Opinion

CEO Boycotting El Al Proves High-tech Execs Can Leave Corporate Bubble

By threatening to shun Israel's main carrier over the reseating of women, an Israeli CEO shows the financial (and social) clout of his sector

An El Al Israel Airlines Boeing airplane.
2015 Boeing

Ultra-Orthodox passengers have always been important customers for El Al Israel Airlines. They have significant purchasing power with the company, particularly on El Al’s non-stop flights between New York and Tel Aviv.

News reports such as those about the delay of an El Al flight from New York to Tel Aviv last week by over an hour due to the refusal of four ultra-Orthodox men to sit next to women passengers resurface from time to time (and El Al is not the only airline that has encountered the problem). In last week’s incident, women passengers agreed to switch seats so the flight could take off.

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Last year the issue even went to court. The Jerusalem Magistrate’s Court seemingly settled the issue when it ruled that women cannot be asked to switch seats due to the refusal of ultra-Orthodox men, whose tradition bars them from having physical contact with women in such a setting, to sit next to them. In the past, the incidents generally resulted in El Al apologizing for any inconvenience, essentially claiming that there was no improper discrimination involved but rather “an effort at accommodating and providing assistance with the various requests of passengers.”

The thousands of people who shared Facebook posts on the issue didn’t prod El Al to respond with anything less routine or with any promises about the way future incidents would be handled. That is until one Israeli, Barak Eilam, the CEO of the software firm Nice, announced this week that employees of his high-tech firm would stop flying El Al until the airline stopped “discriminating against women.”

The public at large may not know Eilam, but El Al’s CEO, Gonen Usishkin, understood the implications of Eilam’s threat on his airline’s business – between $3 million and $5 million a year in business from Nice, according to estimates. Usishkin was forced to personally and publicly announce that “a passenger who refuses to sit next to another passenger will be removed from the flight immediately.”

It’s not every day that an Israeli corporate CEO like Eilam intervenes so adamantly in a major public controversy, and it’s even less common coming from a high-tech CEO. The incident at hand shows the extent to which high-tech executives have the power to influence important social issues in the country. All of this prompts a few points worth considering:

Maybe the time has come for high-tech execs to leave their bubble

The high-tech community is able to work amazingly cooperatively when it comes to advancing its own interests – issues such as changes in tax policy, venture capital fund trading on the stock exchange, visas for foreign professional workers or matters involving foreign currency exchange rates. It might be argued that the time has come for high-tech executives to use some of their influence to push for social change, and not only as it relates to teaching software technology at a young age or encouraging women to become engineers.

>> Tech giant boycotts El Al for moving women at request of ultra-Orthodox men ■ And thank you for not flying El Al | Editorial

Deciding to respond is not simple

In the Israeli public sphere, there is a tendency among the establishment to give priority to the needs of the ultra-Orthodox community, and El Al’s approach prior to this week was only one reflection of this. At the same time, Israel prides itself in being the Startup Nation. And then along comes a successful Israeli high-tech executive, who has propelled Nice from a market value of $2.7 billion to $6.5 billion in the space of four years, going head-to-head with the country’s flagship airline.

Granted, it’s easier for Eilam, who does not live in Israel and manages Nice’s global operations, and is not dependent on the Israeli government. He doesn’t need Prime Minister Benjamin Netanyahu or Justice Minister Ayelet Shaked. But by the same token, it would also be relatively easy for other Israeli CEOs to take similar action. That’s also why many people labeled Eilam’s statement populist and something over which “he had nothing to lose.”

The reaction is not surprising. Polling data from abroad shows that the public is inclined to be highly skeptical regarding corporate executives expounding on issues beyond the core activities of their companies, convinced that these executives are expressing themselves to attract media attention and to build corporate goodwill. But the decision to come out publicly on social issues is never simple.

A survey on the activism of corporate executives published by the Weber Shandwick public relations firm and KRC Research found that 45% of Americans do not buy products or services from companies with CEOs who hold social stances that they disagree with. On the other hand, 40% would reward companies whose CEOs’ views correspond to their own and take an interest in the company’s products. Although the survey focused mainly on companies that sell directly to consumers, it shows that corporations are perceived – either positively or negatively – according to the public image of their CEOs.

Opinion leader needs to be more

The founder and CEO of the American cloud computing company Salesforce, Marc Benioff, has been outspoken on issues affecting the LGBT community. In 2016, he even threatened to pull his business out of the State of Georgia if it passed legislation that critics said would legitimize discrimination against gays and lesbians.

To rise to the level of an opinion leader, however, it’s not enough to build a major company.

You need to be more inward-looking as well. Benioff also provided funding twice to close salary disparities between men and women at Salesforce. In 2015, an assessment was made of the salary gaps by gender and when they were found to be unjustifiable, they were rectified – affecting 6% of the 17,000 salaried employees of the company and costing Salesforce $3 million. In 2017, its staff had grown to 25,000. Salary disparities were again examined and again rectified.

In an interview with CNN, Benioff spoke about the responsibility that CEOs have to monitor wage disparities. He said he was surprised how easy it was to do it through the company’s human resources department. Any CEO, he explained, could to it with the press of a button.

We don’t have information about possible salary disparities at Nice or other major high-tech companies that have evolved in Israel, such as Check Point Software Technologies or Elbit or Wix. But among the 12 members of senior management at Nice, there are only two women, the VP for human relations and the VP for finance. The first is a position that women typically fill and the second is the type of job that women have broken into – nothing unusual.