Leading an ambitious corporate transformation
Stacey Kennedy President Philip Morris International (PMI) Asia Pacific Operations
As debate heats up on the fate of electronic cigarettes and vaping products in the Philippines, a woman who holds one of the toughest responsibilities in the corporate world today remains bent and determined in leading the ambitious transformation of the tobacco company.
“Let’s be honest, the tobacco industry is certainly not a pink profession,” says Stacey Kennedy, the first-ever female president of Philip Morris International (PMI) Asia Pacific operations responsible for 15 markets including the Philippines.
It is no secret of an ever-increasing list of diseases related to smoking and many perceive tobacco companies are reaping unimaginable profits at the expense of public health. This concern along with governments’ regulatory threats may cause Kennedy to lose sleep.
In the Philippines alone, the government rolled out strong tobacco control measures over the last years and the cigarette companies currently could not see the light at the end of the tunnel.
Kennedy admits the Philippines is like many other countries making a lot of noise and controversies around tobacco, but “we have to stay very focused.”
The Hong Kong-based Philip Morris executive graduated magna cum laude from Randolph-Macon Woman’s College in the United States with a degree in sociology and cultural anthropology and an executive MBA from IMD in Lausanne, Switzerland.
Kennedy took the helm of Philip Morris South and South East Asia operations in January last year after working across many divisions in the US and Europe. With her 24-year experience, she is now responsible for over 15,000 permanent employees in the region.
She admits cigarette making is not among the professions that have conducive environments for women to succeed.
“I’ve had a lot of experience of being the only woman in the room or one of just a couple,” Kennedy shares, and this gave her “a bit of crisis of confidence because I didn’t look like, talk like, have ideas like my very homogenous and very masculine male colleagues.”
Kennedy joined Philip Morris USA in 1995, and by 2002 was named director of trade marketing for PMI at the company’s operating center in Lausanne, Switzerland.
When she became a junior executive, Kennedy initially thought that she must fit into the male-dominated boardroom and adopt the way men work.
Knowing that she wasn’t a member of the boys club and felt a little out of place, Kennedy suffered from a lack of confidence and in the process “I lost the authenticity of my own voice.”
“That is a kiss of death,” Kennedy declares. Women should stop “playing to win,” instead they must “play not to lose.”
In March 2006, Kennedy was promoted to vice president for PMI USA southeast region sales where she served on the company’s leadership team, which led to her promotion to vice president for the cigarette firm’s international sales strategy.
In the global role, Kennedy, spearheaded the strategic direction for a new consumer-centric commercial model.
"I bring to the table a different strategic lens on things,” Kennedy states.
Prior to her current position, Kennedy was managing director of Philip Morris Germany, Austria, Croatia and Slovenia, this high-profile role also gave her responsibility for two manufacturing facilities.
“Women bring color, literally and figuratively, to a sea of white shirts. Women bring different leadership styles,” she says. Women hold a key role across sectors because 60 percent to 70 percent of consumer purchase decisions were made by them.
“If you’re in a consumer products company, you better hear what women have to say and the ideas they bring to the table if you want your products to be successful,” Kennedy points out as she highlights the importance of corporate cultures that have both diversity and inclusion.
Today, Kennedy is proud to share that PMI has made some really good progress in becoming a more diverse, inclusive and gender-balanced multinational company in recent years.
PMI aims to increase the representation of women in management roles across the company to 40 percent by 2022. Currently, its number is 35 percent, which is up six percentage points since 2014.
According to Kennedy, unlike in other countries, the Philippines is among the strongest in terms of gender equality,
“I find the culture in the Philippines very open, very warm. People are exceptionally eager to try to embrace new ideas. So I think this made our efforts in the Philippines easier than in some markets,” Kennedy says. “I attribute that to the culture of the society in general.”
But Kennedy points out that there are still some space for improvement in the Philippines. “We tend to get more women in HR, finance, communications, functions. We have a big opportunity to focus on women in sales in the Philippines, and how we could leverage that.”
Last March, PMI became the first multinational company to obtain a global Equal-Salary certification from a nonprofit foundation in Switzerland.
It verified that the cigarette firm pays men and women equally for work of equal value everywhere it operates.
“I’m really proud of markets like the Philippines,” Kennedy says after seeing "the pride of all our employees, not just women but also men who feel that this gives incredible credibility to them working for an employer that is really dedicated to fairness.”
Winning the Equal-Salary certification is a proud moment for PMI because it is a third-party validation that women within the company are getting their basic right, “fairness,” an essential ingredient for business success.
Kennedy explains one of the hardest things for any company to do is to decide where it will start when it comes to improving employees’ diversity and inclusion.
For the case of PMI, it decided to pick a tangible action that would draw a line in the sand, and set the company’s identity as an employer.
“It’s shocking to think that as we’re approaching the year 2020 that men and women are not paid equally for equal work,” she shares. “We are now sending a very clear message to the talent pool that’s out there, women and men, that we pay equally.”
Recent studies revealed that gender pay gap is a common issue in several industries, and it worsens as women climb up the ladder.
“Women earn pennies on the dollar of what men are paid. It’s not fair, and it’s not the best way to attract the top talents in any market. So we wanted to start with this equal salary certification,” Kennedy says.
Admittedly, the Equaly-Salary certification was not an easy process, according to Kennedy. It involved an 18-month rigorous process, covering commitment to equality from top down and bottom up.
Before beginning the certification process, PMI had submitted its compensation data and documents from each country where it operates and on site audits also took place in its affiliates around the world.
Interviews were also conducted to gather information about the senior leadership commitment to EqualSalary principles, while the company’s strategy and management on global people and culture were reviewed.
The Equal-Salary foundation also insured that resources, processes and indicators were in place to drive fair remuneration across PMI’s operations in more than 90 countries worldwide.
But winning the Equal-Salary status should not end there. Further audits will take place two and three years after the certification to confirm PMI’s ongoing commitment to a fair, non-discriminatory wage practice between men and women.
The company also needs to demonstrate continual improvement in applying the Equal-Salary principles.
As early as now, Kennedy saw that the Equal-Salary certification has a dramatic effect on PMI’s ability to attract not only women but men as well.
“When you look at the younger generation that are entering the workforce, men and women want to know that they are going to work in a place with lots of innovation, with lots of different ideas on the table, and importantly they have a real mantra around fairness,” she says.
PMI has placed inclusion and diversity at the core of its business strategy as a key enabler for the company’s business transformation from a traditional cigarette manufacturer to a science and technology-minded firm with a pipeline of innovative smokefree products.
The World Health Organization (HWO) already declared that the global tobacco epidemic is the major threat to public health. Aside from this, cigarettes, as one of the traditional industries, is also not spared by the disruption brought about by the technology.
The name “Philip Morris International” is a synonym for “cigarette manufacturer.” But Kennedy explains they are much more than a tobacco company today because “we want to provide adult smokers with better options than continued smoking.”
Currently, more than one billion people worldwide smoke cigarettes and, according to the WHO, there will still be more than one billion smokers in 2025.
For this reason, Kennedy says PMI wants to provide those among these billion-plus adult smokers, who do not quit, with better options than continuing to smoke. She assures PMI’s unwavering commitment to a “smoke-free future.”
“Our commitment is no passing whim, but the result of many years of careful deliberation, backed up by a substantial R&D [research and development] program. Over the last decade, we’ve spent more than $6 billion in our research,” she discloses.
Kennedy says there is no debate that smoking is harmful or that nicotine is addictive, but for PMI what matters is what the consumer is inhaling.
According to her, there is a huge difference between smoke from a burning cigarette and the aerosol from a non-combustible product.
She adds it is the burning process which creates the vast majority of the harmful and potentially harmful chemicals that are the primary causes of smoking-related diseases.
“If science validates that there is a difference between products, shouldn’t the smoke-free alternatives be treated differently? And shouldn’t the millions of men and women now smoking cigarettes know about those differences?” Kennedy asks.
"Can you imagine the criticism that PMI would face if, at some point in the future, it was discovered that we had better alternatives to continued smoking to offer adult smokers, but had left them in the laboratory?” she adds.
In the US and the United Kingdom, PMI claims there is a growing acknowledgement that smoke-free alternatives to cigarettes can complement existing health policies focused on prevention and cessation.
In line with PMI’s so-called “smoke-free future” vision, the company introduced its IQOS brand, a tobacco heating system that does not burn tobacco, although not risk free.
Kennedy says that based on their laboratory test results, IQOS, because it generates no combustion and no smoke, is 90 percent to 95 percent less harmful than traditional cigarettes.
“We share our scientific findings publicly and encourage others to review our work,” she insists.
Kennedy is urging the Philippine government to conduct its own science-based review on cigarette alternatives before raising the excise taxes on e-cigarettes, vapes, and heated tobacco like IQOS.
She explains that Philippines should make a distinction between combustible cigarettes and reducedrisk products to encourage consumers to switch to smoke free alternatives.
Kennedy adds that the proposed uniform excise tax rate on traditional and alternative cigarettes is a “disappointing” measure.
“We encourage scientists to do independent verification,” she states. “To date, we have about 340 independent peer-reviewed scientific papers on our science. They’ve done a very rigorous review and so we hope that the Philippines will do a similar review.”
PMFTC, Inc., the local affiliate of PMI, plans to launch its heated tobacco product within the first six-months of next year despite threats of higher taxes on cigarette alternatives.
Denis Gorkun, PMFTC president said that the pending higher tax proposal being pushed by the government would not halt the planned entry of the company’s tobacco heating system IQOS into the Philippines in 2019.
“Multiple government agencies around the world have certified that IQOS have a fraction of chemicals compared to cigarettes. For people who cannot quit smoking, they should be encouraged to switch to those much much better alternatives,” Gorkun explains.
For this reason, he believes “the taxation in short has to be risk proportion. This product cost significantly less more to than manufactured cigarettes and of course they bear much lower risk.”
IQOS is already available in 51 markets worldwide and around 8.8 million consumers have already chosen to switch from cigarettes to PMI’s tobacco heating system.
'If science validates that there is a difference between products, shouldn’t the smoke-free alternatives be treated differently? And shouldn’t the millions of men and women now smoking cigarettes know about those differences?” Can you imagine the criticism that PMI would face if, at some point in the future, it was discovered that we had better alternatives to continued smoking to offer adult smokers, but had left them in the laboratory?'