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Talking About Equal Pay

“I would not accept to work in a company where women and men are paid differently”

by Natascha Zeljko

Philip Morris is the first multinational corporate in Germany to get the „Equal Salary Certification“. Laurent Martenet, the Director People & Culture in Germany & Austria explains what drives the company and why he wants to encourage his fellow HR professionals to follow his example

In March this year you received the “Equal Salary Certification”. What is your take on this? Why is it that important to have this certificate?

All the statistics show,that a business, that is diverse and inclusive, is much more innovative. Such a modelgets us a clearer understanding of the consumer as well as higher engagement within the company. Diverse teams bring better outcomes, although it is definitely more difficult to manage such teams, in comparison tohomogenous ones. However,if you look at the balance, the company is more profitable. At the moment we are experiencing the biggest transformation – not just within the tobacco industry, but overall.

To be successful in this shift towards a science and technology leader offering alternatives to adults who smoke, diversity is key. This has been really clear for a long time here at Philip Morris. If you don’t have a diverse and inclusive workforce, which is mirroring the consumers, you simply won’t succeed. Besides, I personally would not accept to work in a company where women and men are paid differently. This is unacceptable in today’s world and this is why the certificate is so important to us.

The upsides of a diverse workplace are obvious. Why aren’t other companies following?

Overall, I can see that in Germany and in Europe more and more companies are talking about diversity and inclusion. So at least the topic is on the agenda of management teams now. At the same time, for a lot of companies those topics remain in the boardroom or on a nice poster. What is missing, is the dedication to really go through the thorough process, just like we did it here, at Philip Morris.

Getting this certificate requires a lot more commitment. You have to take a look at everything, at all the HR processes within the company. From this perspective, it is clear that other companies might not have the means or theresources to look at everything as we did within Philip Morris, because it goes beyond pure calculations or quantitative aspect. It’s more than that, it’s a genuine, full examination of the whole HR practices sector.

Speaking of the certificate, what are criteria for obtaining it?

Philip Morris is the first company,which is globally certified with an equal salary certification.

The Certificate covers PMI’s operations in 91 affiliates and over 80,000 employees. Out of the 91 affiliates, 46 have also been “locally certified ” to put an emphasis on the country’s operations.

Philip Morris Germany is one of them and the first ever certified multinational company in Germany and I’m very proud of that. The audit is done by PricewaterhouseCoopers (PwC), the EQUAL-SALARY Foundation’s entrusted auditor. For us it was very important to ensure, that someone does look at our practices and the criteria rigorously. It’s a two-fold matter. One fold is a quantitative assessment. We give out the data on salary ofall our employees andthen they check if there are variances. If there are, they come back and ask questions. You have to explain each individual case. To give you an example: In Germany, we had 27 cases, where we had to go back, analyse the details and check everything.

“As an HR professional, I’ve been talking about diversity and inclusion for years. Yet you still learn new things that you didn’t know before”

So, the process is really thorough, and it takes a great amount of work. Although the quantitative part might be the easiest, the qualitative assessment is even more demanding. The auditors are interviewing the whole organization. First,they had an interview with the Managing Director and HR Director to ensure themanagement is committed towards diversity and inclusion. Additionally, the topic has been reviewed in the leadership team meeting.

Then, they conduct focus groups talks with female employees to see if our commitment is functioning within the organization – if we walk the talk. Finally, the last part is an evaluation of allour HR policies and practices,in order to see whether there is unconscious bias. It’s areally complex assessment. I also find it very interesting. As an HR professional, I’ve been talking about diversity and inclusion for years. Yet you still learn new things that you didn’t know before.

That might get philosophical now, but in which way is equality really fair? Two different people doing the same job are not performing compulsory equally. How do you tackle this?

Good question. We are led by meritocracy. That’s a principle which we would never jeopardize within Philip Morris. This is indeed taken into consideration in the assessment. That means that people who are performing well, get a higher salary due to better performance. And,by the way, it also happens that you have to adjust male salaries. It works in both directions.

“We’re doing all that not only for our company, we want to be a role-model for other companies and make a difference in our society”

Does the certificate pay off? Are you seeing an effect in the sense of getting more applications? Do people recognize this?

I think I see two positive effects, first of all internally. Inside the company, the certification helps us tremendously to have a better discussion and commitment about diversity and inclusion. There are some projects, which startedout of the certification process. And obviously, this is felt and seen by our employees and by default been spread into the external world – because our best ambassadors are our employees. And yes, it had a positive impact on our applications or interest in the company.

So, it did pay off both internally,to have a broader discussion within the organization, and externally as well. But an important point I want to mention, is that we’re doing all that not only for our company, we want to be a role-model for other companies and make a difference in our society.

In Germany we still face a big gender pay gap with 21 % which hasn’t reduced significantly. What could companies do, in order to decrease the gap, besides getting the certificate – and where do you see the role of political regulation?

From the companies’ perspective, I think we need to make sure that there’s a shift of mindset in the corporation and the management teams in different offices. It should also be a task for the supervisory board. For an HR professional, it is not acceptable to pay men and women differently for equal work. This requires a real change in the company’s culture and its policy.

Therefore, we are hosting an event in cooperation with Global Digital Women on the 4thof December dedicated to equal pay – it’s a call for action for other companies to join us. We would love to share our learnings, because other companies may not have the resources to follow our example, but we can provide themwith tips and insights. From the government perspective, I think it’s essential that we have a policy for diversity and that we rethink old-fashioned regulations.

“For an HR professional, it is not acceptable to pay men and women differently for equal work. This requires a real change in the company’s culture and its policy”

One Example is the fact that you need to have an eleven hour break between one working day and the other. For working mums and dads who have a break in the afternoon to look after their kids and work for two, three hours in the evening, this is an unnecessary barrier in regards their flexibility that fits their needs. But political regulation can only help to a certain point. If you don’t have a cultural change within the corporations, then political institutions will never get there. Even small things can make a difference. For example, last year we launched something we call a “family office”. It’s a separate working place in a mini chalet with a playground for kids. It doesn’t cost much, but it brings a lot of value to our employees.

One point in the discussion about pay gap is the fact that women tend to work in less paid jobs or work part-time. What can we do to level this problem?

I think part-time is something with which we really need to take a much more modern approach in the companies. In many peoples’ opinions, you cannot grow within the company when working part-time as you might have limitations. We need to stop perceivingit as constraint, but instead –as an opportunity. Actually, it is one of the projects we initiated afterreceiving the certification. We had a group of employees working on it – not just HR. In the sense of consumer-centric approach, it means that we reflected with part-time employees what needs to be done.

What did you find out? 

For example,we had a second thought if every job really has to be full-time – so to speak 100 percent. Why not have a critical review of all the jobs and decide which ones could be donepart-time, at 80 percent for instance? Therefore, since then we review all jobs if they possibly might be done in part-time as well –and if not, why.Another element, which is very important, and we’ve had some examples in Germany for several years, is co-sharing a job. This works perfectly well, you get even more out of it.

What can women do themselves to fight for their interests? Are they too tentative, when it comes to negotiating wages?

We definitely need to encourage women to be much more self-confident, especially regarding salary and the respective negotiations. They bring a lot to the table, but they need to be more aware of it and overcome limiting self-restrictionssuch as: “I may not be good enough.” We need to coach them. Also, we need to offer them a forum, which at Philip Morris is the ‘Women of PMG’, where they can share experienceswith other women.For me coaching, providing a platform and having role-models is crucial.

“In Nordics, you can have a career and children without having to compromise. In Germany we still have to catch up”

You work for an American company. What is your perception on Germany; where does the country stand in terms of equality and diversity?

 Well, I see progress with tackling these issues. But to be honest: For me it was a bit of a culture shock coming back to Germany, after spending three years in Sweden. I thought: What the heck are they still discussing? In the Nordics they don’t talk about diversity and inclusion anymore. They just live it. The couples are sharing 50/50 when it comes to taking care of children. There are no discussions about it. There’s no conflict. It is an integral part of the society, which means that you can have a career and children without having to compromise. And sure, the infrastructure has been built up by the state that allows that. In Germany we still have to catch up.

And looking into the future: The Generation Z and the millennials are said to be less career-oriented and less interested in money. What could companies offer additionally to get the brains out of this generation?

This is a topic that occupied us a lot last year. What does it mean to work for a modern employer? We conducted a survey and discussed it with our employees and the millennials in particular. The surprising result: Money is not the most important factor for this population. They want to find fulfilment, a purpose and happiness – also in their working life. This is what drives the new generations. They want to work flexible hours and, as they like to travel, why not working while travelling– for instance on a Friday, working on a train on the way for a weekend trip? So, we have to overcome those old restrictions. Otherwise you will miss the connection with that generation. They would leave. We started working on new work models for this generation at Philip Morris. We want to attract the millennials.

But it’s not all about millennials. We also have to have a healthy age proportion in a company, would you agree?

Absolutely. I think you need the right mix and to learn from each other. For example, we started the “reversementoring”. We took the management team and we linked them with a younger mentor. I am also doing it myself. I’m learning so much, it’s amazing. It’s all about creating an inclusive environment and to make it clear: There are no barriers. This also requires younger mentors to have courage.

You’re planning an event on equal pay on December 4th. It is supposed to be a sort of wake-up call for your German colleagues. Right?

That’s correct. It is really a call for action for my German HR colleagues, an invitation to tackle this topic. To implement a diverse and inclusive culture is cumbersome; that’s why we’re happy to help anyone who wants to discuss these issues. We, as HR professionals, need to push it forwardeven more.

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