Equal pay on a global scale

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Geneva-based Philip Morris International strove to ensure its operations around the world could be certified as paying men and women equally

The organisation

Originally founded in 1847 as a London-based tobacconist by entrepreneur Philip Morris, Philip Morris International (PMI) has since grown into one of the largest producers of cigarettes, employing 77,000 staff worldwide. Today it owns some of the most recognisable tobacco brands, including Marlboro, Benson & Hedges, L&M and Bond Street (the latter a nod to the street where the founder’s first shop was located).

Smoking is now responsible for around 7 million deaths per year, so the company has consistently locked horns with numerous national governments over advertising bans and plain packaging requirements. But in a dramatic break from the past (and despite 87% of its business coming directly from lit cigarettes), in January 2018 PMI announced that its new corporate vision was to create a ‘smoke-free future’. So far it has invested more than £4.5 billion in developing alternative cigarette products from its international R&D HQ based in Geneva.

The challenge

A key plank of PMI’s intended transition from cigarettes to alternative smoking products is to commit to also being an inclusive gender-balanced workplace. This includes a target of 40% of women in management roles by 2022 and a 50:50 gender split for its recruitment pipeline.

Included in this is a desire to reduce the pay gap between men and women, which has been led from the top by CEO André Calantzopoulos. Eighteen months ago he decided PMI would pledge to become the world’s first globally-certified ‘Equal-Salary employer’, as defined by the Equal-Salary Foundation (ESF).

The ESF is an independent not-for-profit- foundation created in 2010 in collaboration with the University of Geneva. It is now supported by the Swiss government’s Federal Office for Gender Equality.

The strategy

This project has been one of the core diversity and inclusion undertakings of Melissa Whiting, PMI’s Switzerland-based vice president of inclusion and diversity.

“With a corporate strategy effectively demanding a move from being a manufacturer to a science and technology business, we need to make sure we have the talent to be able to do this across the world,” says Whiting. “Improving gender pay gaps was where we thought we could make the biggest difference here, as what gets reported tends to get done.”

The methodology involves the ESF analysing wage data to see if differences are less than or equal to 5%, followed up by site visits by PwC to discover if there is any bias and to establish equality commitments.

PMI in Switzerland had already become Equal-Salary certified in 2015, and in 2016 the firm decided to also see if the methodology would work in Japan. “At that point we could have just decided to roll out a few more countries each year, but the decision was taken to take it worldwide over the next 18 months,” says Whiting.

Even though data collection is a dispassionate process, Whiting acknowledges that defining equal pay was daunting – especially at a global level: “There were definitely some basics we had to tackle first; like the fact we employ people who are clearly paid more than others doing the same job because there are performance-related elements built into their role.”

She adds: “When delving deeper we actually uncovered areas where we felt it likely that pay gaps would occur – for instance in some parts of the world it’s not uncommon for women to take two to four years off for maternity, but during this time they weren’t getting automatic pay rises.”

She says she also had to redefine what ‘equal work’ was (“a complex measure” she admits), which involved looking more closely at how roles were graded, according to which skills and competencies staff demonstrated.

The result

On 4 March 2019 PMI was formally certified globally as an Equal-Salary company, having been assessed worldwide by the Equal-Salary Foundation and it being satisfied the organisation now had robust policies in place for ensuring equal pay for equal work.

“As per our research, one immediate quick fix was to eliminate the practice of women not getting automatic pay rises while they’re away from the business on maternity,” says Whiting. “But we’ve also changed other policies too.

For instance: we no longer automatically give men and women we poach a 10% pay rise because the 10% given to the woman would just perpetuate existing pay differences. We now look at paying people the going grade rate, regardless of what they were being paid before.”

Although the firm is tight-lipped on the number of people who have been given pay rises, or what doing this exercise is likely to add to the wage bill, Whiting says employees have already indicated their gratitude at knowing they are part of a business that officially pays equally. “The result of this process has been some key learnings – that you can’t take gender equality for granted,” she says. “Although we passed each step of the auditing process along the way it wasn’t a given that we’d pass. But now that we have, looking forward we’re interested in seeing the difference this makes to our talent attraction and retention statistics.”

She adds: “Demonstrating our equal pay status to graduates will become one of the facets that sets us apart. But we’re humbled to have got this far and we’re also very aware we’ve still got a long way to go – especially in closing our gender talent gaps. This is very much just the start of the process.”

This piece appeared in the May 2019 issue. Subscribe today to have all our latest articles delivered right to your desk

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