How social impact in the local community can increase shareholder profits

In 2013, I moved to Mexico to become plant manager of one of Siemens’ largest factories in North America. It is located in Monterrey in the north of Mexico and employs 1,500 people. Our factory was losing money, production was of poor quality, and we had very unhappy customers. We were thinking of closing the factory down.

70% of our employees are women from the local community which has serious social issues. More than half of families are raised by single mothers. School absenteeism is high, and many girls drop out due to early pregnancy. Cancer and diabetes rates are among the worst in the world. Nutritional habits are poor with excessive intake of sugar, processed foods and red meat.

The area has a strong economy with less than 4% unemployment. Nevertheless, stability at work is rare and people often switch jobs. For example, in 2013, 150 people were leaving our factory every month. It was hardly the perfect environment for a working mother or her children.

We realized that, in order to turn around our business, we needed to provide a better environment for our employees so that they chose to stay with us. We focused on two crucial aspects for each family: health and education.

We strengthened our on-site medical team and started regular health education campaigns about, for example, nutrition, diabetes and cancer. In Mexico, maternity leave is only 6 weeks after birth so mothers stop breastfeeding very early. We promoted the benefits of breastfeeding and equipped a special room for mothers to extract and store their milk so they could continue breastfeeding; this is healthier for their babies and ensures they don’t leave.

We also helped our employees with education by collaborating with the largest Mexican online institution, University of Guanajuato, and granting 40 scholarships a year to outstanding production workers. Thus, they can pursue a high school or university degree which many of them could not complete due to early pregnancy or the need to earn money for their families.

Virtual university signing agreement.

We also set up a classroom with computers at the factory so that employees can study and attend classes – something they cannot do at their homes which are often crowded and lack internet access.

Each year, we also give out scholarships and computers to 50 children of factory workers who had achieved excellent results at school.

Student scholarship recipients.

To help education in the local community, our employees volunteer at a local school conducting different workshops on nutrition, energy or environmental issues. This really resonates with the kids. The school principal told us the days Siemens comes to the school are the only ones with zero absenteeism. Based on this pilot project, Siemens replicated the concept in other parts of Mexico, Costa Rica and Guatemala in partnership with United Way, one of the largest NGOs focused on education globally.

Health workshop at a local school.

With these actions, we positively impacted the lives of our 1,500 employees and their families.  Their work environment is more stable. Job fluctuation has dropped from over 7% per month to 2%, less than half the local market rate. Our employees are more informed about their health and have access to medical treatment. Every year, 40 employees sign up for the virtual university program, 50 of their kids receive scholarships and more than 100 other children in the local community attend our workshops in the schools.

The company has benefited too. This year, our factory is among the finalists of the Siemens Global Awards for performance. We are launching products based on a new technology which is expected to create over 100 new and more meaningful jobs.

I am 30 years old and our factory leadership team’s average age is 35. Our story shows how young leaders can break traditional business paradigms and employ a more open, participative and caring leadership style to drive genuine social change. Our story also shows that social impact is not opposed to business success. On the contrary, they complement and reinforce each other.

I am very proud of what we have achieved over the last 3 years in Monterrey because we combined tangible social impact with remarkable business success. For us, social responsibility was not lip service or a one-off charity event; we made it an integral part of our business strategy, benefiting our community as much as shareholders. 

Yavor ​Nikolov is a Factory Commercial Director at Siemens representing Bulgaria. He is leading the factory's CSR strategy, focusing on education of disadvantaged children from the local community, and providing health education to factory employees. He launched continent-wide cooperation between Siemens & United Way in order to expand their social impact.