I am super excited to what? Introduce our guest speaker tonight. He is T.J. Hasty, the director of ethics and business conduct for space at Lockheed Martin Corporation. What makes T.J. so incredibly wonderful in this position is he's an Air Force academy grad. He's a civil engineer by education. He's also a lawyer. He was a jag in the Air Force, he was associate professor of law, and he understands all kinds of law. The one thing that I want you to know is that you will always have people in your corner as a leader and folks like T.J. are in your corner. They are your advocate. They're truly your cheerleader. They really are. They want to keep you on the right path. When you end up in difficult gray situations. The best thing to do is to just pick up the phone and talk to them about those situations. Because when it's in the gray area, you probably are not the expert in that. You need to have a conversation with somebody that is very comfortable with not only what are the organizations that you work for, their processes, their standards, but what are the loss? With that, I'm excited to introduce T.J. and his subject tonight, ethical decision-making in business. Thank you for that introduction. I don't think I need to say anything now. I know, you do. I always enjoy the opportunity to get to speak to your class about business ethics. It's something that's a topic that's near and dear to my heart. As Kathy said I currently serve as the director of ethics and business conduct for Lockheed Martin Space Company in Waterton in the Denver area. I've been in a position now for about six years. Prior to that, I spent six years in Fort Worth with our Lockheed Martin Aeronautics Company down in Fort Worth where I was serving in the general counsel's office as a compliance attorney. Then before that, back in 2010 when I retired from the Air Force after 29 years, seven months, four days of service in the Air Force, I tried to find employment that I could find with the company that I felt exemplified the culture of excellence and service and I felt that I experience while I was in the Air Force. I've always lived under a culture of ethics. It's not new to me. As Kathy said, I graduated from the Air Force Academy. We lived under an honor code. We will not lie, steal, cheat, nor tolerate or minus anyone who does. Then I had a seamless transition into the Air Force where our core values of integrity first, service before self, and excellence in all we do. I searched for an organization that had those similar type values, and I felt I found one in Lockheed Martin where our values are articulated in our core values of do what's right, respect others, and perform with excellence. As an attorney, I have to always have a disclaimer. This is my disclaimer here that this presentation does not contain Lockheed Martin private area information. It is the views that are expressed by T.J. Hasty or his alone and do not necessarily reflect the views of Lockheed Martin Corporation or Lockheed Martin Space, so we got that out of the way. You're just hearing from T.J. Hasty is what I want to talk about here. Now I'm going to be discussing ethical decision-making and our business ethics program within Lockheed Martin. I asked you, do companies actually need ethics and compliance programs. Do you think they need them? I hear people nodding yes and we say why do companies need ethics programs? But other things far as having an ethical company all things being equal, customers prefer doing business with ethical companies. It's easier to recruit and retain talented employees if the company is viewed as an ethical company. Another reason you want, you look at these. These are some recent headlines that are out there. You don't want your organization or yourself as a headline for one of these articles there. We're going to talk about Lockheed Martin and other businesses of how we seek to avoid corruption and employee misbehavior through our ethics and compliance program. When we look at. Why we have ethics programs with an aerospace and defense industry. As background, as this slide says here in the 70s, the aerospace and defense industry was largely unregulated. In fact, bribery was not illegal, so you could bribe officials and it was actually your way to actually get contracts. In response to that, what they had to do is congress had hearings and things like that. They passed a law that said that foreign bribery was illegal now under the Foreign Corrupt Practices Act. But they still had a lot of corruption going on in the 80s time period. During that period, what the defense contractors had to do because if the defense contractors didn't handle the situation on their own, what was going to happen? You absolutely know what's going to happen. You're going to have regulation. You're going to have government regulation and you don't want to have government regulation so they allowed the companies to try to see if they could police themselves. Next slide. What happened at that? What the defense companies had to do in order to avoid having a lot of government regulation, 70 get together and try to find a way to do some self-governance of themselves. They could get out and do their business without having government oversight. The defense industry initiative came up with these six principles that all companies had to abide by to become part of the defense industry initiative then like Eve was one of the companies that was part of this. We had the CEO of General Electric, some other big companies that came up with these. They came out with very basic obvious things. You have to have a written code of conduct. Let's make sure we train our employees. Let's have some way that we can report anything that's going on. Let's self-govern, self-report and be accountable to the public and then also have best practices that they could share with one another to assist them in meeting those requirements. I said are there obvious today, but back then and this was groundbreaking because that was the genesis of ethics programs or compliance programs in aerospace and defense industry. Next slide. That gets us to what Lockheed Martin's ethics program is today. Companies are working diligently to improve their ethics posture in their programs. Today we have a truly world-class ethics program throughout the industry. But to understand the program, you still have to understand what's the environment in which we do business. Next slide. Now this is not a recruiting pitch for Lockheed or advocating for anything with regard to our company or anything like that. But we have thousands of employees from diverse backgrounds. Great company, great people that work. Next slide. Then like I say, we have both in the US and international locations where we have. That brings its own unique challenges as you might expect of doing business in other countries. All ethics and business conduct programs are built upon the tasks that every company must do to be compliant with the laws. It builds upon those things that inner circle then we think about this, we cascade down in order to make sure that we're compliant. What are the things that you must do for LM for compliance? Those things are things like, what are the laws say that everyone has to follow? Insider trading. You can't engage in insider trading. What are the labor and employment laws that you have to follow? What are the equal employment opportunity laws? Those things are there. Federal Acquisition Regulation so laws and regulations that everyone has to do. What are export control laws that all companies have to follow? Then like truth and negotiation, all of those kinds of things, all the things that a company must do, so you have to do that. That's the core compliance of a company. Then you rise up and say, the ethics and business conduct programs talk about things that companies should do. They may not be things that are illegal against the law, against government regulations, but there are things that companies should do and those are rules in conflict of interests. You don't want to have conflicts within your organization. You have rules about that, about hiring and hiring friends and family or things like that, so you have those rules. You have rules on labor charging, that you only charge the work that you actually work. Just charge the time that you actually worked. Those are rules that you have. You have rules about using assets. How do you use the company assets? You must use those for business purposes, those kinds of things. Rules against retaliation, against people, rules against harassment, things like that, that may not rise to the level of being against the law, but within companies, these are things that are ethics and business conduct program are there to identify. Then finally, you have those core values in Lucky. I tell you do what's right, respect others, perform with excellence, you have these values that people aspire to. The idea is if people were living under the core values that you have with your company, then if you're living that way or making your decisions based upon those core values, then you're going to do the things that you should be doing. All those rules that aren't necessarily against the law, but things that the company should be doing and then it follows that if you're doing all those things that you should be doing, then you're definitely going to be doing the things you must do, so you will be following the laws. It cascades down in that way, working from your core values to things that are optional, but based upon your core values, to make sure that you're going to do all the things that you must do as a company. Next slide. These are the foundations of our ethics program. These are foundation, as I already said do what's right, respect others, and perform with excellence. Those are how we define what we do within our company, at least with Lucky. Our core values, our code of conduct, where we put forth all those different things that we should do within our code of conduct, it applies to all of our employees, our board of directors, it applies to any agents that we have for our company, any consultants and anyone else who's representing the corporation for us. We try to make sure that those things are in a nice place where everyone can find them and easy to follow rules. Next slide. Guess what? Lockheed Martin has all of those things that you guys named with regard to these programs. I'm highlighting what our programs is, but we have our code that we have with that. We have training that we put all our employees that they have to go through. We have different reporting methods where they can bring forth the concerns that they have, either anonymously or they call us on phone, show up, slip a note under the door, which we've had that happened before. All of those days where people can report any concerns that they have. We have an awards program or a reward program for employees. We have an ethics award every year where people are nominated and we select someone who exemplifies those core values for us and there's those things. All of those things are things that we have within our program that we feel is an award winning program for ethics and business conduct. Next slide. This is our ethics office role. What we do and my team does as far as what we are there to accomplish for the company and what support we provide. The main thing that I want to point out as Kathy noted earlier is just being that resource for the leaders and employees. If they have issues or concerns, they can come to the ethics office to talk about those. Those are the role that we play as in our ethics office role. But the real key to try to have a good program is having employees who feel that they can come forward. If you have a program where you don't have that speak up culture where people will bring their concerns to someone, it doesn't necessarily even have to be ethics, it could be the leader, it could be legal, it could be security or anyone to bring those concerns, then that's what we serve as that resource, but it's only as good as having people feel comfortable to come forward. Next slide, Kathy. Next. That's the challenge that we have. How do you encourage employees to come forward to voice their values in the workplace? We need everyone's assistance in maintaining an award to maintain an ethics program. We train and encourage our employees to recognize and come forward when they come across ethical issues. Things like in these bubbles here that when they hear things, who should they report them to? What should they do? We encourage that speak up culture. Next slide. As I said, we do have issues that are coming in. I'll just give you some of the types of issues that come to our office that we investigate as far as cases go. Things that have to do with leader interpersonal issues. The leaders coming in and dropping the F-bomb on table, yelling at people, disrespecting people in meetings, things like that. Retaliation, we just talked about. If someone comes in and reports misconduct and then all of a sudden they're being left out of meetings or they're not getting that assignment that they thought they were going to get based upon that. Personal relationships or favoritism. That's what we're talking about some of that conflict of interests issues that people bring to our office. There wasn't a fair hiring. They hire only their friends and neighbors and family or things of that nature. Then sometimes when leaders fail to take action where things are reported to them and they ignore it. They come to us after many opportunities to try and to do that and saying we generally ask, did you go to your leader about this? Yes, we did, but they didn't do anything. Those are things that we can investigate. Then we look on the other side with employee issues. Number 1 investigated allegation is charging practices, or what we call mischarging. As a government contractor, we build the government for the work that we do on their contracts. Obviously, if someone is not doing the work, but they're still billing it, coming in late. They're in for five hours for the day, but they're charging 10. Or they're at work and the types of things they're doing on their computer, they're conducting business on their computer. They have a real estate business and that's what they're doing on a computer or they're going to inappropriate sites, looking a lot of YouTube videos and all of those things instead of working on site. But people are watching and people are reporting those activities. Next slide. Those are just some of the issues that we deal with within our office. It's always different every day. I've never been stagnant in this position because there's always something new that comes through the door, or with the team and what we're doing in our organization. But these are some of the behaviors of what I feel are ethical leader. This is based upon my experience in Lockheed Martin and in military service. These are pretty obvious. You need to be honest, trustworthy, accountable, or at least perceived to be that way. But you need to be those way. You need to have that internal to you. You need to be accessible to your team. You need to be engaged with them. We talked about transparency. Someone mentioned that with regard to ethics programs, but it's also with the individuals. You want to be transparent, to the greatest extent possible to be able to share the reasons why you're making a decision so that you can be transparent with that. The most important is to serve as your employees' champions, have their backs. Those are some of the things that I believe are essential behaviors of ethical leaders. Next slide. Now, I'm going to take you through one of our training modules here. What we do on our training, we try to give people an opportunity to see scenarios, see things that happen, and report those. During our ethics awareness training, we try to guide people in deciding how to come forward. What would be helpful for you in coming forward in that speak-up culture? This is the types of things that we have there based on marriage entails. Giving voice to values book. It talks about asking questions, obtaining more data, talking to others, re-framing the issue, all of those things. But ultimately if that doesn't get you to the resolution that you're looking for, then you report the violations with that. We do that through a series of videos where we have a video that plays and it's all leader led training. We want to have tone at the top. We don't do the ethics training for our employees, we have their leaders do that. They play the video and then they discuss it. They discuss what are the types of days, what kind of issues, concerns did they see, and then they have a resolution video at the end of that. I'm going to take you through one of our scenarios here. If you go to the next slide there. Let's look at Part 1 of complicit or clueless. Hey Sabrina, how are things going, are you settling in? I guess so Burt, it's a lot different than my old job, I'll say that. You'll get used to how things are done around here in no time, I promise. I hope so. Well, I'm here, if you need to ask questions. Thanks Hey, Burt, Sabrina. I need to get back to work. All right. Everything all right? Of course, just trying to find my land legs, so to speak. Sure. In fact, I was wondering if you had the Human Resources Business Partners number by any chance. HR. If you have any problems or questions, you just bring on to me. I just wanted to get a clear picture of what procedure was on a couple of things. Look, I'm here to remove barriers for my team. That's what being a good leader looks like. Now, I've built a good team here and they all respect the chain of command. Sabrina will too soon as she understands that the buck stops with me. Look, if you have any questions about procedure, you just bring them to me. Great. Thank you. Speaking of your value, I'd really like you to put in for a couple of hours of overtime. You were very helpful in helping us with testing last week. I didn't actually go into overtime. It's important to reward people when they outperform. I'm not sure. Hey, trust me. Now, I'll expect to see it in your entries this week. Hey, Rupert. What's that? We have a visit from the ethics office tomorrow. It's just some silly temporary program they're trying to push right now. I'll take them down after they leave. Well, I'm headed out. Thanks again for letting me leave early today. It's really hard to get an appointment with a pediatrician. Hey, it's important to me that your family is healthy. Well, thanks again. Sure. I loved the barbeque area on that deck. I'm taking design notes. Yeah. We put it in last year. I don't know why I waited too long to get it done. We're hoping to put a deck on the house we just purchased, but getting planning to sign off is a nightmare. It'll be winter before we get the okay. My brother-in-law is the town planner. I'll give them a call. You'll have your okay within a week. I couldn't ask you to do that. Don't be silly. I'm happy to do it. Hey, you know what? In fact, we've got some scrap building materials behind the offices. Why don't you have your contractor stop by and see if he can use anything? Isn't that customer material? Look the materials are just sitting there. No one wants them. It'd be nice to have them taken away. Thanks. Great. Another thing I need to ask you to do us a favor. I need you to bypass the safety device. I mean, it's faulty. It goes up all the time and it just freezes things up. Isn't that dangerous? Everyone knows I love my team. I would never let anything happen to them. Isn't that right, Burt? The only danger, I'm in, is overeating. Well, then I better get the rest of the Burgers. I'll be right back. Did you hear that? He wants me to bypass the I don't want to tell you what to do, but I wouldn't get on Rupert's bad side. Look, the customer has called me twice in the last four hours. They are really unhappy about this slowdown. I understand. But the sensor keeps going off, stopping in line. Wait a minute. Didn't I ask Sabrina to take care of that? She said she didn't feel comfortable bypassing a safety device. But she what? Felt comfortable bypassing me? You know, there's more than one way to handle a misbehaving employee. If you can't do with kindness then you can use the stick. Now the team can be an important way to, how do I put this modify non-compliant behavior. If Sabrina can't play nice, then I don't have to either. Look, nobody is getting paid for overtime until this job ships. If you don't like it, you all know who's to blame for it. Can I speak to you? I'm busy. I've been trying to talk to you for days. Fine. I'm here to lodge a complaint. There have been a number of incidents over the past few weeks. Air is being led out of my tires, my lunch is being put in the trash, I'm not getting memos or work orders. Well, you know what? Maybe you should have tried working with us instead of against us. Excuse me? Look. I know you've spoken to HR. They're investigating. But if you think you're going to get me fired, you are wrong. But I didn't want to get anyone fired. You really should have thought harder before you filed a complaint. You do realize that you're in it deeply. Mischarging, stolen government property, taking personal time without reporting it, and violating safety standards. I would think very carefully about what you're going to say during the investigation. Now get out. I didn't want anything. Get out and get back to work. Any issues? So many. Any issues? This is what we do with our teams. They have the leader play the video, you stop the video and then they start having a discussion. Now, I will tell you that these are realistic scenarios that we have for our ethics awareness training. We get them from real cases and things like that. On this one in particular people like it. It's obvious that this one is over the top. Can't be realistic. It's got to be sensationalized, right? I mean, when you look at this and say all those things that were going on. Well, I'll tell you that this was actually a tone-down version of a case that actually happened to one of our Lockheed Martin small sites. All these things that were going on actually did happen. It was an isolated site no senior leadership on-site, small town, everyone knew each other, the leader there was really took over the site for the most part, okay? Then, how do you want to play their residential? Investigation turned up a lot of pretty surprising things that Rupert had been doing for a very long time. We were also afraid of getting on his bad side that we didn't notice how underhanded he was. At one point or another, he'd managed to get all of us to break a rule somewhere and then he was able to hold it over our heads if we complained. Once Sabrina came clean and decided to let the cards fall where they may, sorted a number of us. What was really disturbing was a total breakdown within our team. Had any one of us spoken up, asked for help, research the facts, or communicated with HR or ethics, this whole thing could have been avoided. It's easy to forget that you're not alone and that you have a lot of tools at your disposal. Even if you've already made some bad decisions, it's always better to speak up. Rupert of course is long gone. While this case may seem over the top, unfortunately, something like this really happened. All of the members of this team faced the same question. Should they take action or remain silent? Teamwork and essential element of our success requires trust. Allowing coworkers to share and build upon the knowledge of others in an open collaborative environment. Voicing our values training provides us the techniques that help us maintain that environment. Ask questions, obtain data, reframe the issue and talk to others. Those techniques also include the reporting of violations when necessary. It is to no one's advantage to remain quiet. Issues like those shown in this case can result in the loss of customer trust, contracts, and jobs. Fortunately, Sabrina made the decision to bring her concerns forward and we were able to correct the situation. You have resources to take the same action if necessary. Contact your ethics officer or the corporate ethics helpline for guidance or to report a concern. The job you save may be your own. That's one of our training modules that we go through and we have our leaders three of those for a particular year session, they're talking about different issues that come up. But it's very effective program and we're very proud of it. Thanks again for the time. I'm sorry I went a little bit over with this but really enjoyed the discourse and the discussion that we had here. Thanks again. T.J., as always thank you so much for taking the time and spending a little extra time at work for joining us. We appreciate it very much. We just really want to thank you for taking the time and sharing your stories and being free, open, and transparent about what's going on. Thank you. I always like doing this Kathy. I'm glad you do. Next time I'll give homework though. Sounds good. Thanks a lot. Thanks, T.J.
