing-press operator, entered the program, he didn’t know all 26 letters of the English alphabet. Now he is using the company’s tuition-reimbursement program to attend a local community college.


Workforce Management, March 2004, pp. 49-50 — Subscribe Now!

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A Strategic Fallacy

We live in an either/or world. Yankees or Red Sox. Paper or plastic. PC or Mac. When I was a preteen, you chose up sides for your favorite TV character and pop star. Your heart beat fast for Captain Kirk or Mr. Spock. You picked your most fab Beatle and stuck with him.



    Then there’s the gulf that workforce managers confront every day: strategic or tactical?


    You’ve been asked, I’m sure, if you’re strategic. And I’ll bet you never once pulled yourself up to full height and announced, “No! I’m tactical, and damn proud of it.”


    Tactical has become a dirty word in workforce management circles. It’s become synonymous with paper pushing and picnic planning and endless red tape. It’s metal desks and adding machines.


    Strategic, on the other hand, implies that you have something akin to super powers. You see deeply into core competencies. You seamlessly facilitate knowledge management. You integrate processes in a single bound. It’s cell phones and supercomputers.


    I don’t know about you, but most days, I feel pretty darn tactical. I’m hunkered down in the trenches of this publication with camo paint on my face and a pen between my teeth. Since I spend a lot of time reading about the implications of tactics versus strategy in workforce management, I was beginning to feel bad about my tactical leanings. So I turned to an expert for some advice, and I am happy to share my findings with you.


    The whole strategy/tactics dichotomy is bunk. That’s the word from no less a source than business consultant Ram Charan, whose books include What the CEO Wants You to Know, Profitable Growth Is Everyone’s Business and my favorite, the best-selling Execution: The Discipline of Getting Things Done, co-authored with Larry Bossidy, former chairman and CEO of Honeywell International.


    I particularly liked Execution because workforce management is at the heart of the book. This is Charan’s message: “Whether they’re expanding abroad or launching a new domestic plan, far too many leaders don’t ask the most basic questions: Who are the people who are going to execute that strategy, and can they do it?”


    To me, that passage seemed to be saying that execution is another word for tactics. But when I asked Charan about that, and whether workforce management professionals are preoccupied with strategy, he set me straight.


    “You’ve got to think and act through a different lens,” he said. “The lens is the business you’re in. You’ve got to know how you make money, then link that with a set of actions so you don’t get stuck in the academic language of strategic and tactical. All this unnecessary jargon is clouding the issue.”


    That’s the good news: The problem is not tactics versus strategy. It’s understanding the business, and executing the human resources strategies that make a business successful.


    Now the bad news: Human resources professionals themselves say that they are not particularly effective at being business partners or in helping to develop business strategies. According to Creating a Strategic Human Resources Organization, a multi-year study by Edward E. Lawler III and Susan Albers Mohrman, human resources may even be slipping a little. The respondents in 2001 deemed themselves slightly less effective as business partners and strategists than did the respondents to the 1998 survey.


    The view of those outside human resources is also mixed. Nine percent of CFOs surveyed last year by Mercer Human Resources Consulting view the human resources function mainly as a cost center. Eleven percent view it as somewhat more of a cost center than a strategic partner. Conversely, 28 percent said human resources is somewhat more a partner than a cost center. Thirty-three percent said that human resources is half strategic partner, half cost center. Only 11 percent said human resources is mainly a strategic partner.


    Business partner or cost center? That’s the real either/or today. And you know which way that slash mark cuts.


Workforce Management, March 2004, p. 8 —Subscribe Now!

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Plain and Simple Liars Lose

You don’t have to be a federal court judge to figure out that a supervisor’s or manager’s missteps in handling employee terminations can be costly. Most employers seem to know it. Every employer that has been through an employee lawsuit is painfully aware of it. Take a look at a few recent jury verdicts:



    ● Awarded: $11.65 million to a Chicago-area maintenance worker who claimed that his employer had violated the Family and Medical Leave Act


    ● Awarded: $872,784 in damages and $650,000 in punitive damages to a factory worker who claimed sexual harassment, constructive discharge and retaliation


    ● Awarded: $1 million in compensatory damages and $2 million in punitive damages to a former engineer at a Maine paper company who was accommodated for a disability for four years before he was laid off during a company-wide reorganization


    Like the road to hell that is paved with good intentions, the superhighway to a huge jury verdict can often start with a manager’s well-intentioned little white lie. Consider the situation of the “jerk” employee. He argues with his coworkers. He gripes about work. He yells at customers. He thins the lining of his supervisor’s stomach and causes the company’s human resources director to spend countless hours explaining to him why the company operates its business as it does. Everyone is sick to death of the guy.


    “We’ll fire him,” the director of human resources finally says to the company’s CEO. “But I don’t want a big scene, so I’m going to tell him he is being laid off and that his job is being eliminated. With this economy, he’ll understand, and no one will have hurt feelings. A replacement for that position will be easy to find, and we’ll be back to work in no time with someone we like.”


    The human resources director meets with Jerk. Jerk is unhappy that the company is downsizing, of course, but understands that it sometimes happens. Two weeks later, Jerk sees his old job advertised in the want ads. That’s his job! If his job was eliminated, why are they trying to hire someone? They lied to him! Was he fired because of his age, his race, his chronic headaches, or because he told the plant manager that he thought the bookkeeper didn’t pay him for all his overtime?


    Jerk wants answers, and he wants them now. Surely one of those attorneys with the big ads in the phone book could help him get to the bottom of this conspiracy. Now Jerk has a new name: “plaintiff.” And the company is on the road to what might be called hell–years of litigation, a trial, big checks to pay attorneys and maybe a jury verdict.


    If you are in the habit of telling employees little white lies about their jobs to soften the blow, I have a simple piece of advice: Quit it. It’s a huge mistake. Anyone who has ever served on a jury remembers the part of the trial where the judge reads the rules to the jury. Here is a typical jury instruction used in a discrimination case:


    “The plaintiff must prove, either directly or indirectly, that there is evidence of intentional discrimination. Direct evidence would include oral or written statements showing a discriminatory motivation for the defendant’s treatment of the plaintiff. Indirect, or circumstantial, evidence would include proof of a set of circumstances that would allow one to reasonably believe that [race/color/national origin/gender/age] was a motivating factor in the defendant’s treatment of the plaintiff.”


    To establish discrimination by indirect (“circumstantial”) evidence, the plaintiff must also prove the following by a preponderance of the evidence:

(1) that he/she was a member of a protected group


(2) that he/she was satisfactorily performing his/her job


(3) that he/she was discharged


(4) that the employer sought a replacement with similar qualifications for the job

    If the defendant satisfactorily presents evidence that shows a nondiscriminatory reason for the termination, the plaintiff must persuade the jury, by a preponderance of the evidence, that the reason offered by the defendant for the termination is only a pretext or cover-up for what was, in truth, a discriminatory purpose.


    I’m a trial lawyer. I have tried employment cases for nearly 30 years, but I can count on one hand the number of “direct evidence” discrimination cases I have encountered in those years. In one of those cases, the employer wrote a memo to the company bookkeeper stating, “As of next Tuesday, there will be no more women on our payroll.” That handwritten note was the only exhibit in that case. And the matter was settled shortly thereafter, for a substantial amount. Almost always, discrimination cases are circumstantial-evidence cases. And the problem with the well-intentioned little white lie is that it helps a plaintiff prove “pretext.”


    When an employer has told little white lies to get out of a sticky situation, the employer’s witnesses will have to admit in front of the jury that the proffered reason for the job action was not the real reason. It was a “pretext.” The employer’s lawyer will find it nearly impossible to get that case dismissed short of a trial. Credibility problems emerge. The employer will be forced to admit that it offered up a pretext to disguise a legitimate non-discriminatory reason. Sound confusing? The jury will think so. And once Jerk’s phone-book lawyer gets his hands on an employer that lies, that lawyer, as we say here in Kansas, will really make hay.


    At trial, Jerk will cry and talk about his emotional distress. Witnesses (usually other disgruntled former employees) will testify that Jerk was kind, caring and sensitive. The employer cannot point to any other employees who were fired because they were “jerks.” The director of human resources will be cross-examined until the cows come home (Kansas again) about “the lie.” The jury will listen to the judge’s rules about circumstantial evidence and decide whether the employer had a legitimate non-discriminatory reason for the termination, or if Jerk is right and there was discrimination. Meanwhile, Jerk’s attorney will be surfing the Web for the next available delivery date for a new Escalade with mini-bar.


    You get the picture. Pretext (“lying”) is a problem. But trying to explain the reason for the lie (“I didn’t want to have a big scene.”) can be a bigger, more confusing problem. The lesson here is simple: Tell it like it is. Document it. Deal consistently and be straightforward with employees. And avoid the courtroom, where liars seldom win.


Workforce Management, March 2004, p. 14 — Subscribe Now!

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Success Factors for an Internal Mobility Initiative

The following are the success factors for an internal mobility initiative.
Purpose Clarity

  • Clearly articulate the purpose of your internal mobility program prior to its design and implementation, focusing especially on the value that can be derived from increased employee satisfaction and higher retention rates.

  • Calculate the potential financial impact of your program. For example, estimate the bottom-line effect of a reduction in turnover of one or two percent.

Policy Guidelines

  • Put a formal policy in place that covers the internal mobility business rules, including conditions for internal posting (is there a requirement to post all jobs internally?), the manager’s role, and the approval process.

  • Communicate the policy and process clearly and frequently, especially with senior managers.

  • Identify top performers as candidates for internal mobility; do not provide opportunities to average or under-performers.
Process Design

  • Have a communications plan in place to promote to employees the process of accessing opportunities.

  • Use an Intranet site to post opportunities and receive applications from employees.

  • Look at your rate of internal fills and modify the way you post jobs in such a way that you will increase or decrease the rate–whichever is your goal. Post positions internally and externally simultaneously if your goal is to draw from the widest candidate pool, or delay posting positions externally to encourage internal mobility initiatives.

Platform Capability

  • Use the automation of staffing-management technology to streamline the processes of informing employees about opportunities and managing employee responses.

  • Create a skills inventory database from employee profiles.

  • Link internal skills and performance to training and employee development. This will facilitate “just-in-time” workforce allocation.

Performance Measures

  • Metrics used to measure whether the internal mobility initiative has met its objectives must also be aligned with the overall goals of the company.

  • Define how you will measure the performance of your internal mobility program; see example below.

Purpose Metrics
Improve retention Turnover rate
Cost of turnover
Impact on profit margin
Employee satisfaction Employee satisfaction survey
Retention rate over the past year
Lower staffing costs Cost per hire
Sourcing cost per hire
Fill positions faster Time to hire
Time to contribution

SOURCE: Copyright 2003 iLogos Research, a division of Recruitsoft Inc. Reprinted with permission.

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Labor Issues Could Hinge on Topsy-Turvy Senate Race

The outcome of labor issues over the next six years could hinge on an unusual primary election next month in Pennsylvania.


Sen. Arlen Specter, a Republican from Pennsylvania, is a reliable Republican vote on most issues, and Republicans such as Majority Leader Bill Frist, Mississippi Sen. Trent Lott and former Sen. Bob Dole have written that Specter is “one of the best senators in promoting Republican values and policies” according to the Pittsburgh Post-Gazette.


Democrats on Capitol Hill who are interested in workforce issues tell Workforce Management that they’re pulling for Specter in a primary challenge next month, despite the conservative accolades from Frist and Lott. That’s because when it comes to critical labor and employment votes, Specter is a moderate “swing vote” who often votes in support of union positions and is hoping to win a fifth term in the U.S. Senate.


Few Republican senators are as popular with labor unions as Specter is, and few Republicans raise as much money from unions. Rep. Pat Toomey, Specter’s challenger, is getting fundraising and other support from well-known Republicans throughout America–former attorney general Ed Meese, former federal court judge Robert Bork and publisher Steve Forbes–in an attempt to defeat Specter, according to the Associated Press.