Martin Marietta CaseStudy

Topics: Ethics, Business ethics, Compliance and ethics program Pages: 9 (1998 words) Published: June 21, 2015
Executive Summary
“Martin Marietta ethics program was one facet of an effort to create and maintain a “do-it-right” climate at a time when the defense industry was facing serious attacks from the government and the public for fraud and mismanagement” (Paine, Choy, & Santoro, 2004, p. 2). During the 1980s, there was an increase in defense spending as allegations of contract fraud often made headlines. To protect itself, Martin Marietta in addition to 18 other defense organizations worked together to form Defense Industry Initiative on Business Ethics and Conduct. In 1991, Martin Marietta’s corporate office received 9,625 calls concerning corporate ethics with 572 of the reported cases recorded as alleged questionable behavior (Paine et al., 2004). This paper will analyze two problems faced by Martin Marietta, which are employees’ fear of retribution and how to assess the program’s effectiveness. Martin Marietta needs to re-evaluate its policies and procedures and incorporate a zero tolerance on retaliation. Effectiveness of the ethics program will be measured by the evaluation of each report and whether it was handled according to the guidelines set forth in the policies. Effectiveness will also be measured by the ease of use of the reporting tools utilized by management and associates. Problems

Martin Marietta was experiencing two problems with their ethics program. One problem was among the employees. They were apprehensive about reporting ethical issues because they were afraid of retaliation. When employees are afraid to come forward and report suspicious or unethical behavior, this decreases the effectiveness of the ethics program.

The second problem is how to measure the effectiveness of the ethics program. Martin Marietta realized they could measure the number of reports and the actions taken to correct the behavior, but they still had issues with measuring how well the program was working across the board. Features of the Program

Like most codes of ethics, Martin Marietta included topics such as conflicts of interest, accurate record keeping, gifts and entertainment, insider trading, antitrust law, and political contributions (Paine et al., 2004). Signatures of employees denoted that they had read and acknowledged the code of ethics. For executives, ethics was included within their incentive and rewards plans. “The code was later supplemented by a publication providing examples to help employees interpret the standards of conduct and make decisions in the ‘gray areas’” (Paine et al., 2004, p. 3). There was also a period of training for the employees on how the designed program worked if used appropriately by everyone.

For employees who were concerned about confidentiality, there was an option to call a toll-free line, which went straight to the corporate office. The company tried to address all concerns and come to a decision within 60 days. Cases that took more than 60 days to resolve, but less than 90 days, were passed on to local management. All cases taking more than 90 days were referred to the ethics office. Effectiveness of the Program

The ethics program at Martin Marietta has had a positive effect. It has created protection for the employees and the company alike. In the interest of the employees, it offered a way to address concerns as to how management may have handled a certain situation. This gave the employees an active voice in the company. For the company, the program was a way to hold everyone accountable in the hope of maintaining honesty and fairness in all dealings.

Exhibit 3 denotes the number of allegations during the period between 1985 and 1991. There seemed to be little change in the number of anonymously reported allegations, which shows that some employees still feared some retaliation. Nevertheless, there was some positive movement. The company also compared their own data to that of other companies which was not a very effective way to benchmark the...

References: Johnson, C. E. (2012). Organizational Ethics: A Practical Approach. Thousand Oaks: SAGE Publications.
Paine, L. S., Choy, A., & Santoro, M. (2004, August 17). Martin Marietta: Managing corporate ethics (A). Harvard Business School.
Top 10 Benefits of Business Ethics Programs. (2013, January 30). Retrieved from C Suite Mentor: http://csuitementor.wordpress.com/2013/01/30/top-10-benefits-of-business-ethics-program/
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