Taking an Engineer's Approach at Lockheed Martin

By Jill Dutt
Washington Post Staff Writer
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.

"EEO is a compliance-based model," Stevens said. "We understand it. We respect it. And we comply with it. Diversity for us isn't the compliance-based model. It's an opportunity-based model."

Lockheed has nearly 124,000 employees in the United States; 21 percent are minorities and 25 percent are women. In its senior executive ranks, meaning the 52 positions that require board approval, there are four minorities and eight women. Its 15-member board of directors, which recently created an ethics and corporate responsibility committee to focus, in part, on diversity, includes two women, one of whom is African American, and one black man.

It's not that Lockheed never has problems with workplace issues; it has been sued in the past by the Equal Employment Opportunity Commission. A Lockheed spokesman said the company has a zero-tolerance policy when it comes to discrimination and harassment. There are multiple channels to lodge complaints, through each unit's equal opportunity officer or human resources representative or directly to one's manager or the ethics hotline. Every complaint is investigated and acted upon if evidence is found to support it, according to the policy.

Linda Gooden, president of Seabrook-based Lockheed Martin Information Technology, one of the corporation's fastest-growing units with more than 16,000 employees around the world, manages her company with a strong emphasis on personnel development.

"I'm a lot more focused these days on age than ethnicity" to improve staff diversity, Gooden said. She believes racial issues in the workplace may be less divisive in coming years because new graduates expect diversity. "Generation X is very different," Gooden said, explaining that she watches her stepdaughter's friends, who are diverse and comfortable with their differences.

Gooden likes to find promising young managers to assign to "stretch" assignments, meaning jobs more demanding and complex than they have handled previously. One veteran Lockheed employee said reaching down to less-experienced but talented employees was not the norm at the company until recently. It used to be that promotions were based more on length of service, as in the military. Employees expected to move up slowly, as their age and experience mounted.

Stevens and Gooden knew that model of entitlement for long-timers had to change. "You have a hugely interesting mix of demands that we believe a highly diverse, professionally talented workforce is best able to meet," Stevens said.

Two recent contracts were shaped by the team working on them, Gooden said. For a Social Security contract to develop an automated electronic disability payment system, Gooden tapped 200 recent college graduates to write the software application. She wanted it to be Web-based and figured she would leverage their experience growing up with the Web.

Meanwhile, a female program manager led another contract to track deadbeat dads for the federal Office of Child Support Enforcement. The manager "understood from a gender perspective the importance of the program," Gooden said. "Not that men couldn't have done it, but there was much more passion. . . . Diversity helped us understand what mothers faced. Diversity helped us understand the bigger picture."

Gooden's company recently won the high-profile Sentinel contract from the FBI to link technology systems among the bureau's offices, allowing its agents to search and share information among one another and with other intelligence agencies. A previous effort led by another contractor was scrapped after hundreds of millions of dollars were wasted building a system that did not work and investigators alleged fraud and mismanagement.

The Sentinel program team is also led by a woman, Sandy Gillespie. "She's very good with customers," Gooden said. "She came in to do one job and won five others."

When Stevens is asked if he thinks it unusual for two women to be leading the company's high-stakes effort at the FBI, he brushes the question aside. The real genius, he said, was Gooden's ability to see that her company's work modernizing the technology systems at the Social Security Administration had lessons for how to handle the FBI.

"You might say, 'What would work for the Social Security Administration have at all to do with law enforcement?' And you would have really missed a huge opportunity to contribute meaningful value," Stevens said. "That's part of weaving this fabric of a global security company that taps into diversity, including different perspectives, different points of view and different experiences, and taking the time to ask, 'Is there any part that is relevant to this diverse set of experiences that we have had that we can apply to this mission here?' Now, Linda has the rhythm of that embedded in her professional life."

Judy F. Marks, president of Rockville-based Lockheed Martin Transportation and Security Solutions, is also leading several high-profile contracts, including one to modernize the security and surveillance systems in New York City's subway system, a job she is well aware carries huge risks and responsibilities. "We're not talking about bleeding-edge," she said. "We're talking 100-year-old tunnels."

Marks, like Gooden and Stevens, focuses on building strong connections to universities, stressing the need to graduate more engineers and scientists. Marks estimates that Lockheed hires a full 5 percent of those eligible for security clearance from each year's U.S. graduating classes with degrees in engineering and computer science. "We concentrate on how to open that pool, how to get high schoolers interested in science degrees, even middle schoolers," she said. She said schools are having more success attracting women and minorities to those disciplines; when she graduated in 1984, she was one of eight women in a class of 135 engineering majors.

Among Marks's nearly 2,500 employees, about 31 percent are minorities and 30 percent are women; more than half are engineers. Only 29 percent are 51 or older, so her company is among the younger at Lockheed.

The management challenge in bringing in such large pools of new employees lies in teaching them the standards and expectations of the corporation without trying to make everyone homogeneous. Lockheed needs the knowledge of a generation who grew up with instant messaging, iPods and cellphones.

"There's a value to having the right information at the right time," Marks said. "That's the challenge we're all trying to solve in different ways" for federal clients such as the Federal Aviation Administration and the Department of Homeland Security.

"We won't tell you how to design software," Marks added, but Lockheed will train employees on its process for coding, selling and delivering software to customers. "But we need our people to ask, 'Why not have a chat function' " built into new programs?

While Lockheed focuses on feeding the pipeline, Stevens is also aware that the top ranks of the corporation remain dominated by white men. Both Gooden and Marks are examples of how that is changing, and both said they were confident that headquarters leadership would change in time -- something top female executives, of course, have been saying for decades.

This time, though, they were right. On Friday, Lockheed announced that Joanne M. Maguire will replace retiring G. Thomas Marsh as head of the company's space systems business, one of five executive vice presidents of operating units reporting to Stevens. That is a company first. Stevens vows she won't be the last.

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