Martin Marietta: Managing Corporate Ethics (A)

In an industry overwhelmed with fraud and corruption, Martin Marietta was ready to revamp their reputation to become an ethical company. This concept catapulted a decade of creating, developing, and tweaking an ethics program. Martin Marietta’s goal was to maintain a work place with “descent people doing quality work” (page 1). But with this idea came a series of difficult challenges the company needed to overcome. Martin Marietta arose to the challenge and executed an elaborate ethics program. The programs successes were hard to measure at best. A SWOT analysis was designed to reflect upon all aspects of the ethics program.

A case study was used to discuss Martin Marietta’s successes, failures, and future endeavors regarding their ethics program. Martin Marietta was founded upon selling cutting edge aerospace and defense technology. Overwhelmed with dirty business transactions, Martin Marietta’s General Counsel, Jacques Croom desired a “do-it-right” (Sharp, page 2) environment. He despised the media’s opinion of the defense industry as “a penchant for taking more than is rightfully theirs, and for delivering less than perfect products, overcharging, falsifying tests and on occasion bribing government officials” (Sharp, page 4).

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With the goal of an ethical company in mind, Croom began his quest. By 1985, Martin Marietta released their “Code of Ethics and Standard Conduct,” as well as creating an “audits and ethics committee. ” With the use of a SWOT analysis, it became possible to map out the Ethic Programs strengths, weaknesses, opportunities, and threats. (The SWOT analysis in its entirety may be viewed in Appendix A. ) Martin Marietta’s Ethics Program produced quality work which held their employees accountable for their actions, however; it also imposed a fear of retaliation within the employees.

The program’s effectiveness was nearly impossible to measure. Martin Marietta set out to conquer a large goal of creating a remarkable ethics program. However, their goals for the program continued to grow and grow until eventually they became unattainable. Martin Marietta took a hands-on approach in creating their Ethics Program, but monitoring 60,000 employees “ethical decisions” took a large workforce. In 1986, a committee including Martin Marietta and several other defense contractors created “A Defense Industry Initiative on Business Ethics and Conduct (DII). ” Martin

Marietta placed their entire company under a voluntary disclosure program, which required all employee misconduct to be reported, monitored, and resolved. To achieve this task, an audit committee was formed which tripled in manpower between 1986 and 1991. George Sammet was placed in charge of the Ethics program by insuring the employee’s complaints, questions, and concerns were heard and dealt with. “Ethic Officers” were placed at all of Martin Marietta’s branches to handle employee related issues. Ethical complaints could be made anonymously or vocally to field “Ethic Officers. Once complaints were made the ethic officers would report them for investigation through audit, personnel, security, or legal staff. Almost half of the complaints which were reported were personnel related cases including salaries, promotions, and poor supervisory skills. But, with such an elaborate program, employees quickly became aware of possible retaliation for reporting issues. Once the issues were reported, they then needed to be dealt with. This could include verbal or written reprimand, transfer, or possible termination.

Complaints began surfacing from employees that similar incidents were disciplined differently. Favoritism was shown to some employees. Martin Marietta’s Ethic Program was elaborate and intense (Sharp). I believe Martin Marietta set out with the best of intentions when creating their Ethics Program; however, they became too wrapped up in committees and guidelines and lost track of their original goal. With such an elaborate program in place it became impossible to measure the program’s successes. Rather than stepping back and reevaluating the program at this point, Martin Marietta expanded their ethics program.

Educating and reporting every single act of employee misconduct for 60,000 individuals is an impossible feat. Sometimes smaller is better and Martin Marietta may have benefited greatly from a more specific ethics program. The major benefits Martin Marietta received from the implantation of an ethics program was revamping their public reputation, thus creating a positive public image. This in turn would boost sales. The program also gave employees a place to voice concerns and report misconduct. Unfortunately, the program cost the company man power and instilled fear into the employees of retaliation (Sharp).

To properly assess the programs successes and failures, I would first scale back the program to a simpler point of view. Employees should only voice concerns or report misconduct in situations where the company could be put at risk. Every instance of gossip or anger from lack of promotion or raise does not need to be reported to an ethical committee. Let’s face it, there is no perfect company and while striving for perfection is good, one must walk before they run. Since Martin Marietta has such a large workforce devoted to “ethics” I believe they could stay in place at each branch.

However, now they will only need to deal with serious issues. This will give the auditors more time to devote to resolving specific larger issues, rather than silly work place gossip. Hopefully, employees will be able to once again focus solely on their jobs, rather than worrying about being reported to an ethics committee. A specific “punishment” system needs to be in place. Favoritism must not be shown to certain employees. Since complaints are divided up between audit, personnel, security, and legal staffs the ethical issues need to be handled within these divisions.

Each division should have a three step punishment system: Minor Issues which could be resolved through a written or verbal corrective action, Critical Issues which could be resolved with suspension or transfer, and Major Issues which would be handled through termination. To assure favoritism is not an issue, employee complaints should be referred through department serial numbers. This will prevent those handing out the punishment from knowing the employees name. Once the punishment has been decided upon, the field Ethics Officer at the branch will be notified.

They can then inform the specific employee of their reprimand. Once the program has been scaled back, I would recommend evaluating the program in three separate ways. I would first monitor and compare reported “ethical” issues each quarter. Gradually, it would be best to see a trend of less reported issues, which in turn would mean less ethical misconduct. Secondly, I would provide employees with a scantron survey asking questions regarding their satisfaction of the program, managers, and company as a whole.

With such a large company, scantron surveys will allow for quick analyses to measure effectiveness. Finally, field ethics officers should convene and discuss concerns as well as positive aspects of the program. Employee’s fear of retribution is a notable concern. Ethics officers need to be able to handle and maintain these fears. If the program was scaled back slightly, I believe this would eliminate some fears of retaliation. However, if Martin Marietta chooses to continue with their current Ethics Program, then instances of revenge must be dealt with.

There should be a zero tolerance act for retribution, whether it is supervisors lashing out at employees for reporting their wrong doings, or coworkers lashing out at other coworkers. First offenses should be dealt with through corrective action and repeat offense should result in termination. If retribution results in termination, employees may think twice before traveling down that road. Martin Marietta’s hands-on approach to their Ethics Program was quite impressive. It shows they are truly concerned with being viewed as an ethical company.

They have devoted man power, finances, and reputation to developing a solid ethics program. With such a large company, they have strived for perfection. Martin Marietta is well on their way to becoming an ethical company within the defense world. Other companies should learn from Martin Marietta’s goals, mistakes, and success when developing their ethics program. Ethics is such a hard concept to grasp and the larger the company, the more difficult it becomes to enforce. Add the defense industry into play and the concept becomes even more tedious.

Martin Marietta has done an outstanding job of developing an Ethics Program. With a few alterations and a more focused approach, I believe they could have a very easily assessable program. Without ethics, a company cannot truly thrive. Martin Marietta acknowledged this long before many other companies. They have paved the way for ethical guidelines within the defense industry. One would like to believe a business could make moral decisions without an ethics program in place; however, in this day and age that is far from possible. Guidelines must be set up to prevent unethical decisions from being made.

Work Cited

Sharp Paine, Lyn. Martin Marietta: Managing Corporate Ethics (A). Boston: Harvard Business School-Harvard Business Publishing, revised 17 August 2004. Print. Pages 1-14

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