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Lockheed Corporation’s Ethical Decision-Making Case Study

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Updated: Jun 7th, 2020

Lockheed: Ethical Issues Experienced Within the Past Decades

The Lockheed Corporation “was a successful aerospace organization in the United States” (Hartung, 2010, p. 5). The company was “established in the year 1912 and later became Lockheed Martin after merging with Martin Marietta” (Lockheed Martin, 2015, para. 1). The firm’s past has been characterized by numerous ethical issues and scandals. Such scandals affected the company’s profitability and success throughout the second half of the 20th century. To begin with, the firm faced a wide range of bribery scandals from 1950s to 1970s. Hartung (2010) argues that “the company’s officials bribed different companies and governments across the globe in order to purchase more aircrafts from Lockheed” (p. 23). Such scandals resulted in numerous hullabaloos in different nations such as Japan, the United States, Italy, and West Germany.

During the same period, Lockheed recorded numerous losses due to the changes experienced in the market. As well, the company’s L-1011 TriStar was unsuccessful in the market. This development affected the company’s financial performance thus forcing different stakeholders to engage in corrupt strategies. According to an investigation conducted in 1976, Lockheed’s bribes “amounted to 22 million US dollars” (Hartung, 2010, p. 74). The company had bribed different foreign officials. Such bribes were aimed at encouraging them to purchase their aircrafts from Lockheed.

Many defense contractors also faced numerous challenges during the period. The absence of transparency and commitment affected the firm’s performance. Before merging with Martin Marietta, Lockheed paid a fine of 24.8 million US dollars for engaging in bribery and ineffective corporate practices (Lockheed Martin, 2015). In 1990s, the firm also paid “around 1 million dollars to an Egyptian lawmaker in an attempt to market its aircrafts in the country” (Hartung, 2010, p. 98). Such bribery claims affected the company’s image and eventually resulted in heavy fines.

The Turning Point

Several issues and developments emerged thus forcing the managers at Lockheed to implement new ethical approaches. The investigations conducted in 1976 showed that Lockheed had been engaging in various malpractices. Such malpractices resulted in numerous fines and penalties. The events taking place in the company throughout the period led to new allegations. The leaders in the firm also continued to pay bribes to different government officials. In 1975, the firm was forced to pay a fine of over $24 million. The organization was also expected to plead guilty for violating the country’s anti-bribery regulations and laws (Lockheed Martin, 2015). New illegalities were also reported during the period.

The newly formed Lockheed Martin therefore formulated new agreements and practices in order to remain ethical. Lockheed Martin instituted new strategies in order to deal with such allegations. The firm was also expected to address every past ethical complaint, misconduct, and malpractice (Lockheed Martin, 2015). This turning point resulted in a powerful ethics program. The purpose of the program was to ensure the firm was on the right path towards achieving its business objectives (Terris, 2005).

It also wanted “to establish powerful internal programs to monitor, report, and even prevent any illegal act” (Hartung, 2010, p. 65). It is agreeable that the ethical problems and challenges encountered throughout the second half of the century forced the company to implement a powerful ethics program. The program also encouraged more employees to engage in the best business activities. The new program has made Lockheed Martin one of the most successful and ethical companies in the aviation industry.

Strategies Used to Initiate the Best Ethics Program

Lockheed Martin has been using powerful strategies in order to implement and support the best ethics programs. The main goal has been to ensure the firm reinvents its image. Modern technologies have “the potential to support the best ethical programs” (Hartung, 2010, p. 67). Lockheed Martin has developed an electronic ethics program. The purpose of this ethics program is to track every kind of wrongdoing outside and inside the organization. The implemented system monitors the actions, behaviors, and violations committed by different employees. The system is also effective because it can investigate a specific employee for one month (Lockheed Martin, 2015).

After implementing the system in 1995, Lockheed Martin has managed to catch around 217 employees (Lockheed Martin, 2015). Some of the employees have been observed to misuse the firm’s assets. Some employees have also been involved in different business malpractices. Individuals “engaging in conflicts of interest are also fired immediately” (Lockheed Martin, 2015, para. 2). This argument shows clearly that the firm’s electronic program plays a positive role towards addressing different challenges. It has also been encouraging different stakeholders to be involved in the process. The important objective is to ensure the firm transforms its corporate image (Terris, 2005).

Lockheed Martin has also designed a new ethics game (Lockheed Martin, 2015). This kind of game is used to track and monitor the performance of every worker in the firm. Every employee is expected to play the game at least once in a year (Lockheed Martin, 2015). This game ensures every worker can handle various ethical issues. It also encourages different individuals to engage in the best business activities. The company’s famous “Ethics Challenge” has produced positive results. This is the case because it encourages every employee to focus on the most appropriate practices (Ciulla, 2011). A new training program has also implemented in this firm. This training program focuses on different issues such as security, compliance, and ethical practices (Lockheed Martin, 2015). The company also keeps appropriate records in order to monitor the effectiveness of every program. These strategies have been effective thus supporting Lockheed Martin’s business goals (Carroll & Shabana, 2010).

Why So Much Effort is Needed

The scandals recorded from 1950 to 1970 affected the corporate image of Lockheed. The organization’s culture was also affected thus making it impossible to achieve the best results. A company that engages in different malpractices loses the trust of its stakeholders (Carroll & Shabana, 2010). The company can also lose many customers an eventually become unprofitable (Ciulla, 2011). The level of employee turnover might also increase. This knowledge explains why such efforts should be implemented to transform the cultural image of a company such as Lockheed.

The new efforts should address various issues such as ethics, commitment, and integrity. Every new program should monitor and address the expectations of different stakeholders. The firm should also encourage its employees to engage in positive practices (Casson & Lee, 2011). Employees and managers must also work together in an attempt to promote the targeted cultural change. Evidence-based decisions should be made in order to ensure the organization engages in the best business activities (Casson & Lee, 2011). Experts and professionals should also be hired in order to support the targeted cultural change. The strategy will eventually make the targeted corporation successful.

Reference List

Carroll, A., & Shabana, K. (2010). The Business Case for Corporate Social Responsibility: A Review of Concepts, Research and Practice. International Journal of Management Review, 1(1), 85-105.

Casson, M., & Lee, J. (2011). The Origin and Development of Markets: A Business History Perspective. Business History Review, 85(1), 9-37.

Ciulla, J. (2011). Is Business Ethics Getting Better: A Historical Perspective. Business Ethics Quarterly, 21(2), 335-343.

Hartung, W. (2010) Prophets of War: Lockheed Martin and the Making of the Military-Industrial Complex. New York, NY: Nation Books.

(2015). Web.

Terris, D. (2005). Ethics at Work: Creating Virtue at an American Corporation. Waltham, MA: Brandeis University Press.

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