Case Assignment
1. What do you think about the notion presented by Terris that Lockheed’s ethics program does little to prevent ethical breaches at the highest level of the organization?
2. Are the efforts put forth—such as making sure higher level executives participate in training—enough to help executives navigate what Terris calls the “ethical minefield” faced by leadership in such an organization?
3. What are some things that could be done to address the issue related to ethics at higher executive levels of the organization?
4. Terris points out that the company’s program is overly focused on individuals and that it doesn’t really address group dynamics that can impact ethical situations. For instance, there can be a tendency for groups to “go with the flow” of the group decision-making process and overlook ethical issues in the process. What would you recommend that Lockheed Martin do to address this situation?
(Hint: reviewing p. 128 and the following pages—before the section headed
Personal Responsibility, Collective Innocence—of the text might be helpful.)
Write a 3- to 4-page paper, not including title page or references page addressing the issue.
Your paper should be double-spaced and in 12-point type size. Use APA style.
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/.
For additional information about this book
[ Access provided at 8 Nov 2022 01:57 GMT from Trident University International ]
https://muse.jhu.edu/book/23072
https://muse.jhu.edu
https://muse.jhu.edu/book/23072
chapter four
Vulnerabilities
F successes, there are significant limitations to Lockheed
Martin’s approach to ethics. Measured against its own standards and
those of the contemporary ethics industry, Lockheed Martin’s program
shines. 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 larger
culture. Lockheed Martin’s ethics program, for all its excellent qualities,
illustrates that gap. One consequence of this gap is that the corporation’s
quest to be seen as an active force for good in American life remains, at
best, incomplete. Another consequence is that the company’s program is
better at responding to the problems of the past than to the problems of
the future.
Lockheed Martin’s ethics program addresses people, but it does not
address systems. The exclusive emphasis on lived individual experience
is appealing and in many ways effective. But the impact of a corporation
like Lockheed Martin is not simply the accretion of millions of acts of
fundamental decency undertaken by , workers. It is also the im-
pact of the corporation as a very powerful organization, or, rather, as a
collection of very powerful organizations. Lockheed Martin’s program is
innovative in reaching the , employees, but that is not enough.
Innovation for innovation, evil will eventually outflank virtue. It thrives
not 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 the
light of the long-standing expectations in American life regarding cor-
porate behavior. When it comes to addressing the moral character of the
corporation’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 leave
major questions untouched. By drawing strict boundaries around their
ethics 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 of
business ethics that I discussed in chapter :
• Does the program specifically and effectively address the dangers
of 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 concerns
of 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 program
makes little special effort to target and address ethics issues involving the
men 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 enough
attention to the specific challenges facing those who have the power and
authority to err on the grandest scale.
. Personal responsibility, collective innocence. Lockheed Martin’s
program lavishes attention on the individual employee, encouraging a
strong sense of personal investment in the corporation’s ethical per-
formance. But the program does not take into account the pernicious
side of organizational life: the tendency of groups to slide, often unin-
tentionally, into habits of misconduct.
: Ethics at Work
. The corporate family: rewards and resistance. The ethics office
has taken great pains to reach out to the corporation’s employee base
and make the organization supportive, rather than didactic. Neverthe-
less, there is always a fine line between social improvement and social
control.
. Policy and mission: ethics and judgment. Lockheed Martin’s
ethics program focuses on issues of business conduct, with few formal
mechanisms for assessing the ethical implications of larger policy or
strategic 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 the
ethics 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, and
new sources of public outrage. In describing these gaps, I do not mean
to suggest that the company’s performance in these areas is necessarily
deficient. I am saying, instead, that I am not convinced that the ethics
program as currently conceived is well positioned to prevent problems in
these areas that might arise in the future. To the extent that a good ethics
program is supposed to be preventive rather than reactive, these strike
me 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 constraints
that might prevent such recommendations from being implemented,
but if I am going to criticize, I feel a responsibility to offer starting points
for 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 the
twenty-first century have had their origins in the plushest executive
suites. At Adelphia and Tyco, the leaders of the corporations were
charged with naked plunder of the assets of the organization. At Enron
and WorldCom, senior executives appear to have gone to extraordinary
lengths to deceive government regulators and the public, not to mention
their own employees, about the true financial circumstances of the cor-
Vulnerabilities :
porations. At Boeing, senior executives acted as though they believed
that 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 many
others, the direct or indirect responsibility for the misdeeds landed
eventually 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 States
today, 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 scurrilous
actions 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 dollars
worth of assets and business. There are at least three factors that can
push senior executives to testing the boundaries of ethics and integrity:
opportunity, incentive, and the very self-confidence that makes them
successful in the first place.
By the nature of their positions, senior executives in any organization
have more opportunity to act badly on a grand scale. Senior executives
have 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. There
is 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 those
made further down the line.
Men and women at the top often also have greater incentive to cross
an ethical boundary. Sometimes this is a matter of pure greed and large
numbers. The members of the Rigas family looked at Adelphia’s assets
and 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 of
modern corporations, senior executives can sometimes find themselves
: Ethics at Work
tempted by almost unimaginable financial rewards if they are willing to
bend the rules. Incentive, however, is not just a matter of naked greed.
The vagaries of the market in a world of rapidly fluctuating profits and
losses create enormous pressures on senior executives to succeed, or at
least not to fail. These negative incentives place a premium on creating
at least the appearance of a positive financial outlook, especially to the
investment community. Corporate leaders, whose careers rise and fall
on 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 rewarded
within an organizational hierarchy, as dynamic leadership over the past
half century at Lockheed and Lockheed Martin has shown. They are also
qualities that can make an individual vulnerable to making choices to
suit his or her own needs and preferences. Again, this is not to argue that
those who defy conventional thinking about business strategy are des-
tined to defy conventional thinking about ethics. But it seems obvious
that some significant proportion of those succeed through brash new
thinking will eventually come to believe that their own actions are not
only inherently profitable but inherently “right.” There will always be a
fine line between self-confidence and hubris.
Lockheed Martin’s own history suggests its vulnerability to renegade
behavior at the top. The global bribery scandals of the s and s
involved 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 put
enormous pressure on senior management. When corporation presi-
dent Carl Kotchian launched his personal campaign to sell the TriStar
jet in Japan, he was taking on himself the burden of avoiding a darker
financial abyss. Kotchian’s strategy of secret negotiations and payments
owed something to his confidence in his own commitments, in his con-
viction that the good of the corporation was a greater moral good than
certain niceties of business conduct.
Vulnerabilities :
History also suggests another challenge for corporate leaders: Those
at 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, as
men of character who put their own stamp of values on the companies
they built. By their own lights, and by the standards of their youth, they
operated according to clear sets of principles. But the very success of
their enterprises created new realities and new environments in the
United 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 was
creative exploitation of opportunity appeared to their competitors and to
succeeding generations to be crass exploitation of people and resources.
In hindsight, we recognize that the corporate leaders of the era were
able to think of themselves as beacons of morality because it took years
for the public and the government to define and react to new fangled
abuses like pools, trusts, deceptive advertising, and the exploitation of
workers. In some ways, this pattern continued through the twentieth
century and encompassed the more recent scandals involving Lockheed
and other defense contractors. The globalization of American business
during the s meant that bribery overseas became a way of life, toler-
ated as morally acceptable in a world of relative standards. Under the
glare of the Washington spotlight, Carl Kotchian portrayed himself as an
American patriot and a company loyalist who was the victim of a hypo-
critical political vendetta.
In the contemporary environment, the ground is shifting even more
rapidly under today’s senior executives, and the ethics issues at the top
of 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 cover
his or her tracks, these are straightforward situations that require straight-
forward investigations and response. The senior executives at Lockheed
Martin, however, operate in an environment where their daily decisions
have enormous impact, not only on the corporation itself but also on the
outside world. They operate in a world of relationships and deals and
negotiations where the rules are often not clear-cut, where innovation
and success require unconventional approaches, where new arrange-
: Ethics at Work
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 accounting
practices that might have an impact on investors, the potential disrup-
tion for employees, assessing the ethical climate of a takeover target, the
protection and the sharing of proprietary information—these types of
issues create special challenges for senior executives in situations where
a 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 in
the defense industry, and their counterparts in the U.S. government. The
maze of competition and collaborations creates ample opportunities for
personal 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 power
and 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 more
sense to judge its merits by its attention to problems at the top of the
hierarchy, 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 solid
and highly visible support of its ethics program by the CEO and other
members of the leadership team. Second, the corporation makes it clear
that all members of its senior management team not only participate
fully in the annual ethics training, but also complete dozens of other
modules each year that are designed for others within their areas of re-
sponsibility. Third, the corporation makes clear that the ethics officers
are widely available for consultation with members of senior manage-
ment. Each of these elements of Lockheed Martin’s ethics program is
worthy and important, but they nevertheless fall short of addressing the
ethical demands of leadership in all their complexity.
Where Lockheed’s corporate leadership was an ethical liability in the
s, one of the company’s great successes of the past decade has been to
reverse this process, so that the identification of the corporation’s lead-
ership with the ethics program is now a strength. CEO Norm Augustine
staked his own reputation on the ability of the company to produce a
Vulnerabilities :
high-quality, high-impact ethics program, and he was willing to take
chances in the face of considerable skepticism in order to pull it off.
Augustine and his successors, Vance Coffman and Robert Stevens, clearly
deserve credit for the strides that the corporation has taken in this area
since .
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 the
leadership may be necessary to launch a successful ethics program, but
that support provides no guarantee that those same leaders will neces-
sarily act for the best in their capacity as corporate decisionmakers. After
all, 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 known
as hypocrisy, of course, but any strong ethics program should be pre-
pared for that possibility. A more common scenario, perhaps, involves
the 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 and
convictions, only to find them chipped away by circumstances. It casts no
aspersions on the personal character and commitment of Norm Augus-
tine or Vance Coffman or any other Lockheed Martin leader to suggest
that their public commitment to the ethics program is no more than a
necessary starting point. For the program that they have spawned to be
ultimately effective, it will need to train its sights on the behavior of
the 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 at
Lockheed Martin undergo the same kinds of trainings and modules as
thousands 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 we
have seen, the corporation’s ethics awareness program and training
modules do an excellent job of provoking discussion among a wide range
of 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 the
special ethical demands placed on those at the highest reaches of the
hierarchy. Ethics, after all, is ultimately about the just application of
: Ethics at Work
power. Just as we know that the business situations that senior executives
face are inherently more complex and challenging, so are the questions
about the proper application of values in any particular situation. The
ethics and compliance modules favored at Lockheed Martin make the
law clear, suggest sources of help, and hint that many situations have no
single “right answer,” but they do little to encourage the deep, difficult
self-examination that can help leaders stave off opportunity, incentive,
and their own hubris. The program encourages employees to think
about the complexities of applying the rules and regulations, but it does
little to encourage those at the top to think about the complex nature of
the rules themselves. Sheer quantity of exposure to ethics modules can-
not replace more searching considerations of the ethical challenges of
power and leadership. The scandals at Boeing illustrate vividly that
an extensive, broad-based ethics program creates insufficient protec-
tions against top executives who believe that they can redefine ethical
boundaries with impunity.
The ethics officers at Lockheed Martin are available for consultation
with the leaders of their divisions, but the effectiveness and extent of this
consultation depend on personal relationships, rather than on more for-
mal practice. Alice Edmonds at the Lockheed Martin Space Operations
division in Virginia described to me at length the ways that her company
president relies on her advice in key situations. And CEO Bob Stevens is
known to drop in for advice at the office of ethics vice-president Mary-
anne Lavan. My impression is that these relationships are sometimes
substantial, and that ethics officers have worked their way into positions
of greater trust and responsibility vis-à-vis senior executives in recent
years. But it is a relationship that is wholly at the discretion of the senior
executive 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 program
makes relatively modest demands on them, and opens up an area of vul-
nerability for the future. This is exacerbated by potential weaknesses in
the structure of accountability. Ultimate authority on ethics issues at
Lockheed Martin lies with the Audit and Ethics (A&E) Committee of
the corporation’s board of directors. The vice-president for ethics and
business conduct reports to this committee, as well as to the CEO, so one
Vulnerabilities :
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 hearing
concerns 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 liable
for 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 a
truly 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 at
other major defense contractors, and one was recently retired from the
U.S. Air Force. Most have served as directors of other major U.S. corpo-
rations, including Enron and Global Crossing. None of the Lockheed
Martin 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 the
Audit and Ethics Committee, is a former Undersecretary of Defense as
well as a former senior executive at McDonnell-Douglas and the CEO of
the Aerospace Corporation. Aldridge was a member of Lockheed Mar-
tin’s board of directors, while at the same time heading a presidential
commission 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 members
are individually men and women of impeccable reputations, the mirror-
image profiles of so many directors make it difficult to believe fully in
the thoroughness of their oversight, even with looming presence of
Sarbanes-Oxley and the federal sentencing guidelines.
The question, then, is whether Lockheed Martin’s ethics program is
best positioned to protect the corporation against misdeeds by its top
executives, and whether it can identify and stay ahead of emerging ethics
issues that involve the top leadership. Lockheed Martin ethics officers
: Ethics at Work
fret that a “bad apple” like Michael Sears at Boeing can undo years of
work, but there is a fatalism in the “bad apple” theory that dodges the
issue. The Lockheed Martin does educate senior management about the
specific type of violation in the Boeing case. Indeed, when the news
broke 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 matter
both of education (providing senior executives with the opportunity to
examine ethics issues in a manner suitable to their level of authority)
and of accountability (creating credible mechanisms for monitoring the
actions of senior executives).
It is also a matter of viewing ethics broadly enough to respond to
changing 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 top
executives were thought of simply as an internal management issue. But
in an era when the gap between the richest and poorest workers in the
United 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 Lockheed
Martin 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, for
example, more than times the salary of one of the corporation’s
ethics officers? Is it “right” for senior executives to earn large salaries, and
sometimes 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, when
does a compensation issue become an ethics issue?2
For Lockheed Martin’s ethics officers, this issue is entirely off the
table. Not a problem in our environment, Brian Sears assures me. “With
all the oversight that we’re getting from the federal government, there’s
no 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’s
job—to have to answer to so many constituencies, to work under so
much pressure. He’s worth every penny that they pay him.”
Vulnerabilities :
Brian Sears may well be right—perhaps the Lockheed Martin CEO’s
compensation would stand up to every test of fairness known to human-
kind. The point, however, is not to make a judgment about what Vance
Coffman or Bob Stevens earns. The point is that the issue is not registered
in terms of fairness or ethics in the Lockheed Martin environment. With-
out that type of scrutiny, the corporation is vulnerable to the kinds of
cozy compensation deals at other companies that have spawned noto-
rious headlines in recent years. Even if the deals are not excessive in
contemporary terms, a bland disregard for the income gap may be seen
as morally blind by a future generation. It is possible that the issue of ex-
ecutive compensation receives rigorous scrutiny in ethical terms among
the corporation’s leadership and board of directors. But even if this
is true, the public silence on the issue undermines the corporation’s
self-image as an organization willing to tackle the full range of tough
questions.
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 program
has to depend on trust, goodwill, and the efficacy of its initial efforts. No
organization can station an independent ethics officer behind every ex-
ecutive’s desk chair, and none wants to “train” its executives to the point
of numbness. But there are, perhaps, four types of steps that a corpora-
tion like Lockheed Martin could take to address both the substance and
the appearance of effective ethics programs for its top management.
. It could develop ethics programs that address the specific problems
and 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 of
more generalized power and authority. Perhaps senior executives could
spend less time on compliance modules, and more time examining cases
that 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 have
already taken, with an eye toward lessons for the future.
. The corporation could create a stronger and more formal role for
the ethics office in advising and monitoring the actions of top execu-
: Ethics at Work
tives. Informal consultation is helpful, but it is most helpful to those who
are already inclined to think most carefully about potential ethics prob-
lems. A more formal structure for this type of consultation would create
one additional opportunity to head off problems before they occur.
. The corporation could appoint members to the board of directors
with 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 about
framing and publicly tackling emerging ethics issues, such as executive
compensation. The company’s policies in this area (and other emerging
areas) may be fully defensible in ethical terms, but this can only be borne
out through open discussion of the issues involved. Such openness, in-
cidentally, could have positive effects on morale within the company, as
well 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 ten
years, 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 may
ultimately be judged by history as harshly as the nineteenth-century
titans of industry—and for the same reasons. They put every issue to
an ethical test—except for the special powers and privileges of their
own position.
Personal Responsibility, Collective Innocence
As we have seen, Lockheed Martin’s ethics program places a premium on
informing and empowering the individual decisionmaker. The program
is “driven down” to every corner of the corporation, and the code of
ethics and the training modules encourage every employee to shoulder
his or her share of the responsibility for maintaining the corporation’s
values. This approach democratically distributes a sense of individual
investment in the company’s ethical well-being, and it has helped im-
prove the company’s performance on business conduct issues. But it also
Vulnerabilities :
means that the program bypasses a crucial dimension of organizational
ethics: the dynamics of collective decision making.
It is instructive, in this context, to examine the continuing ethics and
compliance problems that Lockheed Martin has faced over the past
decade. We have already seen that Lockheed Martin is candid about the
fact 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 heritage
companies) 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 during
the same period). These numbers, by themselves, say little about the
effectiveness of the corporation’s ethics program. The POGO database
lumps together settlements, pending cases, and allegations, so the totals
by themselves are somewhat misleading. But they provide a rough indi-
cation of the continuing challenge that the corporation’s ethics and
compliance 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’s
violations spans the country and the corporation’s many enterprises:
• In , the corporation settled a civil lawsuit for $,, in
a case involving environmental contamination in Burbank, Cali-
fornia, after it closed its original headquarters; the company has
also 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 Lockheed
Martin Engineering Sciences Corporation charged the space
agency 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 for
costs incurred on its private commercial contracts.
: Ethics at Work
• 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 use
of Foreign Military Sales funds.
• In , twenty-six recently terminated employees of the corpo-
ration’s Knolls Atomic Power Laboratory won a judgment of
nearly $,, 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 and
ethical violations. Lockheed Martin’s own ethics database tracks a much
more extensive set of investigations and settlements, involving not only
corporate misbehavior but also the deportment of individual employees.
The corporation chooses not to share this data, but the ethics officers
assert that their internal statistics show a marked decline in significant
cases over the past eight years. Nevertheless, they are still tracking hun-
dreds of cases each year, with dozens involving significant violations of
the 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, misconduct
unhappily does occur. It is impossible to rid the organization entirely of
bad apples, when the organization involves , people and more
than $ billion in business each year. Besides, some of these violations
took place in companies that had been recently acquired by Lockheed
Martin; this means that in some cases the offenses occurred before the
company was part of the Lockheed Martin “family,” and in other cases
that the corporation’s values had not yet had time to take hold when the
violations occurred. Ethics officers also point out that some of the more
dramatic 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 was
awarded $. million as part of the settlement.
It is reasonable to suppose that Lockheed Martin’s ethics program has
Vulnerabilities :
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 of
cases suggests that size may itself be a catalyst as well as an excuse. The
sheer breadth of corporation activity means that a centralized values
program can only penetrate so far, and that there are nearly boundless
opportunities 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 cannot
afford to withhold too much business from Lockheed Martin and its
largest competitors.5
Even within a gigantic enterprise, the ethics program makes it more
difficult for an individual to perpetrate fraud or abuse either through in-
tention or through ignorance. Lockheed Martin’s program puts the
onus on the individual to know the legal and ethical rules, and it alerts
employees to illegal or illicit activities of their fellow employees. The
program creates an atmosphere where it is, in theory, more difficult for
an individual to get away with cutting ethical corners, even if the com-
pany has not been as successful as it wants in encouraging employees to
report unethical behavior that they have witnessed. The workshops and
training modules ensure that ignorance on the part of an employee can-
not be an excuse. The program also gives the corporation a measure of
protection from formal responsibility for the actions of rogue workers.
However, the types of corporate malfeasance illustrated in Lockheed
Martin’s recent history are seldom the result of a single individual’s ac-
tions. Overcharging on a contract with the Navy involves more than a
single person’s manipulation of a spreadsheet. If too much information
is made available to a foreign government in a particular set of business
transactions, it involves the participation of many individuals who are
making complex choices together as they try to meet goals and serve
their customer. A pattern of age discrimination likely involves the hiring
practices of dozens of managers, each of whom may be trying to do his
or 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.”
: Ethics at Work
This is particularly true in an engineering culture, where teamwork,
shared information, and cooperation among different groups are the
lifeblood of the organization. People work together closely on projects,
share ideas, push each other to find innovative solutions to problems, and
make decisions together about how to bring the best ideas to fruition.
This work style makes for a productive and exciting environment, but it
also creates a particular challenge for living by company values, because
people in groups are much more likely to push the boundaries of ethical
behavior than individuals acting on their own. Several evasions of ethical
responsibility tempt the individual working in a team. He can say to
himself that if no one else has voiced an objection to a particular course
of action, then it must be acceptable. She can convince herself that the
general direction that a team is taking has been endorsed by the team
leader or by a superior in the hierarchy. Or, most simply, an individual
can decide that responsibility for weighing the ethical implications of a
decision lies with some other member of the group. Important decisions
do not simply happen at key moments, but they occur over time, often
through an accretion of actions. Indeed, it is frequently impossible to
pinpoint the precise moment that a course of action becomes a settled
fact, and it is often equally impossible to identify clear responsibility
when things go particularly right or particularly wrong. Ultimately, any
strong, sustained ethics program needs consciously to address the elusive
dynamic 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 about
situations 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 stand
up and challenge the collective wisdom that is pushing a decision across
an 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
Vulnerabilities :
moments when a right-minded intervention can prevent disaster. This
may not always be the case.
Furthermore, the vast bulk of the resources of the ethics and business
conduct division is concentrated on relatively minor problems. Ethics
officers spend a great deal of their time on everyday situations involving
issues like personnel problems, side businesses, and access to pornog-
raphy via the corporation’s computers. Cases in the ethics awareness
program likewise present scenarios where the stakes are comparatively
low. The by-product of a well-intentioned effort to make ethics issues
accessible 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 the
last century have been committed by “decent” men and women who
were 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 local
concerns: Some people are simply bound to get hurt in the competition
for 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 the
mark 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 to
head 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-based
approach to the ethics awareness program is a good start, but the atom-
ization of most of the training modules, undertaken by individuals on
their own computers or PDAs, stresses individual decision making. A
more 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 direct
role 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
: Ethics at Work
The Corporate “Family”: Rewards and Resistance
If we look at Lockheed Martin’s ethics program through the lens of the
labor environment, we see a highly self-conscious attempt to create a
new kind of corporate culture. Ethics officers see their job as not only
education and investigation, but also to provide a unifying theme for a
far-flung enterprise, to create unity by creating virtue. This approach has
had 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 financial
stress. The program pays a great deal of attention to the actions of indi-
vidual managers with respect to individual employees. Cases in the
training programs focus on issues of sexual harassment, or favoritism,
or fairness in promotion procedures, with attention to the actions of
both workers and their supervisors. Policies involving wage scales, bene-
fits, disciplinary procedures, and hiring practices, however, are matters
for the human resources department. No doubt many of the individuals
in human resource departments at Lockheed Martin bring full and
complex ideas about ethics into their discussions, but there is no sus-
tained and consistent method for making ethics considerations a central
feature of developing employment policies.
Instead of focusing on employment policies, the ethics program
concentrates on molding the lives and minds of individual employees
to encourage them to embody the Lockheed Martin values. There are
modern echoes of Ford Motor Company’s efforts, almost a century ago,
to develop the Five Dollar Day and the Sociological Department because
the demands of the modern assembly line meant that the company
needed a more reliable workforce. Ford set about deliberately to create a
corporate 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
Vulnerabilities :
by virtue of high-speed communications. Ford needed workers who
would demonstrate their loyalty to the company by showing up on time;
Lockheed Martin needs workers who will put the company’s well-being
before personal opportunity. The modern corporation cannot, of course,
bring its program directly into the home lives of its employees, but it can
use 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 own
counterreaction, 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 minority
of the respondents, men and women who find the ethics program op-
pressive and too “politically correct.” These comments tend to come
from areas of the corporation with significant numbers of blue-collar
employees, 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 , a
forty-eight-year-old assembly-line worker named Doug Williams at-
tended his annual ethics training session. Williams, who was White, had
a history of altercations involving African American coworkers, and he
had been known to complain about the compulsory nature of the ethics
program. Shortly after the training session began, Williams went outside
to his pickup truck, returned to the training room with a semiautomatic
rifle and a shotgun, and started shooting. Two men were fatally wounded
there, and Williams then went onto the factory floor and killed three
more employees, before finally turning his gun on himself. Doug
Williams was obviously a seriously disturbed individual, whose troubled
history had been unfolding for many years. Nevertheless, the fact that
the ethics session proved a trigger for his tragic spree hints at a reservoir
of 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 be
coercive when it comes to values. In the weeks before his shooting spree,
for example, Williams had taunted Black coworkers by wearing an im-
: Ethics at Work
provised protective head covering that resembled a Ku Klux Klan hood;
his manager had quite properly challenged and disciplined Williams on
that 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 of
social 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 push
in this area. With an aging workforce, a decline in Americans studying
engineering, and the changing demographics of the United States, the
corporation has recognized that broadening its pool of potential hires is
a business imperative, especially with military spending on the upswing,
and the prospect of adding major new projects in the next decade. Yet
one can hear senior Lockheed Martin employees discuss “diversity” in
the corporate workforce without making any reference to race or gen-
der, or even discussing the possibility that the corporation might have a
responsibility 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 to
bring more women into engineering positions or making the growing
Latino population central to the corporation’s recruiting plans for the
future. Of course, there is nothing wrong with expanding the company’s
dress code or listening to a younger generation’s music at a company
party. But the corporation’s ethical obligations to underrepresented pop-
ulations are off the ethics program’s radar screen. The program does, of
course, address and discourage discrimination against current employees.
But it is not positioned to implement the corporation’s values when it
comes to promoting diversity in a positive sense through hiring, men-
toring, promoting, and retaining minority employees. I do not mean to
make a judgment here about Lockheed Martin’s performance in recruit-
ing, retaining, and promoting minority employees. Lockheed Martin
has been subject to lawsuits and federal government investigations re-
garding its treatment of African American employees, most recently fol-
Vulnerabilities :
lowing the Meridien shootings, but it is difficult to assess the merits of
those charges across the corporation. 7 The more important point is that
the corporation’s ethics program shines a spotlight on one possible area
of 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 one
way. Nevertheless, the incident provides Lockheed Martin with the op-
portunity to reconsider the relationship between its ethics program and
its 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 workplace
issues could strengthen the program’s credibility both inside and outside
the corporation.8
Policy and Mission: Ethics and Judgment
Lockheed Martin’s ethics program focuses on the areas of organizational
activity that fall under the rubric of “business conduct.” The program
developed and thrived in response to a series of specific problems and
scandals, involving violations of standards of business practice like
bribery and mischarging. At Lockheed Martin, the ethics program, ex-
tensive as it is, stops at the border of business conduct. As in most other
major corporations, the ethics program addresses ethical issues within
the walls of the corporation: the behavior of company employees in
highly specific situations.
American conceptions of “ethics,” as we have seen, go well beyond
these 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 on
its 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 and
embrace 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-
: Ethics at Work
tion is bound to have an enormous impact both inside and outside of its
walls. As a player in a quasi-public industry, its influence on policy has a
disproportionate impact on both national and international events. And
as a weapons manufacturer, in the business of making products that kill
people, Lockheed Martin encounters, in its core mission, a set of moral
and ethical concerns that companies in less controversial industries
might not face.
With these factors in mind, the segregation of ethics from questions
of policy, community impact, and mission raises critical questions about
the 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 on
the toughest and largest questions about a corporation’s impact on the
world?
Some people believe that this is, in fact, entirely the wrong question.
They argue that it is critically important that American corporations
make a clear distinction between “administrative ethics” and “policy
ethics.” 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 their
attention on “administrative ethics”—running their organizations with
both clear and consistent business practice standards, accompanied by a
clear and consistent set of company values that transcend mere compli-
ance with regulations and the law. This approach allows corporations to
communicate a consistent message, empowering employees to create an
atmosphere where integrity and profits can flourish symbiotically.
Gilman argues that if corporations formally incorporate the ethical
dimensions of policy and mission into their ethics programs, they enter
an open-ended domain that will ultimately endanger the whole project.
He acknowledges that a company like Lockheed Martin faces a whole
host 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 he
contends that virtually every industry faces a complex series of ques-
tions about the nature of its core business that simply cannot be tackled
at an organizational level. Automobile manufacturers create products
that make possible innumerable benefits for modern life, but they befoul
the air and they cost tens of thousands of people their lives each year.
Potato-chip manufacturers create products that taste good but make
Vulnerabilities :
people fat and bring on heart disease. Defense contractors help protect
the American way of life, but their products can lead to a destabilized
world. 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 they
can do: run a clean organization based on strong values, and trust that
the implementation of those values will encourage the organization to
play 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 business
practice matters. The ethics program is entirely separate from the divi-
sion that most conspicuously focuses on the corporation’s impact on the
external world: the “community relations” program. Under this rubric,
Lockheed Martin sponsors a host of national and local programs. Its
most 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 teacher
leadership center in Florida, and promotes interactive learning tech-
niques in Texas. Lockheed Martin employees and retirees participate in
the Network of Volunteer Associates (NOVA), tutor children in math
and reading in Dallas, and have developed an online volunteer place-
ment system in Owego, New York. The corporation supports music and
dance companies in the state of Washington, and sponsors exhibitions
and performances at such institutions as the National Museum of
Women 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 that
makes an important contribution to American life. These activities also
have 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 social
outreach 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 “policy
ethics.” A corporation may give generously and create vibrant, positive
community programs with one hand, while the other hand institutes
policies and products that breed death and destruction. When Philip
Morris aggressively advertises its community contributions, the company
breeds cynicism, because its efforts are so obvious an attempt to distract
the public from the lethal nature of its core products. When an indus-
trial polluter helps support after-school youth programs, those activities
ring hollow in light of the adverse effect of the toxins on children’s
health. These examples may represent the obvious end of the spectrum,
but the principle holds just as true for organizations with less drastic
public relations problems. Being a good corporate citizen is the whole
package, 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 on
the local economy, on government, on the environment, and on its
neighbors remains unscrutinized in a formal way. But the bifurcation
opens up a gaping hole that has the unfortunate effect of making both
ethics and corporate social responsibility (CSR) look like window dress-
ing. The ethics program appears to have an artificial border that protects
the 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 pointing
out that it is not possible for every set of corporate activities to come
under 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 program
should empower people to do their best, not simply police them.
Trusting people to do their best, however, makes the most sense when
the issues are simple, and where a single individual has enough infor-
mation and capacity to make the best possible decision. The relationship
Vulnerabilities :
between one of Lockheed Martin’s businesses and its surrounding com-
munity, however, is a complex and dynamic network of exchanges, likely
to involve hundreds of people in different capacities. Each individual
may undertake his or her part with the utmost care and conscientious-
ness, but the sum total of their actions may still do harm in unintended
and unforeseeable ways—unforeseeable, that is, if there is no framework
in 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 larger
questions of policy and mission is especially sensitive, given the nature
of the corporation’s business. After all, Lockheed Martin makes money
by designing, manufacturing, and servicing machines that destroy prop-
erty and human life. Indeed, these machines have been put to extensive
use in the past decade, as the high-tech American military of the late
twentieth and early twenty-first centuries has been deployed in the
Middle East and around the world. Making money on fighter planes,
missiles, and spy equipment puts the company squarely up against the
American tradition of discomfort with the ethics of war profits. Lock-
heed Martin’s ethics program is entirely silent on the moral dimensions
of its core business. As long as it refuses to engage its constituencies
about this crucial issue in an honest and sophisticated manner, Lock-
heed Martin will remain the subject of suspicion and hostility among a
broad cross section of the American public.
As in the past, the debate over the ethics of weapons manufacturing
is cast today in the starkest terms. Critics of weapons manufacturers
portray the industry as corrupt, self-interested, and heartless; the “mer-
chants of death” theory is still alive and well, all the more invigorated by
the size of the corporations and the size of the weapons that they make
today. 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,” but
typical in its content, is Michael’s Moore’s treatment of Lockheed Mar-
tin in his film Bowling for Columbine. The documentary explores
: Ethics at Work
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 the
corporation 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 films
trucks laden with long-range missiles rolling through the streets of Lit-
tleton in the middle of the night, and he challenges a nervous Lockheed
Martin public relations representative at the factory about how he feels
about making weapons of mass destruction. No wonder, Moore sug-
gests, that our children feel they have license to pick up guns and unload
on their classmates, when they live in a community where destruction by
the ton is the principal source of employment and pride. Throughout
the whole film, Moore keeps returning to Lockheed Martin as a conven-
ient symbol and target. In another sequence, he blames the corporation’s
participation in the welfare-to-work field for a tragic incident where a
six-year-old boy is shot while playing with an unattended handgun; the
boy was left alone, Moore suggests, because the Lockheed Martin pro-
gram forced his mother into an unnaturally long commute. The picture
is clear. In Moore’s diatribe, Lockheed Martin is a soulless corporate
giant, 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 the
ethical dimensions of its core activities: We are in the freedom business.
From the corporation’s point of view, its products deter violence, rather
than instigate it. Moreover, the defense industry simply serves the needs
and demands of a democratically elected federal government. When I
tell Brian Sears that some people I know consider ethics in the weapons
business to be something of an oxymoron, he bristles. He reminds me
that Lockheed Martin is part of the defense industry, with an emphasis
on 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 to
the case. It is unethical for a country not to defend itself. If someone is
breaking into your house, would it be ethical to shoot him? I can say this
for sure: If someone were breaking into my house and I had a gun
Vulnerabilities :
(which I don’t, by the way), I would have no qualms about shooting that
person. Not to defend my family would be irresponsible, immoral, and
indefensible.”
Sears is proud, he goes on, of Lockheed Martin’s contributions to the
country, and he is realistic about their impact.“I know that our products
have 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 our
products as immoral. Even though our products kill people, it’s killing
people in the service of protecting ourselves.” Sears understands that the
corporation has and will continue to have its critics. “We’re never going
to be warm, fuzzy friends with Greenpeace or any other group that’s for
peace 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 will
never like what we do. We understand their position. We just don’t agree
with it.”
There is something profoundly unsatisfying about this debate, or
rather, about this lack of a debate. Moore makes an unambiguous (and
sometimes sophomoric) case that the weapons business is inherently
corrupt, that the industry has a stake in the demand for killing machines
that makes manufacturers morally responsible for the deaths those
machines 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 of
liberty. Both parties seem to insist that there is no possible discussion,
no avenue for conversation between the corporation and its critics on
this crucial issue.
But what, after all, is an ethics program for, if it is going to put aside
altogether the questions at the very heart of the organization? Without
judging the merits of the case, it seems unarguable that there are pro-
found ethical questions about the nature of the weapons business that
deserve sustained attention. What responsibilities do weapons makers
have for how their products are used? To whom should those products
be sold, and under what circumstances? Do weapons manufacturers di-
rectly or indirectly contribute to causes of warfare by generating the
: Ethics at Work
need and demand for their products? What is the collateral impact on
the larger culture of investing so heavily in massive military systems?
From Lockheed Martin’s point of view, there are two principal
reasons—one stated, one unstated—why questions like these are off the
table. 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 working
for,” 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 fair
business practices in selling to the American military, it is fulfilling its
ethical obligations both to the letter and in spirit. Questions about how
and whether the weapons are used, who has access to which systems, the
prosecution of warfare, collateral damage to civilian populations—these
are considerations for the military and civilian leadership of the nation,
not for the private sector. Of course, Lockheed Martin has both a legal
and ethical obligation to be extremely careful when selling its products
to customers other than the U.S. government—but those situations
most definitely are treated extensively in the corporation’s ethics pro-
gram, in units regarding the protection of proprietary and classified
information, 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 of
opening 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 their
concerns, but no corporation has an obligation to examine itself into
extinction.
There are merits to both of these reasons for silence on the ethics of
weapons making. It is quite true that moral considerations about the use
of force lie in the domain of military, more than corporate, ethics.
Furthermore, it is difficult for any high-powered organization to do its
work with the speed and vigor necessary to pursue excellence if its mem-
Vulnerabilities :
bers are wondering too much about whether what they are doing is, in
the end, “right.” Indeed, to the contrary, Lockheed very much depends
on 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 enables
this corporation to do its best work.
Yet silence on this core issue threatens the integrity and the credibility
of the entire ethics program. Whoever buys its products, Lockheed Mar-
tin helps to make some of the deadliest man-made objects on the face of
the 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 forms
of “collateral damage”; the dangers to humankind posed by the manu-
facture of nuclear missiles; the social costs of an enormous defense
budget—while many people and organizations may share responsibility
for these issues, it is difficult to argue that the corporation that makes the
products bears no ethical responsibility for their consequences. This
does not mean that the company should abandon its core mission, but
it 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 than
provider 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, they
would run afoul of company values. If honesty and integrity and respect
are going to mean something at the individual level, they must mean
something at the institutional level as well.
Blind allegiance to the corporation’s largest customer, by the way, may
ultimately lead to its own problems. The corruption scandals of the
s were not the result of a handful of renegade employees, but of a
system of glad-handing and favoritism involving both the government
and the private sector. Misdeeds were implicitly justified by the patriotic
imperative to build up the country’s defenses in order to win the Cold
War. Compliance with the letter and spirit of the laws and regulations of
the United States is certainly important. But companies like Lockheed
Martin would also do well to maintain a watchful eye on the ethical di-
: Ethics at Work
mensions of the very laws, regulations, and procedures of the govern-
ment itself. The U.S. government has uncovered many scandals, but it has
spawned 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. government
related to the rebuilding of Iraq, but found itself the target of scathing
public criticism on two fronts. First, Vice-President Dick Cheney had
served for several years as Halliburton’s CEO, leading to widespread spec-
ulation that Halliburton had directly or indirectly traded on Cheney’s
influence 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 a
wartime climate to obtain unfair advantage. Halliburton is a signatory
of the Defense Industry Initiative, and the corporation has all the key el-
ements of an ethics and business conduct program. But if anything, the
existence of these programs simply made Halliburton a more inviting
target 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 between
principles 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 weave
ethics 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—partly
under pressure from the government, partly for marketing reasons, and
partly out of a growing internal sense of responsibility. The defense in-
dustry can likewise participate in public discussions about its own
strategic 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 might
best be handled collectively. The Defense Industry Initiative (DII) was a
groundbreaking idea in , when a group of fierce competitors came
Vulnerabilities :
together to address collectively the series of business practice scandals
that had beset their industry. Over the past two decades, the DII has
served as the nation’s most creative industry consortium, nurturing a
spirit of commitment to excellence in ethics programs and to full-fledged
values 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 of
ethics questions that face their industry, in partnership with the federal
government itself. What kinds of weapons does the United States need?
What are the moral and ethical implications of manufacturing, or of not
manufacturing, certain weapons systems? Can certain manufacturing
capabilities be put to nonmilitary use? Together with its competitors,
who are its partners in the DII, Lockheed Martin could help transform
the nature of public debate over the defense industry. Indeed, it could
help 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 Martin
could pursue in integrating ethics in its fullest sense into the enterprise:
. A more formal role for senior ethics officers in strategic and policy
decisions would be an important first step. Informal consultation is no
substitute for “a seat at the table.”
. The corporation could build a bridge between its ethics programs
and its efforts in the area of corporate social responsibility. That frame-
work of that bridge need not be burdensome. There is no reason for
ethics programs to become ethics empires. But the clear line at Lockheed
Martin between ethics and social responsibility suggests a habit of seg-
regation that threatens to undermine the ultimate effectiveness of both
endeavors. The divorce between “ethics” and “corporate social responsi-
bility” may make sense in terms of the bureaucracy, but it makes no
sense at all in terms of a strand of public thinking that sees business
ethics in terms of a corporation’s role amid its neighbors.
. Lockheed Martin can make the ethical dimension of discussion of
specific business decisions part of its public discourse. Such openness
would 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.
: Ethics at Work
. 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 the
thornier issues of the ethical dimensions of the defense industry as a
whole. This kind of leadership would ultimately pay off in better deci-
sion making for the nation, which would in turn pay dividends in more
credibility and more dependable business relationships in the industry
itself.
Raising questions about the corporation’s core business need not un-
dermine the entire program. After all, people who adopt Michael Moore’s
perspective simply will not work at Lockheed Martin. But having the
confidence to face these questions directly, allowing for a flexible give
and take, and developing a more nuanced vocabulary for discussing the
corporation’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 in
facing the full range of ethics issues that each of its employees confronts.
Lockheed Martin is not about to abandon the weapons industry, nor
would consideration of the ethical complexities of that industry lead it
to 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 to
discussing 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. It
has 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 appropriate
standards of business conduct.Yet for all its successes, two nagging ques-
tions remain. First, has the corporation fully addressed the root causes
of potential ethics issues? And second, do the corporation’s programs
measure 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 dangers
that lurk in the world, and the evil that lies within himself. Americans
Vulnerabilities :
like to think of themselves as upright, but they are often loathe to look
at the larger picture of their circumstances: the gross inequalities that
persist despite the rhetoric of equality; instances of greed masked in
complicated 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 larger
issues of justice and fairness. Lockheed Martin’s program exemplifies
this spirit: Its dedicated ethics officers pursue their work with innova-
tion and diligence, but no one is asking or permitting them to take on
the larger picture. It is threatening to do so, but it is equally dangerous
to ignore the big questions, which have a way of creating disruptions at
unexpected moments.
This tension has long-standing roots in American history and cul-
ture. One particularly dramatic rendition of that tale, although it is
nearly years old, vividly illustrates how fine the line is between tri-
umph and catastrophe.
In his novella Benito Cereno, Herman Melville tells the story of
Amasa Delano, captain of an American trading ship, who comes across
a mysterious, half-wrecked Spanish vessel, the San Dominick, floating off
the coast of South America. Delano and his crew board the ship, where
they 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 of
Black slaves. Delano looks around the ship and is disgusted by what he
sees: a slovenly, decaying vessel where the Spanish sailors mope around
indifferently, and where the Blacks, equally sullen, appear slow to obey
the commands of the crew. Delano is particularly affronted by the liber-
ties taken by a slave named Babo, Don Benito’s personal attendant, who
strikes the American captain as lurking on the brink of insubordination.
The American captain can draw only one conclusion from what he sees
aboard the San Dominick: The tribulations of the voyage have somehow
dimmed 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 up
arms, and attack the American boarding party. The instant reveals that
the situation aboard the Spanish ship has been an elaborate sham: The
: Ethics at Work
Blacks, not the Spanish, have all along been in charge, led by that very
Babo who appeared to wait so obsequiously upon Don Benito. Weeks
earlier, the slaves had successfully risen against the crew, killing most,
and demanding that they be taken back to Africa. Delano and his men
manage to strike back, bring the ship under control, and restore order
and the proper authority, but the American captain remains puzzled by
how 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 social
structure and authority: On board a ship, a captain is in charge, and
everyone 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 clearly
and fairly delivered. Arriving aboard the Spanish ship, Amasa Delano
placed 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 odd
behaviors—he can interpret them only in terms of his existing world-
view: He sees weakness in the Spaniards, rather than strength in the
Blacks. His blindness to the reality of his circumstances, to a system of
power and motivation outside the boundaries of the world as he knows
it, 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. Delano
has 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 more
careful 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 in
human lives that is fundamental to the social and economic life of his
country. The slaves may have been murderous indeed, but we cannot
judge their violence outside of the context of the violence that has been
Vulnerabilities :
done to them. Delano never sees this. He cannot penetrate beneath the
surface of events because he lacks the capacity and the will to question
the 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 stretch
those boundaries nearly cost him his life, but he seems doomed to repeat
the experience in other circumstances, because he has failed to absorb
the lesson of the San Dominick.
Delano’s mind set is the habit of American virtue: We trust in our
own fundamental decency. We consider moral questions in a tightly
controlled sphere. And we assume that evil is an aberration, something
outside 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 questions
about the nature of the social or organizational enterprise itself.
This mindset is not limited to corporate America. It also characterizes
our political life, at both ends of the ideological spectrum. We tend to
construct moral systems that appear wholly consistent from within, but
are impervious to the perspective of the wider world. Sometimes this
can take the form of a U.S. crusade to bring liberty and enlightenment
to distant parts of the world, with little respect for indigenous view-
points about how best to construct a fair and just society. Sometimes this
can 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 is
easy to be swept up in the nobility of the ideals, and to evade the less
pleasant task of searching self-examination.
Much can be accomplished this way. Melville suggests that Delano’s
ship was a model of efficiency and decorum, expertly managed within
its domain. So, too, Lockheed Martin’s ethics program is in many ways a
splendid model. The corporation has been a leader in bringing a formal
consideration of ethics issues into the very center of its enterprise. Not
only is Lockheed Martin a better organization for those efforts; through
cooperative arrangements, its programs have had a salutary effect on
others 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 the
company with a remarkable esprit de corps. Their ethics program is
neatly packaged and scrupulously documented, with “contacts” counted
by the thousand. In the decade since the mega-merger created Lockheed
Martin, the company has managed to escape sensational scandal. Its
ethics program has been hailed for its innovations and its scope. Its
efforts 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 cases
to discuss are thoughtful and well-balanced. The flowcharts that illus-
trate the investigations process are clear and unambiguous. The survey
data are splendidly thorough and quantified. All this tidiness, however,
seems out of step with the business of human malfeasance, in all its
messiness and complexity. By its very nature, ethics resists completion
and 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 areas
and intractable dilemmas. To their credit, Brian Sears and others at
Lockheed Martin have recognized this, and have tried to incorporate
complexity 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, Lockheed
Martin’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 by
building it inside a sturdy compartment and then carefully making sure
that the package remains intact. This is a careful strategy, aiming to build
morale 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 does
not diminish the program’s successes within that compartment. But it
does mean that the program will inevitably meet at best only a portion
of public expectations, because not everyone accepts the notion that
Vulnerabilities :
ethics should be so strictly contained. If business ethics means the full
measure 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 harms
that a powerful organization can inflict on its communities, and on the
world.
With all that Lockheed Martin’s ethics program has accomplished in
the last fifteen years, it may seem unfair to chide the corporation about
what lies outside the “box”: attention to the specific challenges faced by
senior management; the ethics of collective decision making; the inter-
face between ethics and social responsibility; and the ethics of the core
enterprise itself. But the challenge lies precisely in the corporation’s suc-
cess. What it has accomplished inside the box is so substantial that it has
the 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 world
through 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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