ONE COMPANY'S FORMULA
Taking an Engineer's Approach at Lockheed Martin
Monday, May 1, 2006
When Bob Stevens took over as Lockheed Martin Corp.'s chief executive in 2004, he faced a mammoth demographic problem: About 100,000 of the company's 135,000 workers would be retiring in 10 years. To keep its edge, Lockheed would have to replenish a workforce heavily recruited from the military with young engineers, scientists and managers drawn from all backgrounds and able to think across traditional borders.
The need was urgent, especially because Lockheed's core customer, the U.S. government, was concentrating on homeland security and disaster preparedness, requiring Lockheed to expand its scope from military hardware systems to keep pace. The company needed a leadership pipeline full of professionals with diverse backgrounds and skills to meet multidimensional needs.
With an engineer's precision, Stevens rethought the issue of diversity from the ground up, commissioning the expected studies of best practices but also trying to move beyond a philosophy that treated race or gender as an end in itself. The first result was a mathematical model meant to measure such seeming intangibles as how effectively managers create an inclusive atmosphere. The second was a business process now being rolled out that identifies and rewards leaders who inspire new ways of thinking.
"Talent is the critical resource that's going to drive success in the 21st century, period," Stevens said in an interview. "Any person in business today that would look to a single source of talent would be by design sub-optimizing the strategic horizon of that business. We are not about to do that."
Lockheed's approach to diversity is unique in many respects but is also in step with how many of America's largest corporations approach the topic. The notion of "inclusion," not numbers of diverse hires, is gaining prominence. Executives say that they can hire thousands of people from diverse backgrounds out of college but that if the company's management cannot really listen and respond to their unique voices, those employees will move to a company whose management can. Companies also link diversity efforts to business goals, not morality, because global competition necessitates it.
Lockheed is "clearly doing some things other people aren't," said Joe Watson, chief executive of Reston-based executive recruiter Strategic Hire Inc. and author of an upcoming book, "Without Excuses: Unleash the Power of Diversity to Build Your Business." "Diversity is not about kumbaya, with everybody loving and hugging each other. At the end of the day, diversity is a business imperative."
Too many executives, Watson added, suspend their sense of business logic when diversity is raised as a topic, thinking it a fuzzy, gray area that cannot be measured. "What Lockheed seems to recognize is that the face of the workforce is fundamentally changing. To be successful in meeting revenue and earnings targets and their commitments to shareholders, they have adopted the tools of diversity to keep their employees," Watson said.
The algorithm that emerged from Stevens's first effort at rethinking diversity -- a piece of intellectual property called the "diversity maturity model" that the company is trying to patent -- is a core management tool, with a portion of executives' bonuses tied to improvements in their unit's ranking. Counting the race and gender of employees has only a small impact on the result. Rather, the model assesses the potency of each unit's recruitment and development programs and surveys employees and customers.
"We did not want this to be a program around women and minorities," explained Shan Cooper, vice president of diversity and equal-opportunity programs at Lockheed's headquarters. "We still wanted to look at that, but our focus is on the culture and the environment. . . . This is the first time we're really holding people accountable for their people strategy."
Stevens's second effort, called "full spectrum leadership," identifies the attributes that managers are expected to embody.
"This is an environment of opportunity, but you've got to bring your A game," Stevens said. The leadership program defines what that A game has to look like: not just an ability to get financial results but also one to shape the corporate environment itself, build effective relationships, energize a team and model personal integrity. To sharpen those skills, Lockheed built a leadership training center near its Bethesda headquarters and offers robust mentoring and leadership programs for emerging executives. Such efforts are central, Stevens said, to keeping Lockheed ahead as it transforms from a missile- and plane-making defense company to a global security corporation.
When Lockheed executives discuss diversity, they pointedly stress that they are not talking about "EEO," or the equal employment opportunity laws the company follows as a contractor to the federal government. Those legal requirements are important, executives say. But they are not the main focus of broader, more vital diversity efforts that center on making sure everyone who works with the company feels included, valued, and able to move up the ranks as recognition of their talent and effort.