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Lockheed's scandal: A lesson for the rest of us

I can only imagine the anger and shock that went through Lockheed Martin last week as the company fired heir-apparent Christopher Kubasik for having an affair with another Lockheed employee.

Kubasik was the president and chief operating officer and was slated to become CEO on Jan. 1, replacing Robert Stevens, who would remain chairman for another year, when presumably Kubasik would take over that position as well.

That plan was months, if not years in the making, as Kubasik continually took on larger roles including chief financial offer.

But all that blew up in October when another Lockheed employee alerted officials to the relationship and an investigation was conducted.

The news broke coincidentally on the same day that Gen. David Petraeus resigned from the CIA for the same reason. That’s probably the only bit of luck Lockheed Martin has had in this matter. Petraeus is huge news and knocked Lockheed Martin off the front page.

Not knowing Kubasik or what kind of person he is or any other particulars, I’m going to resist the arm chair psychology of why he did what he did.

Instead, let’s look at Lockheed and how they reacted. There are lessons that any company, public or private, can learn from.

The most obvious is the speed with which the company reacted. An investigation was held and the company took decisive action.

But the greater lesson is in succession planning.

Marillynn Hewson, who had been running Lockheed’s electronics’ sector, was slated to take Kubasik’s COO and president position on Jan. 1. She’ll now become CEO instead.

 The fact that the company had someone of her caliber, experience and knowledge of the company waiting in the wings is more than just luck.

Hewson has been part of the company since 1982, and as the leader of the electronics business she oversaw a business unit with $14.6 billion in sales and 45,500 employees.

Not a shabby replacement.

Despite the phenomenon of the past decade or so of celebrity CEOs – think Jack Welch and Steve Jobs – one person does not make a company.

So the lesson here is that companies need to prepare. The fact that Hewson comes in as CEO on Jan. 1 and not as acting or interim CEO is critical for Lockheed. It has to be immensely reassuring to customers, employees and, of course, investors.

Lockheed and the rest of the defense industry are in the midst of a dramatic shift in its market as the global defense market faces severe reductions in defense spending.

Any weakness will only get compounded.

Any CEO of any company needs to look down the ranks and feel confident that there are one or more people that can step up. That should be a goal when filling those top C-suite positions. Is this person a future CEO? If the answer is No, then don’t hire them.

So while I’m sure there is a lot of embarrassment and regrets and second-guessing at Lockheed headquarters, there should also be a touch of pride.

The company and its board moved decisively. Lockheed will have a strong, proven leader at the helm as Stevens moves out of the executive suite. Of course, he’s staying on for a while as executive chairman to help with the Hewson’s transition.

Hewson will have challenges ahead as the leader of the largest defense company in the world, but they’ll have nothing to do with the scandal that elevated her to CEO. That’s not a reflection of her qualifications.

 

Posted by Nick Wakeman on Nov 12, 2012 at 7:24 PM


Reader Comments

Thu, Nov 15, 2012 Bill's 3rd grade English teacher Rockville Elementary

Bill, what did I tell you repeatedly as a child? We only use the word "since" to comparatively measure time. You should have used the word to "because" or "as" to denote causation.

Wed, Nov 14, 2012 joebob lughead Denver

As a LM employee, I am anxiously looking forward to the next Ethics Training video which will feature Bob Stevens tellin us just how important Ethics is to LM. Thanks a bunch Chris. I hope you choke on your 3.5 million.

Tue, Nov 13, 2012 Bill Rockville

When you post anti-LM comments, purporting to be Australian, it helps if English appears to be your 1st language. Since it isn't you'll pardon us if we ignore your comment.

Tue, Nov 13, 2012 Fort Worth

I second what Zardoz said. Everyone here is talking about Kubasik's separation pay and comparing it with the fact that the rest of us would have been fired without receiving a dime.

Tue, Nov 13, 2012 Zardoz Ft. Worth

Nick .... the only anger and shock that went through Lockheed Martin last week was when the employees found out that he was getting a $3.5 mil dollar parting gift and 18 months insurance along with his vested stock options

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