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Feb 11, 2016

Condensing the code of conduct

Best compliance and ethics program (large cap): Lockheed Martin

Lockheed Martin is the 2015 winner of the award for best compliance and ethics program (large cap) for the supplier code of ethics it has implemented and the ethics awareness training it has been providing annually. For many years, the defense and aerospace company had been sending its entire code of conduct to suppliers. Deciding that this contained a lot of information that was not applicable to its suppliers, Lockheed’s compliance and ethics team cut it down from 36 to just four pages.

‘In the last several years, there have been more and more requirements for companies to engage with their supply chain in ways we had not in the past, including conflict minerals, counterfeit parts and human trafficking, and that trend is only continuing to grow,’ says Blair Marks, director of Lockheed’s ethics awareness and operations. ‘So it makes sense to really capture our expectations for [suppliers] in a document a supplier could look at quickly and say, I’ve got it, instead of having to plow through 36 pages and pull out the pieces that are relevant to it.’

Lockheed Martin’s suppliers aren’t required to sign or affirm a stand-alone document, but the new code of conduct is communicated to them as part of any purchase agreements with the company. Marks doesn’t believe it has changed the way Lockheed vets its suppliers, but says: ‘Our engagement with the supply chain around ethics has increased significantly in the last few years, and the supplier code is one aspect of that.’ The company also has a supplier-mentoring program through which it works individually with some of its smallest and largest suppliers, doing assessments of their ethics programs, identifying gaps or opportunities for improvement and helping them make improvements.

A new program – called fast-track mentoring, launched this year – does the same in a group setting through webinars that are recorded, allowing a supplier to go back later and pull up whichever topic it needs to review. Members of the ethics team have also been participating much more regularly in supplier conferences, both at the corporate level and within each of its business areas, as ‘part of a comprehensive program to engage more frequently and more directly with our supply chain on ethics and to try to provide [suppliers] with resources to strengthen their own programs,’ Marks says.

In its business conduct compliance training program, one of Lockheed’s major enhancements is ‘gamification’. ‘We’ve had computer-based compliance training for years, going back to the 1990s,’ Marks points out. ‘What we’re doing now is making the training even more interactive and putting a ‘game’ element into it.’

David Bogoslaw

Associate Editor and Online features producer for Corporate Secretary