HACKETT PERSPECTIVE

August 26, 2005 Human Resources: Best Practice For Current Members of Executive Advisory Programs Only

LOCKHEED MARTIN AND GEORGIA-PACIFIC LEVERAGE DIVERSITY AS A KEY ENABLER OF TALENT MANAGEMENT
I. Executive Summary
With the demographic time-bomb ticking, leading organizations are radically rethinking how they attract and retain talent. Pivotal to this is recognition that diversity is both a recruitment dierentiator and a way to broaden the talent pool. Research nds that a world-class diversity program implementation drives substantial dollar benets to the bottom line. This Hackett Perspective showcases two organizations that are trailblazing best-practice approaches to diversity management: the 130,000-employee-strong advanced technology systems integrator Lockheed Martin, and Georgia-Pacic, which employs about 55,000 people in the manufacture of tissue, packaging, paper, building products, pulp and related chemicals. The contents of this paper are based on moderated discussions that took place at The Hackett Groups 2005 Best Practice Conference, held in Atlanta this past spring.
With more than 300 locations and 55,000 employees in North America and Europe, Atlanta-based GeorgiaPacic which had over $20 billion in sales in 2004 is one of the worlds leading manufacturers and marketers of tissue, packaging, paper, building products and related chemicals.
Texanna M. Reeves, Group Manager Workforce Strategies & Programs for Georgia-Pacic Corporation, manages the group whose key objective is to develop strategies and programs that attract, develop and retain talent while managing the diversity initiatives for the corporation. She leads the cross-functional, cross-division Corporate Diversity Council which is responsible for integrating the diversity initiatives into the business.

II. Lockheed Martin

For Lockheed Martin the challenge is crystal clear. Although top-line employee population growth will, in the coming years, be no more than 1% to 2% annually, an aging workforce means the corporation will need about 34,000 new hires over the next two years. This rises to 90,000 over a 10-year period. Indeed, fully 19% of employees are eligible to retire today. The role of diversity and teamwork Maureen Lee, Director, Diversity Workforce Management, places the recruitment need into a wider workplace context. We must attract new talent within a shrinking employee pool and with declining enrollment trends for critical capabilities such as engineering.
Headquartered in Bethesda, Md., Lockheed Martin employs about 130,000 people worldwide and is principally engaged in the research, design, development, manufacture and integration of advanced technology systems, products and services. The corporation reported 2004 sales of $5.5 billion.
Maurine Lee, Director Workforce Diversity and Management, has responsibilities for the development and implementation of the comprehensive, enterprise-wide diversity strategy, programs and policies that support and enhance the organizations core business strategies worldwide, including a focus on the recruitment, development and retention of top talent for a diverse workforce, as well as the positioning of Lockheed Martin as an Employer of Choice among prospective/ current employees.
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2005 The Hackett Group: World-Class Dened. All rights reserved. Reproduction of this document or any portion thereof is strictly prohibited. Distribution of Hackett Group Process Advisory Programs research is limited to current program members.

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The company boasts about 50,000 scientists and about 20,000 engineers. Replacing such talent, Lee says, requires that aggressive talent management strategies be put in place today not least around diversity. To secure competitive advantage going forward, we must become a recognized employee of choice for people of all shapes, colors, perspectives, ages, religions and nationalities, she says. Note the word perspectives. Central to the diversity strategy, is a commitment to reap the benets from each employees unique talents and views. This is captured in Lockheed Martins denition of diversity: Diversity is an inclusive team that values and leverages each persons individuality. Crucially, these individual capabilities coalesce around a common vision: One company, one team, all-inclusive, where diversity contributes to mission success. Lee stresses that diversity management is not just about attracting and retaining the best from dierent backgrounds, but about assembling diverse talent that can work together as one team. Enhanced teamwork leads to superior performance, productivity and innovation. This then leads to stakeholder satisfaction and competitive advantage. Indeed, teamwork is one of the core organizational values that serve as the foundation of the Lockheed Martin diversity journey; the others being ethics, excellence, can-do attitude, integrity and people. A business-driven diversity approach Engaging the entire organization in the diversity journey began in 2003 with the formation of the Corporate Executive Diversity Council, led by CEO Bob Stevens. Commitment and accountability at the very top of the organization has really helped drive the diversity agenda company-wide, explains Lee. process. Chaired by Stevens, the Corporate Executive Diversity Council comprises presidents and vice-presidents from Lockheed Martins six operating divisions. Collectively there are about 40 business units across the divisions. Each unit has its own diversity council, which reports progress to the divisions and then to the corporate level council. Additionally, beneath the business-unit diversity councils, there are numerous anity groups, such as for the physically challenged, driving specic
Figure 1 shows the enterprise-wide engagement

FIG. 1 Lockheed Martins business-driven diversity approach Board of Directors Executive Management Committee Executive Council Corporate Executive Diversity Council

Aeronautics Integrated Systems and Solutions Space Systems Electronic Systems Information Technology Services Corporate

Business Unit Diversity Councils

Source: Lockheed Martin

2005 The Hackett Group: World-Class Dened. All rights reserved. Reproduction of this document or any portion thereof is strictly prohibited. Distribution of Hackett Group Process Advisory Programs research is limited to current program members.

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diversity initiatives. Lee comments that substantial amounts of activity deep within the units pose some diculties. We have to keep communication owing between that grassroots level and the corporate executive diversity council. For a large organization, this is not an inconsiderable challenge. As just one example of a current diversity initiative, several cross-functional teams are exploring ways to address cross-generational issues. Over the last few years weve aggressively recruited talent from various universities, says Lee. We are now blending these new hires with a maturing workforce. Given the age dierences, we nd that they dont always talk the same language. So were working hard to put in place practices to overcome these challenges and create the one-team mindset. Other initiatives include further ingraining a diversity mentoring culture, leveraging a K-12 outreach focus, ongoing diversity education and dialogue, and maintaining and enhancing supplier diversity programmes. Measuring diversity A diversity measurement process was introduced at Lockheed Martin in 2004. This included an employee diversity survey; self-assessment at the business unit level and a peer review of all the assessments. This provided an overall diversity number against a ve-level maturity model: Level 1: Foundation Level 2: Enlightened Level 3: Embraced Level 4: Integrated Level 5: Institutionalized inclusion Lee says that, being a process-driven organization, the measurement approach was well received by the employee base. The organization can also see the road ahead. Now that we have the baseline gure, we will set goals and measure progress over time, Lee concludes.

FIG. 2 Georgia-Pacics diversity program design and implementation

Values/Visions
Communication Recognition & Reward

CEO

Business Plans Training/Development Mentor Programs Work/Life Programs

tive s

Diversity Key Drivers

Leadership Workforce Marketplace Community

Ini

tiat

Init ia

Role Models Diversity Champions

Strategy/Tactics
Workforce Strategies & Programs Diversity Councils

ive s

Performance Management Diversity Measurements

Source: Georgia-Pacic

III. Georgia-Pacic
A measure of the progress being made at GeorgiaPacic is its 2005 receipt of a Catalyst Award, presented to organizations furthering the advancement of women. In 2001, Georgia-Pacic launched a diversity initiative called, Bridging Cultures, Leveraging Dier 2005 The Hackett Group: World-Class Dened. All rights reserved. Reproduction of this document or any portion thereof is strictly prohibited. Distribution of Hackett Group Process Advisory Programs research is limited to current program members. 2000002

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ences. The initiative has increased the representation of women in the pipeline and at senior levels within the organization. In industries that are traditionally heavily male-oriented, G-P has increased the number of women at the Executive Vice President level from 9% to 29% and representation of women at the President/Vice President level is up from 11% to 17%. Lastly, at the Senior Director/Director/Controller level numbers have risen from 22% to 30%. Uniting dierent capabilities Texanna M. Reeves, Georgia-Pacics Group Manager for Workforce Strategies and Programs, says that the Catalyst Award is an acknowledgement of signicant progress thus far, but, this is a diversity journey and we havent, as yet, reached our destination. Since beginning its journey, Georgia-Pacic has been driving the message that diversity is more than just the balancing of gender, race, age and physical abilities. This, explains Reeves, is just the tip of the iceberg. Diversity is also about, as examples, the talents, education, life experiences and heritage of the workforce. We must embrace and leverage the similarities and dierences so that everyone contributes to their full potential. Capitalizing on this wealth of resources is done by creating a common ground where dierent capabilities can unite. This common ground is illustrated through Georgia-Pacics diversity model, as seen is Figure 2. At the core are four diversity key drivers: Leadership Weaving diversity into the core of the business. Workforce Taking full advantage of the diverse labor pool to source top talent. Marketplace Enhancing the Georgia-Pacic brand and improving the companys position in the emerging markets, especially the women and minority markets. Community Being good corporate citizens. Steering the implementation of the model is a functional cross-division corporate diversity council, led by Reeves. Crucial for its success, she says, is that the councils representatives are senior executives. Having a VP on the corporate council means they can then drive the integration of our diversity plans within their business. Councils at divisional and

FIG. 3 Percent of companies where senior HR executives tie business strategy with people strategy, 2004
100% 100%

75 60% 50
67%

25

Peer Group

World-Class

Source: The Hackett Group 2004 Book of Numbers Research Series: Performance Metrics and Practices of World-Class Human Resources Organizations

100% 86% 75 48%

84%

50

25

Peer Group

World-Class

2005 The Hackett Group: World-Class Dened. All rights reserved. Reproduction of this document or any portion thereof is strictly prohibited. Distribution of Hackett Group Process Advisory Programs research is limited to current program members.

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Peer Group

World-Class

location levels support the corporate council. Its very much a cascading type of approach in which were holding every level accountable for diversity, says Reeves. Although a vertical cascade, the key to leveraging diversity for competitive advantage is horizontal, cross-functional and indeed cross-business unit teaming. Simply put, given that dierent businesses target dierent markets, Georgia-Pacic is a very decentralized organization. Therefore, the diversity strategy includes the development of very business-specic plans. However, uniting all of this is a powerful, overall theme of inclusiveness. Dierent types of thinking stem from dierent dimensions of diversity. We want those dierent perspectives to solve problems and help the organization be more innovative. The utilization of cross-functional teams will help make this happen, Reeves says. Georgia-Pacic is looking to capitalize on diverse thinking by using the diversity councils and teams as catalysts to creating a culture of inclusion by sharing ideas and experiences. Such sharing is encouraged through the organizations well-established mentoring circles, which are generally cross-divisional. These circles are typically job-specic, such as sales, but must be inclusive in that all are groups are fairly represented. Mentoring and showcasing success There are also circles aimed at encouraging the progression of under-represented groups. Progression is further steered through various leadership forums, such as a women leadership forum and a minority leadership forum. These forums help to identify, and remove, barriers to advancement and to showcase successes and role models. Showcasing is also central to Georgia-Pacifics Women of Achievement program, which Reeve says has been essential for attracting women to untraditional roles such as a plant manager in a paper mill, for instance. Being able to show that women can succeed in traditionally male industries certainly inspires other women to aim for these positions, Reeves says. Evaluating the success of the Women of Achievement program is largely done by looking at the number of women assuming such positions. And a diversity climate survey assesses how the working environment enables the progression of women, and other groups.

FIG. 4 Percent of companies where an explicit workforce strategy has been articulated, 2004
100% 86% 75 48%
84%

50

25

Peer Group

World-Class

Source: The Hackett Group 2004 Book of Numbers Research Series: Performance Metrics and Practices of World-Class Human Resources Organizations

2005 The Hackett Group: World-Class Dened. All rights reserved. Reproduction of this document or any portion thereof is strictly prohibited. Distribution of Hackett Group Process Advisory Programs research is limited to current program members.

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The climate survey is embedded within a wider employee survey which is enterprise-wide and independently conducted. The diversity questions are over-sampled to ensure an accurate workforce representation and the overall climate results are compared to the ndings from the sampled women and minority groups. Remedial actions are taken to address any negative disparities. The most recent diversity survey found that 88% of the Georgia-Pacic workforce understands the business case for diversity. A diversity scorecard also tracks progress against the four key focus areas. This holds departmental and group leaders responsible for driving the diversity agenda. Year-over-year results are reported, compared and acted upon. We are really getting the message across that diversity is a competitive advantage, because its about attracting and keeping talent. And in the nal analysis, as long as theyre talented, we dont care how people look or what shape they come in, says Reeves.

Technitrol Develops Eective Retention Strategy for Employees in China to Cope with Growth and Competitive Pressures, June 6, 2005 (2000001) Despite Being a Hackett-Certied Practice, Employee Training Remains on the Back Burner at Most Companies, January 19, 2005 (1700010)

About the Authors

STEPHEN JOYCE

Senior Business Advisor, The Hackett Group

Mr. Joyce has 23 years of experience in information systems and human resources, with four years experience as managing director of the PeopleSoft Solutions group within Answerthink, parent company of The Hackett Group. Mr. Joyce possesses significant expertise leading and managing the implementation of PeopleSoft HRMS application software packages. An expert in guiding senior executives through business process reengineering programs, Mr. Joyce previously served as Vice President, HR Information Systems; Vice President, Compensation and Benefits; and HR Generalist at a major East Coast investment company.

IV. Key Performance Metrics

All world-class companies align their people strategy with their business strategy, enabling more eective recruiting, stang, training and succession planning 67% more than peers (Fig. 3). Consistent with this forward-looking approach, worldclass organizations are 84% more likely to formulate an explicit workforce strategy, with a clear plan for execution (Fig. 4).

JAMES CREELMAN Senior Business Advisor, The Hackett Group

James Creelman is the author of numerous management reports covering subjects such as the Balanced Scorecard, nance and human resources best practices, shared services and corporate culture. His research, advisory and speaking activities require him to travel extensively throughout the world. Presently, he is conducting research into corporate governance practices and new approaches to budgeting and forecasting.

V. Looking Ahead
Both Lockheed Martin and Georgia-Pacic are setting the benchmarks for leveraging diversity for competitive advantage. Observations by Senior Hackett Business Advisors conrm that going forward, the proactive driving of diversity initiatives will become a central component of successful talent management strategies. Demographics will simply demand this.

VI. Related Hackett Research

The Hackett Group 2004 Book of Numbers Research Series: Performance Metrics of WorldClass Human Resources Organizations The Eective Execution of Business Strategy Differentiates Best Practice Companies, June 8, 2005 (1600026)
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2005 The Hackett Group: World-Class Dened. All rights reserved. Reproduction of this document or any portion thereof is strictly prohibited. Distribution of Hackett Group Process Advisory Programs research is limited to current program members.

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ABOUT THE HACKETT GROUP

The Hackett Group, a business process advisory rm, is a world leader in best practice research, benchmarking, and advisory services that empower executives to achieve world-class enterprise performance. Hackett offers analysis and insight backed by metrics derived from 3,300 benchmark studies over 13 years at nearly 2,000 of the worlds leading companies, including 93% of the Dow Jones Industrials.

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2005 The Hackett Group: World-Class Dened. All rights reserved. Reproduction of this document or any portion thereof is strictly prohibited. Distribution of Hackett Group Process Advisory Programs research is limited to current program members.

2000002

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