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Corporate Training Develops Expertise

Philip Morris

The aim was to move from traditional classroom training, where people sit and listen with little practice, and to make them actors in, and direct contributors to, their own learning.

Consumer  product manufacturers can no longer just push their product onto shelves but have to engage with customers and the people behind the counter. This is especially true of companies like Philip Morris which changed the way it operates in response to a new external environment of market regulations and restrictions on sales.

Horses for courses is a racing term that's widely used in business. However, few companies have applied it as literally as Philip Morris International in its corporate training program.

Philip Morris Russia is completing the third year of a major learning initiative in building knowledge, applying skills and displaying a set of core values throughout the whole organization. It has targeted all employees from field, regional and national headquarters. The company is well known in the industry and among the fast moving consumer goods companies for its holistic approach to corporate training.

The equine experiment was just one element in an innovative approach to acquiring skills and knowledge in order to increase performance at work, and part of a program called SmartVille.

It emphasized leadership and communication skills as two critical elements for any winning and agile organization. Two hundred and fifty people managers were asked to persuade horses to overcome unfamiliar obstacles. Horses are well known for their reaction to humans and, if they follow one person but refuse to obey another, that person must examine their own failings first. The sessions took place at the suburban Divny Equestrian Center, in Moscow region.

Frederic Patitucci, vice president human resources, Philip Morris International affiliates in Russia, explained why the company had decided to enhance dramatically the skills of its sales and marketing staff and to instill a learning culture — which he said resulted in a win-win situation for the company and its employees.

A few years ago, the company decided to move from being brand centric to consumer centric. "We are putting the consumer in everything we do in the company. This has become an obsession for all of us, from operations until the moment the product hits the shelf at the point of sale. To make that happen, we have our brands, our people and their capability to engage with the trade and the consumers, so as to influence the choice of legal age smokers."

As a result of the implementation of the tobacco control law, companies can no longer advertize, nor promote cigarettes at bars, nightclubs, restaurants and any kind of point of sales. Hence the ability of employees to connect with the trade and legal age smokers is becoming paramount in this new business landscape.

On one hand, staff needed to develop their behavior and attitudes. On the other, they require more technical knowledge than in the past, when organizations like Philip Morris and others sent sales targets from superiors to regional teams.

As a result, Patitucci said, commercial staff now need to be more versatile and rounded and must know the architecture of the portfolio, to understand the trade segmentation and the sales universe. This includes the activation of the different trade and consumer channels, consumer segmentation, and the mechanics of pricing the impact of an excise tax scheme on the profitability of the business.

The company implemented a three-year plan covering the buildup of technical expertise. At the heart of it were five core values that govern the staff's approach in their day-to-day business activities. "These are consumer centricity, courage, ownership, innovation, and cooperation," said Patitucci. All corporate training programs at HQ and area level were built around these five core values and were supported by a pan Russian change management initiative that helped to disseminate the program from Kaliningrad to Vladivostok. The sponsor of this initiative was the Russian senior management team with advice and support from PricewaterhouseCoopers.

Philip Morris usually outsources the vast majority of its training activities but in the case of SmartVille it handled 60 per cent of the training in house, mainly run by internal trainers who decided to teach and transfer their knowledge to their colleagues.

For each employee the training consisted of five days, every year, and, depending on the position of an employee, people attended from 10 to 15 days during a two-to-three year cycle.

The internal trainers, called "subject matter experts", led the first three days dedicated to technical and pure business related matters such as portfolio, distribution, trade management, key account, finance and strategy. The remaining two days addressed what it takes to display "consistently and in a coherent way" the five core values.

PricewaterhouseCoopers' consultants handled this part. The program went beyond the Russian borders since employees from Croatia, Turkey, Romania, Switzerland, Kazakhstan and other markets took part in the program. Moreover, SmartVille hosted special PMI guest speakers such as the chief marketing officer, the senior vice president R&D, heads of innovation, product development, and market research and information services.

The cooperation with Moscow School of Management Skolkovo brought an even broader dimension with speakers from all over the world combined with the rich experience of successful Russian entrepreneurs.

The company sent the whole sales and marketing staff from Russia to SmartVille, in Nakhabino, Moscow Country Club, which was built upon a university concept, aiming to make learning as comfortable and productive as possible for employees. The first session was in November 2012 and the last session is planned for the end of November 2014. The groups comprised of 24 to 96 people. Between the modules, participants were asked to stimulate their learning through assigned homework with their direct supervisors' help. The aim was to move from traditional classroom training, where people sit and listen with little practice, and to make them actors in, and direct contributors to, their own learning.

"For example, our territory executives were asked to define and articulate those business problems that they were facing in their territories," said Patitucci. "It sounds easy and almost trivial but believe me this is certainly the most complex task one can ask of his subordinate." To make it easier, all of them received the knowledge they needed, did their homework and shared the results with their line manager.

Direct supervisors had to play a critical role by maintaining the momentum to ensure that people applied all they had learned in the workplace. "It is about coaching and assessing skills and behaviors, which happened to be the first of the four modules of our leadership school that was run in parallel with SmartVille. Together they formed the PMI Russian University. The two initiatives were linked: while the sales force was learning how to display these critical values, line managers were learning to assess how these hard skills and values were deployed," said Patitucci.

"Philip Morris knew what they wanted to do," said Svetlana Pashkevich, manager for corporate programs development at the Moscow School of Management Skolkovo. "They began the process six months beforehand. They were preparing for Russia's tobacco control laws and they have been through this before in other countries."

Skolkovo worked with the company, and was integrated into the training program and its learning objectives. On PMI's side vice presidents were involved in opening and closing the sessions by engaging the whole sales and marketing people in a candid dialog. "Our role was to give them a viewpoint of how things were done in other industries, where change was becoming the norm," said Pashkevich.

Skolkovo business school helped Philip Morris to look at experience outside the company. "Sometimes, in Philip Morris International we have a tendency to be too inner focused," said Patitucci. "Skolkovo helped us to get experts from all over the world, which brought their expertise and perspective."

After three years of a successful cooperation, SmartVille is closing at the end of this year. The next phase of learning may involve Skolkovo or another partner. In assessing the results, Patitucci is honest when asked if he can measure the results in a tangible way of such a major initiative: "The answer is no. We do not have a direct correlation between business results and this training investment.

"I am not aware that any company has been able to get an objective and measurable pay back on training. However, our market shares are growing, the employee engagement has reached its highest level in 20 years of presence in Russia and our staff turnover has dramatically decreased. We have tripled the numbers of Russian talents working outside of Russia as expatriates and we feel that we have been able to build a community throughout Russia where our employees feel good. The most difficult challenge is ahead of us: we cannot rest on our laurels and we have to further build and keep up this momentum".