LRN Perspectives

Ethics is Best Defense: Leo S. Mackay, Jr. on Building a Values-Based Culture at Lockheed Martin

September 17, 2019 LRN Corporation
 

“We have 35% of our employees that will voluntarily watch the Integrity Minute, which involves them in considering the demands of ethics.”

 – Leo S. Mackay Jr.

This episode of the Principled podcast is hosted by Ben DiPietro, Editor of LRN’s ENC Newsletter, who is interviewing the Senior Vice-President of Ethics and Enterprise Assurance at Lockheed Martin, Leo S. Mackay, Jr.. Leo explains the strict compliance landscape within the aerospace and defense industry, due to government oversight, as well as the open and collaborative efforts to go beyond the law with a commitment to ethics, both in the industry itself and within the supply chain. Lockheed Martin has five distinct disciplines under the Enterprise Assurance umbrella, but the tools used for risk management within each are largely the same. Leo also describes Lockheed Martin’s commitment to diversity and inclusion, as well as mandatory Ethics training in response to the #metoo movement and other social activism.

WHAT YOU'LL LEARN THIS EPISODE...

  • [1:02] How did you find your way to working at Lockheed Martin? What led you to Ethics and Compliance?
  • [1:11] The Chief Executive of Lockheed Martin tapped Leo on the shoulder for the position, because of his general management background both in private industry and within the government, which was different than the previous Ethics and Compliance leaders who had legal backgrounds.
  • [3:13] What is different about leading Ethics and Compliance at a defense company compared to leading it in a different sector?
  • [3:26] In Compliance, there are many regulations and the government monitors things very closely in terms of international transfers. On the Ethics side of things, there’s an aerospace industry-wide commitment to ethics and associated programs beyond the law, including networking and benchmarking in an open and collaborative manner.
  • [6:34] What were some of the challenges associated with integrating Ethics and Compliance with the Internal Audit Enterprise Risk Function?1
  • [6:46] The challenges in bringing organizations together were maintaining transparency, being upfront, and managing misconceptions. The results were nearly all upside and Enterprise Assurance was coined as an umbrella term to describe all five disciplines associated with risk management: Internal Audit, Ethics and Compliance, Enterprise Risk Management, Sustainability, and Environment, Safety and Health.
  • [8:22] Are there still times when these issues need to be separated and handled individually?
  • [8:27] The disciplines remain separate, particularly with respect to Internal Audit and Ethics, which require independence and confidentiality, respectively.
  • [9:33] Are you finding other departments more willing to embrace Ethics and Compliance than they were in the past? What can Ethics and Compliance do to better lay the groundwork for positive relationships with other business units and executive management?
  • [9:47] Lockheed Martin conducts a Compliance Risk Assessment biannually, which goes across the Compliance universe of the corporation to engage other departments, such as Privacy and International Trade Controls. After the data are collected, the results are shared with the individual Risk Owners to discuss potential gaps or issues. 75% of identified risks were addressed in 2018, while the remaining 25% were deemed to be acceptable/not serious.
  • [11:46] As you move forward, what’s happening at Lockheed Martin in terms of diversity and inclusion, and how is all this being shaped my #metoo and social activism of employees, investors, and others?
  • [11:59] The Sustainability Report lays out metrics that Lockheed Martin has set in terms of progress in diversity and inclusion. With respect to the #metoo movement, there is a mandatory portion of the Ethics training that’s delivered by supervisors using a high production quality one-hour scenario-based video. In addition, there is a voluntary component of Ethics training released three/four times a year, called the Integrity Minute, which engages the workforce through a high production value video series.

    Don’t miss our next episode! Be sure to subscribe to Principled on Spotify, Apple Podcasts, Google Play or wherever you listen to podcasts.
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