2015 Corporate Responsibility Report

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Diversity & Inclusion

At Northrop Grumman, developing our people is more than a strategic priority. It's critical to attracting and retaining talent and shaping a culture of diversity and inclusion that defines our business. We have employees in 50 U.S. states and 25 countries. Our values-based culture creates a workplace that brings together these diverse cultures, backgrounds, skills and experiences.

Equal Pay Assurance We benchmark our salaries by position utilizing external salary surveys. We monitor pay rates to ensure equitable remuneration for women and people of color. Our incentive system is performance-based. Women hold more than 40 percent of executive positions and people of color hold nearly 20 percent of executive positions. Our Corporate Policy Council, the most senior executives of the company, is 38.5 percent female and 15.4 percent people of color.

Equal Employment Opportunity We adhere to Equal Employment Opportunity (EEO) and Affirmative Action (AA) principles and policies and build them into our operations across the company. We develop annual Affirmative Action plans, where applicable, that document specific actions to increase the representation of minorities, women, and people with disabilities, and continually improve our veterans hiring initiatives.

Performance Reviews All employees receive regular performance feedback and are eligible to participate in development programs to enable them to perform effectively in their current positions and to encourage achievement of individual career goals. Employees receive formal performance reviews every 12 to 15 months, based on their hire date within a calendar year and scheduling. In 2015, approximately 96 percent of our employees received an annual performance review, which includes feedback on development needs.

Benefits Our employees who are regularly scheduled to work 20 or more hours per week are eligible for health and welfare benefits under the Northrop Grumman Health Plan, including benefits for domestic partners and transgender benefits. Qualified full-time and part-time employees are eligible for the 401(k) plan, retirement plans, life and disability insurance, education assistance and many other employee benefits.

Agency Complaints In 2015, external agencies logged 31 complaints of discrimination across the company. We investigate all such complaints and take appropriate action. Of these complaints, we closed 13, with 18 still open/pending as of Dec. 31, 2015.

Perfect Rating

We achieved a perfect 100 point rating on the Disability Equality Index "Best Places to Work"

Collective Bargaining Currently, collective bargaining agreements cover approximately 5 percent of Northrop Grumman employees. At Northrop Grumman facilities, our employees are free to exercise their rights of freedom of association and collective bargaining.

2015 Diversity and Inclusion Goals & Performance Summary

Goal Create an inclusive work environment that fosters creativity and innovation and promotes colleague engagement through awareness and inclusive leadership skills training.

Performance In 2015, in support of fostering an inclusive environment, we launched a newly designed Employee Engagement & Inclusion Survey. The results provided managers with new insight to engage employees and discuss diversity and inclusion. Our Employee Resource Groups continued to show strong growth. We launched a global women’s network that expands outreach and development efforts for women.

Goal Increase representation of women and people of color in leadership positions as benchmarked against labor market recruitment census and availability data. Increase the representation of veterans and people with disabilities.

Performance In 2015, we launched a new, five-year diversity plan based on our analysis of current and projected population benchmarks. In 2014, we achieved modest growth in almost all areas. Female leaders increased from 23.8 percent in 2014 to 24.5 percent in 2015. People of color in leadership increased from 20 percent in 2014 to 21 percent in 2015. In 2015, more than 50 percent of college hires were diverse or female candidates, strengthening our future leaders' pipeline. Our Persons with Disabilities representation in our overall population increased from 4.8 percent in 2014 to 5.4 percent in 2015. We also observed an increase in our overall veterans population from 19.8 percent in 2014 to 20.4 percent in 2015. In 2015, Persons with Disabilities made up 10.2 percent of our hires and veterans made up 26.6 percent of all hires.

Goal Engage various external stakeholder groups that support and serve Northrop Grumman’s values and interests in recruiting, developing and recognizing a diverse workforce and contracting with diverse suppliers.

Performance We continued to partner with many external organizations in support of the development and growth of diverse talent. In 2015, we attended 12 diversity conferences to recruit new diverse employees and develop STEM talent. We won awards from various LGBT organizations and were named a top company for executive women. We achieved a perfect 100 point rating on the Disability Equality Index “Best Places to Work for Individuals with Disabilities.” To strengthen our partnerships, senior leaders spoke at conferences such as Women in National Security Careers.