Business Studies
Topic: Writer’s choice
Introduction
In the Shadow of the Skunk Works
D??? s?????? ????? me at the entrance of the Lockheed Martin facility
in Palmdale, California, just outside the security office, the credit
union, and the gift shop carrying toy models of U-?s and Stealth fighters.1
An understated man in his fifties, Sanders is the site’s full-time ethics
officer, one of eighty men and women throughout the corporation
charged with communicating and implementing the company’s values.
He greets me in the desert sunshine in shirtsleeves, and we spend a good
part of the day touring the premises, stopping to chat with some of the
employees on the line.
The Palmdale facility occupies dozens of acres of desert, in close
proximity to the enormous expanse of Edwards Air Force Base. Once a
manufacturing plant, Palmdale is now primarily a refitting facility, where
Lockheed Martin installs up-to-date technology into some of its most
venerable aircraft. In one enormous hangar, I climb into a C-??? cargo
plane, now being retooled as a mobile, in-flight media station. Loaded
with tons of new electronics, the plane will now be capable of flying
halfway across the world to jam radio signals within a radius of hundreds
of miles. The half-finished plane, with its crisscross of colorful
wires, gleaming cables, and mysterious boxes, will one day have the mission
of carrying the American message of liberty and opportunity to
drown out enemy voices in the far corners of the globe.
The sleek bodies of the famous U-? planes, with their distinctive
pointed noses, dot another hangar. Rechristened the TR-? after the U-?
became infamous, these planes, too, are being refitted with the latest
space-age technology. After more than a year in Palmdale, they will
emerge with even more sophisticated capacity to spy on earth from
sixteen miles in the air, answering the call for better information, delivered
more quickly, more precisely, more secretly. Later that morning, a
Copyright © 2005. Brandeis. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or
applicable copyright law.
EBSCO Publishing : eBook Collection (EBSCOhost) – printed on 4/28/2017 3:52 PM via TRIDENT UNIVERSITY
AN: 530895 ; Terris, Daniel.; Ethics at Work : Creating Virtue at an American Corporation
Account: s3642728
flat, black, batlike craft glides through the desert haze and comes to rest
on the tarmac. The Stealth fighter was one of Lockheed Martin’s triumphs,
the first plane capable of disappearing in midair, its jet-black
surface jumbling radar signals and baffling those who scan the skies.
I am not allowed to bring a camera or a tape recorder with me on
these rounds, and there is one part of the facility that I cannot visit at
all. An unassuming jumble of buildings at Palmdale houses the current
iteration of the Skunk Works. The top-secret design facility was moved
to Palmdale when Lockheed closed its original headquarters in Burbank.
Off limits even to most of those who work in other parts of Palmdale,
the Skunk Works retains its aura of mystery and its reputation for developing
the most sophisticated of the military’s top-secret projects. To
enter the Skunk Works is to enter the “black” world of aircraft and
weaponry, whose products may not be seen, deployed, or even acknowledged
for decades to come. The gift shop at the entrance to the facility
sells caps with the jaunty little skunk logo on the bill.
Standing near the Skunk Works barracks and the U-? hangars, I am
in the shadow of the nerve center for some of the most innovative engineering
projects accomplished in human history. I am also standing in a
principal outpost of one of the largest enterprises in the United States,
the corporation that does the most business with the U.S. Department
of Defense, running to more than $?? billion in ???? alone. Lockheed
Martin is about big ideas, big products, and big business.
Amid the heavy machinery and the high-security fences, Dave Sanders
moves comfortably, chatting casually with line employees and supervisors,
moving in and out with ease, clearly a man known and liked and
trusted in the facility. He has been in the ethics office for three years now,
after a career in various aspects of human resource management. Ethics,
he tells me, is not complicated. It’s a matter of helping people see that
doing the right thing is just as easy as doing it wrong. Sanders introduces
me to the men and women who work on these planes, and who do their
part for Lockheed Martin and, as they see it, for the United States of
America. Much of his time, he tells me, is spent simply troubleshooting:
resolving problems between a line worker and his supervisor; helping an
employee receive a benefit she is owed; advising an executive on how to
handle a client’s gift. Sanders also oversees the annual ethics awareness
program at Palmdale. Ethics awareness is a mandatory exercise for every
? : Ethics at Work
Copyright © 2005. Brandeis. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or
applicable copyright law.
EBSCO Publishing : eBook Collection (EBSCOhost) – printed on 4/28/2017 3:52 PM via TRIDENT UNIVERSITY
AN: 530895 ; Terris, Daniel.; Ethics at Work : Creating Virtue at an American Corporation
Account: s3642728
Lockheed Martin employee; one year everyone had to play a board game
based on the Dilbert comic strip. Sanders sees himself as a specialist in
prevention. No issue is too small; if a worker thinks a problem is an ethics
issue, then it is an ethics issue, as far as he is concerned. Yes, he pursues
investigations of wrongdoing as well: labor time charged incorrectly, or
an accusation of harassment, or a violation of safety regulations. But by
Sanders’s lights, his facility is pretty clean. The expected dose of human
frailty is contained and defused, he explains, by an ethics program that
values the individual and rewards work done according to the company
values.
Dave Sanders is the face of ethics at Lockheed Martin, and, in some
ways, the face of corporate ethics in the United States today. Low-key,
commonsense, and practical, Sanders also embodies a clear sense of
mission, as he represents the corporation’s neatly packaged and scrupulously
documented program. He is part of a conscious and sustained
effort to make ethics an integral part of Lockheed Martin’s “value” as a
corporation, crucial to its sales and recruiting efforts, as well as to its
inner workings and its public image. Values and ethics now reinforce
Lockheed Martin’s image of a noble enterprise; innovation in delivering
goodness is presented hand in hand with innovation in delivering spaceage
engineering.
Between ???? and ????, a series of dramatic scandals rocked corporate
America. In their wake, writers and commentators rushed to examine
“what went wrong” at Enron and WorldCom and Tyco and others. The
tales of unbridled greed, the exposure of faulty systems of checks and balances,
and the charges of poor public oversight gave impetus to the rapid
development of programs in ethics and business conduct in corporations
across the United States. The accounts of failure made a compelling case
for the reexamination of the fundamentals of American business.
This book takes a different tack. Instead of focusing on failure, it begins
with the premise that there might be something to learn from a
corporation that has made a sustained and public commitment to
ethics and values going back over two decades. It is a portrait of how
one American corporation—Lockheed Martin—responded to scandal
and has since continued to develop an ethics and business conduct proIntroduction:
In The Shadow of the Skunk Works : ?
Copyright © 2005. Brandeis. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or
applicable copyright law.
EBSCO Publishing : eBook Collection (EBSCOhost) – printed on 4/28/2017 3:52 PM via TRIDENT UNIVERSITY
AN: 530895 ; Terris, Daniel.; Ethics at Work : Creating Virtue at an American Corporation
Account: s3642728
gram that involves hundreds of thousands of hours and millions of dollars
each year.
This work is intended to contribute some sense of vitality and detail
to discussions of corporate ethics, and to complement the rich trove of
writings on ethics in American business: philosophical works that tease
out the theory behind applied ethics; cautionary works that narrate
stories of waste, fraud, and abuse; and practical works that advise business
leaders on how to integrate ethics into their organizations. By simply
describing the power and the limitations of one company’s efforts, I
hope to illustrate the complexities and challenges of developing and
maintaining a corporate ethics program.
In conceiving this book, I have tried to address a series of straightforward
questions:
• What led Lockheed Martin to develop its ethics program, and
how did the program come to take so prominent a role in the
corporation’s public image?
• What does the corporation mean by “ethics,” and how does it
conceive of the goals of its ethics program?
• What activities have been implemented under the ethics banner?
• How well do those activities meet the goals it has set for itself in
this area?
• Does the corporation’s ethics program match public expectations
of what it means to be a good corporate citizen in the United
States?
In answering these questions, I have focused more on the design and
execution of Lockheed Martin’s ethics program than on its results.
Assessments of a corporation’s ethical performance are difficult and controversial,
and they require much more access and data than I was
granted as I conducted my research. The question of whether, in the
largest sense, an extensive ethics program has made Lockheed Martin a
more “ethical” corporation is, therefore, beyond the boundaries of this
study. I am more interested, in any case, in the choices that the corporation
has made in defining ethics and in creating activities to promote
ethics as a part of its culture. Some of these choices respond effectively
and powerfully to the challenges that the company faces. Other choices—
? : Ethics at Work
Copyright © 2005. Brandeis. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or
applicable copyright law.
EBSCO Publishing : eBook Collection (EBSCOhost) – printed on 4/28/2017 3:52 PM via TRIDENT UNIVERSITY
AN: 530895 ; Terris, Daniel.; Ethics at Work : Creating Virtue at an American Corporation
Account: s3642728
notably, the key questions that Lockheed Martin chooses to exclude
from its ethics program—may leave the corporation vulnerable to future
scandals and public disapprobation.
The defense industry has, to some people’s surprise, the broadest and
most sustained set of ethics programs of any sector of American business
today. Lockheed Martin has built and maintained an extensive formal
ethics and business conduct program since the mega-corporation
was formed through a merger in ????. The program builds on efforts
first developed in the ????s in the corporation’s “heritage” companies—
Lockheed, Martin Marietta, and parts of IBM, General Dynamics, and
General Electric, among others. Defense contractors had responded to a
series of crises—global scandals involving bribery, overcharging, and
collusion—that severely undermined their public image and their
standing with their biggest client, the U.S. government. Lockheed had
been rocked by a sensational overseas bribery scandal in the ????s; its
new management was particularly eager to change the corporation’s
practice, image, and fortune. The company helped to found the Defense
Industry Initiative, a consortium of companies that pledged to establish
substantive programs to improve their integrity.
Defense contractors were among the first to initiate formal ethics
programs in a big way, but a number of other developments stimulated
attention to ethics throughout American business during the ????s.
Perhaps the single biggest “stick” was the development of federal sentencing
guidelines for wrongdoing involving organizations, first put into
effect in ???? and strengthened several times since. The guidelines have
for the first time made senior executives personally and legally responsible
for fraud and abuse committed by their companies during their
tenure, and they also created a series of benchmarks by which American
corporations would be judged. Organizations that took specific steps
to shore up ethics efforts would be treated less harshly when problems
did surface. The ???? guidelines specified that punishments of organizations
found to be in violation of the law would be mitigated by the existence
of “an effective compliance and ethics program.” Of course there
were positive incentives for attention to ethics as well. These included
Introduction: In The Shadow of the Skunk Works : ?
Copyright © 2005. Brandeis. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or
applicable copyright law.
EBSCO Publishing : eBook Collection (EBSCOhost) – printed on 4/28/2017 3:52 PM via TRIDENT UNIVERSITY
AN: 530895 ; Terris, Daniel.; Ethics at Work : Creating Virtue at an American Corporation
Account: s3642728
the benefits of an improved public image, the reciprocal goodwill of
customers, and long-term efficiencies that came from eradicating waste
and fraud.
The corporate scandals of the first years of the twenty-first century instigated
additional federal measures that raised the bar for corporate
ethics programs. In ????, Congress passed the Sarbanes-Oxley Act, which
tightened regulations regarding financial disclosures and conflict of interest,
and which also increased penalties for certain types of white-collar
crime.2 Building on Sarbanes-Oxley, the U.S. Sentencing Commission
(USSC) issued new sets of revised guidelines in ???? and ????. The
???? guidelines dramatically increased the criminal penalties for executives
whose white collar crimes affected a large number of people or endangered
the solvency of publicly-traded companies. A defendant who
shredded a substantial number of documents could spend more than
three years in prison; an executive whose actions defrauded more than
??? employees or investors could face a sentence of more than ten years.
The ???? USSC guidelines expanded and detailed the government’s
requirements for corporate compliance and ethics programs. The original
???? organizational guidelines had included benchmarks for such
programs; the ???? guidelines added detail and raised standards, by requiring
corporations to promote an “organizational culture” to encourage
ethics and compliance with the law. That “organizational culture”
would minimally require the knowledge and participation of the corporation’s
board and senior officers in the ethics program, the identifi-
cation of specific individuals to operate the program, extensive training
and communication about ethics throughout the workforce, and auditing
and evaluation of the ethics and compliance efforts. In other words,
it would no longer be sufficient simply to post the rules and regulations
on a notice board, or to distribute an occasional memo about business
conduct. Companies whose ethics programs were viewed as pro forma
would be subject to more severe penalties than corporations that could
credibly claim that they had woven ethics into the structure of their institutional
life.3
These developments, among other things, heightened attention to
business conduct and helped to stimulate a new cottage industry in the
United States: the work of the ethics consultant. Lockheed Martin is part
of an intricate web of peers, clients, and providers who have made ethics
? : Ethics at Work
Copyright © 2005. Brandeis. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or
applicable copyright law.
EBSCO Publishing : eBook Collection (EBSCOhost) – printed on 4/28/2017 3:52 PM via TRIDENT UNIVERSITY
AN: 530895 ; Terris, Daniel.; Ethics at Work : Creating Virtue at an American Corporation
