If you want to earn more- diversify

By Ofer Matan, published Yediot Ahronot October 1 2018

There is a pervasive realization worldwide, as well as in Israel, that diverse population of employees that include workers from various sectors – Arabs, Ultra-Orthodox, women, residents of the periphery, single mothers and more – can contribute to the economic achievements of the company or corporation. How does this work, and which Israeli companies already implement this insight?

How distinctive are the laundry habits of Ultra-Orthodox families in Israel? It turns out that, although most of the Ultra-Orthodox in Israel belong to a lower than average socioeconomic class, when it comes to laundry detergent – many Ultra-Orthodox families are willing to pay more for a product that will do the job properly. This characterizes the Ultra-Orthodox market in other areas of cleanliness as well. One of the reasons is the practice of transferring clothes between the children, which required keeping them in good condition over time. In addition, many of the Ultra-Orthodox educational institutions have a dress code of buttoned shirts that costs more that the simple T-shirts required by the state schools; this is an additional catalyst for recycling shirts within the family. Moreover, if that was not enough, one of the 613 commandments is “do not throw” – a prohibition on throwing objects and items that people can still use.

Very doubtful if there are too many secular product managers in the Israeli market who are familiar with all these nuances of the Ultra-Orthodox sector, even though they constitute a significant consumer force. Ira, a religious woman who has been, for several years, the Israel brand manager of the Ariel laundry detergent, is exceptional in this respect. She decided to use her knowledge of the Ultra-Orthodox families’ laundry habits to create an original marketing campaign for Ariel.

Ira wanted to emphasize maintaining the clothing fibers and thus started the marketing project “Pass the Shirt”, in which the Company collected from Ultra-Orthodox female students, across the country, 11,000 buttoned school shirts that were small on them. They washed, ironed and packed the shirts in branded bags and distributed them, free of charge, to Ultra-Orthodox female students who were in need of shirts. Last May, the campaign worked for the third year and Ariel claims that during those years the sales of laundry detergent in the Ultra-Orthodox sector have increased.

Ira is one of the 35 Israeli employees of Proctor & Gamble Corporation. Proctor’s management has a collaboration with an Israeli association called “itworks”, which aims to promote human and sectorial diversity in the employment world in Israel, and to create opportunities in the Hi-Tech industry for populations, such as Ultra-Orthodox, Arabs, single mothers, residents of the periphery and people with disabilities. THE “itworks” association helped Proctor to recruit employees from variety of sectors and the result was that out of the 35 employees in Israel – most of them in managerial positions – there are five (15%) Arabs and Ultra-Orthodox. The manager of Head & Shoulders and Pantene brands is a religious 28 years old man with five children. An Ultra-Orthodox man is the supply chains’ manager. Two Israeli Palestinian women serve as managers in the Overseas Supply Chain Department and Ira herself, as previously mentioned, is the manager of the Ariel laundry detergent brand. The representation of Arabs and Ultra-Orthodox is indeed low, compared with their proportion in the population, however; in view of their poor representation in the labor market in general, and in managerial positions in particular, this is a considerable progress.

Employees as presenters

Human diversity in work places has been a hot issue in Israel in recent years and even more so in USA. It turns out that attempting to create diverse working and thinking teams in terms of gender and ethnicity is worthwhile for companies and corporations, in more than one aspect. It increases intellectual openness, enables raising original ideas in thinking teams, and deepens the familiarity with sectors and population groups that are not part of the social mainstream. It also improves the approach towards these populations and adds new sources for recruitment of employees and talents. "A proper integration of employees from excluded groups is the right thing to do, both socially and economically", says Inbal Sifris, Head of the Employment Department at the Applied Center for the Psychology of Social Change at IDC Herzlia. "This is one of the nice examples showing that there is no contradiction between the social-ethical motive and the business motive; this makes this field so interesting and growing".

Many studies – some conducted by academic scholars and others by consulting firms hired by large commercial companies – claim that there is a clear link between the degree of human diversity in companies and corporations and economic results. A study conducted by Lucio Lorenzo and Martin Reeves of Boston Consulting Group (its main findings were published in the "Harvard Business Review" last January) has examined 1,700 companies from USA, Brazil, France, Germany, China, Austria, India and Switzerland, and found a direct link between the degree of human diversity in the company and the level of innovation and originality of ideas raised in it (which ultimately also leads to economic achievements). The American consulting firm McKinsey has conducted a similar study among the Fortune 500 list (the ranking by the economic magazine Fortune of the 500 American companies with the highest gross income) and reached the same results: there is a link between human diversity and innovation, creativity and economic benefit. It is somewhat sad that huge companies, which are driving the global economy, need studies to prove that recruiting employees from different sectors will improve their performance, rather than them doing it anyway.

It turns out, however, that the impact of human diversity is more complex. Thomas Kamoro Permozitz of Colombia University in USA has examined 108 different studies conducted on this issue and found that, while diversity does increase creativity and raising original ideas, it also makes it difficult to choose one of the many ideas raised. He concluded that it would be advisable to create human diversity in departments that are responsible for brainstorming, but also to ensure that the forum who decides which idea to choose and how to implement it, will actually be more homogenous in terms of its members.

In Israel, the diversity issue is flourishing much because many employment industries have a shortage of skilled employees. The industry which has the most prominent shortage of work force is Hi-Tech, which is seeking more than 10,000 additional employees. Making Hi-Tech companies and other companies accessible to the Ultra-Orthodox and Arab sectors is one of the best ways to meet the needs relating to shortage of employees. The representation of these sectors in the labor market is at a lower rate than their proportion in the population; this is where the potential for large recruitment of employees lies. However, it is important to remember that, unlike in USA or Europe where attempts are made to increase the representation of minority groups in the labor market, Israel is much more of a political sensitive arena. The Palestinians are seen in many places as the enemies within, and the Israel Jewish State Law, which has recently passed at the Knesset, contributes to this. In addition, regarding the Ultra-Orthodox sector there is an accusatory discourse about rights and obligations (military recruitment, etc.).  In light of the above, companies in Israel that work to integrate more Arabs and Ultra-Orthodox employees are proud of this on the one hand, but are also wary of the way it is being presented, on the other hand. They are aware of the public sentiment towards these sectors and are anxious to annoy their main clientele. Nevertheless, we managed to find several examples of companies who shared with us how their attempts to diversify the working population gave them economic benefits and advantages.

Coca Cola Israel provides a good example of thinking outside the box, which is made possible when the company has employees and managers from diverse populations. The Company decided to use its Arab employees as presenters in a marketing campaign towards the month of Ramadan, in which the consumption volume of the Arab sector grows significantly. During Ramadan, Coca-Cola Israel’s Community Marketing Manager, Salam Sharkiya, a 35 years old resident of Jatt (one of the Palestinian border villages) launched a campaign in which, rather than putting the company’s products on the front; he showed its’ Arab employees and emphasized the family value characterizing the Ramadan, to strengthen the connection of the sector’s population with the brand.

Sharkiya selected 30 Arab employees from 30 communities (to symbolize the 30 days of the holiday) – from employees at the bottom of the production chain to managers – and uploaded their pictures to a mini-site opened especially for the campaign. Alongside the pictures, a commercial appeared that was also distributed on social networks, showing a family meal in an Arab family in Israel, drinking Cola and remembering past pleasant family episodes that are related to drinking Cola during Ramadan. One of the memories is of a couple who met as young employees at a Coca-Cola factory, fell in love and started a family together.

The customers were invited to visit the site and choose which of the company’s employees they would like to invite to their home alongside a famous Arab Chef to prepare a festive family Ramadan meal for them. The Arab public was enthusiastic about this offer, people voted for employees who live in their community and it soon became clear that the employees from the large cities – Jerusalem, Nazareth, Sakhnin and Taibeh – were those who were invited the most. Every day, another family won a visit of a company employee alongside the famous Chef and could include up to 20 people at the meal that was prepared for them. That means that 600 people overall enjoyed these meals.

Coca Cola says that the campaign increased the sales of its products in the Arab sector, compared to previous years, and that Coca Cola’s global CEO was very enthusiastic about the commercial and wanted to implement it in Turkey as well.

To speak as an Arab to an Arab

Sonia Masood (42), resident of Ramle, is a director and manager of the Nazereth office of Deloitte Israel. She has been working at Deloitte for 14 years and has seen how, in recent years, the number of Arab employees has increased from barely 10 (out of 1,200 employees) to more than 60. The change came about thanks to the collaboration between the firm and the "Collective Impact" project that operates to increase the employment rates and employment quality of the Arab population in Israel. "Collective" explains that the Arabs are 21% of the population and only 5% of the business sector, while among managers at companies with more than 1,000 employees (such as Deloitte for that matter) their proportion is even lower: only 0.3%.

Deloitte worked to recruit Arab employees for consulting and accounting positions and realized, at some point, that, if they want to create customers in the business sector of the Arab society, the firm can no longer operate only in Tel Aviv but should invest in the sector's business capital, Nazareth. "A business organization wants constant growth and this can be achieved by increasing the customer share, increasing the market share or approaching new markets", explains Ilan Birnfeld, Chair and CEO of Deloitte. "When you approach a new market, it should be ideally performed by people who understand this market, its’ consumption habits, language and culture. We wanted to serve the business sector in the Arab society; therefore needed employees who know this market and come from it".

"Hardly no business in the business sector of the Arab society has hired consulting services as we are able to provide", says Masood about the days prior to opening the office in Nazareth. "They used services of an accountant from their village or city, but not beyond that. I mainly manage Arab employees and there are advantages to the fact that a business consultant for an Arab business is an Arab himself".

What advantages, for example?

"There are cases, for example, of a family business, in which there is an actual CEO but whoever makes the decisions in practice is the father, founder of the company. An Arab consultant will be able to recognize that, to respect the father and avoid embarrassing situations where it seems that he ignores the father and speaks directly with the CEO. I personally had such a case. I made sure to explain first to the founding father, an 80 years old man, my role and the consultation services that I provide. Once he gave me his blessings, I switched to a much more effective dialog with his sons".

According to Masood, the young Arab employees hired by Deloitte create natural networking in the sector’s communities; this brings customers to the firm by word of mouth. In addition, Deloitte helps Arab businesses to work with the markets in Europe or USA by means of its overseas branches and this also helps to recruit new customers. CEO Birnfeld says that Deloitte has recruited 200-300 new customers from the Arab sector this way.

Another company operating in Israel who attempted to increase human diversity among its employees is Nokia, which employs 250 people in its Israeli development center. 125 of them work in the global cloud division, under the management of Guy Shemesh, Nokia's global vice president. Twenty-five of these employees are Palestinians from Ramallah, who work in the office in their city and arrive at the Nokia offices in Kfar Saba approximately once a week. Seven others are Palestinian citizens of Israel.

The "itworks" association helped Nokia recruit these employees. "Beyond the fact that the search for employees from other populations increases, for me personally as manager, the talent inventory from which I can recruit", explains Shemesh, "There is also an issue that, as a global company, we need a variety of ideas and non-monolithic thinking. We sell cloud infrastructures that is used by service vendors and large companies from all over the world and when there is intellectual diversity, we can produce better products that are more adapted to global population of various needs, cultures and languages".

Shemesh says that diversity also reduced employees’ turnover, a sharp phenomenon in the High-Tech industry. An average High-Tech employee works in one work place for a period of two years, and in Israel 16% of programmers leave their job every year. He adds that the decrease in turnover also stems from the fact that employees from minority sectors are more likely to hold their jobs. In addition, the percentage of leavers among the Jewish employees has also decreased following the increased diversity of the human capital.

"Another advantage of diversity is the multitude of the programming languages that the employees know", he says. "People in High-Tech are used to work with programming languages that are taught at large universities in USA and in the IDF. When recruiting employees that are more diverse you suddenly have people who know more languages, as well as employees who are self-taught and do well working with open code. During one of the conversations in the office kitchen we realized that with diverse knowledge that our employees have, we no longer need the external vendor who provided us with open code platform for our product - we can start creating this code ourselves. This allowed us much flexibility in the contents and in times of delivery of our products to the customers".