Until recently, a top-down management style was the norm  at Lockheed Martin Aeronautics Co. The defense contractor mirrored the culture of its key customer, the military. But now the 67-year-old defense plant—a fixture on the Fort Worth scene since World War II—is updating its image.

The change-maker moving the behemoth toward an enlightened future is Ralph Heath. Heath is executive vice president of Lockheed Martin Aeronautics, a unit of Lockheed Martin Corp. that is based in Maryland, but has nearly 15,000 of its 28,000 workers in Fort Worth.

Heath spent most of his 34 years in the industry under a hierarchical regime. He doesn’t pine for the past, though. Instead, he espouses a new culture of engagement, balance, and dignity. Orders from on high are out; civility is in. During a recent company webcast he took unfiltered, live questions from workers, something that would have been unheard of just a few years ago.

But the white-haired Heath, 60, isn’t becoming soft as he ages. He sees a competitive advantage in changing Lockheed’s culture. CEOs should listen up, he says—though he hopes his competitors aren’t paying attention.

“It’s critical to long-term survival and success,” Heath says of the culture shift. “Absent this, employees are going to have choices over time.” The change is especially critical when you look at the average age of an LMA worker: about 50. Retirements will abound in the coming years, and Lockheed must appeal to a younger mindset.

The company hopes to do that with attractive benefits: an onsite Starbucks, a renovated cafeteria  where chefs cook orders to specification, and a fitness club with a massage therapist. It’s even begun “enforcing” its 9/80 work schedule, whereby employees work 80 hours over a 9-day period, then take every other Friday off. (The benefit has been around awhile, but many had feared taking the day off.)
Lockheed is also getting serious about flexible schedules and telecommuting when it makes sense.

June Shrewsbury, executive vice president of company integration, recalls how Heath nudged his leadership team toward the new norms. Heath gave leaders six months to demonstrate their commitment to change and to show what they were doing to move forward.

During that time, Shrewsbury interviewed a cross-section of the people she supervised. She learned, to her chagrin, that some found her inaccessible. So she made two changes that have paid big dividends:  She now has office hours from 7:30 to 8:30 every morning, and she travels to the sites she oversees once a week rather than once a month.

Heath says a big bump in employee satisfaction reported in a 2008 worker survey indicates employees like the new culture, which he says is still evolving. Retention and productivity also are up. Just 1.48 percent of LMA workers left voluntarily in 2009, below the industry average of 4 percent.