Cultural Intelligence and Financial Performance
Both academics and practitioners agree that diversity, or people with different ideas, lifestyles, and backgrounds, positively influences creativity, innovation, and competitive advantage, which can ultimately result in greater financial performance. However, diversity alone is not enough. Companies also need inclusion or representation, especially in a “melting pot” like the U.S. To achieve superior financial performance, companies can no longer ignore minority groups as their stakeholders (employees, leaders, buyers, suppliers, government organizations, etc.). Our research demonstrates that in countries like the U.S., stakeholders expect and demand companies to have a diverse and inclusive environment. Thus, companies need to meet stakeholders’ expectations to increase financial performance. More importantly, inclusive leadership is necessary for the success of a diverse workgroup. Thus, Cultural Intelligence helps organizations to enhance financial performance.
Specifically, to achieve superior financial performance, companies need to provide leaders, managers, and employees with the tools to be successful in this environment. Cultural Intelligence, or our ability to function effectively in a diverse and inclusive environment, is the skill required for leaders, managers, and employees to make a diverse and inclusive organization successful.
Diversity, Inclusion, and Cultural Intelligence.
Why Diversity and Inclusion are Important Parts of Financial Success
Research demonstrates that diverse and inclusive organizations outperform less diverse and inclusive companies. Thus, diverse and inclusive organizations can enjoy superior financial performance. In addition to enhanced financial performance, diverse and inclusive organizational culture and organizational environment bring many benefits.
Benefits of diversity:
- superior financial performance
- creativity
- innovation
- competitive advantage
- better decisions
- more effective/productive results
- prevents groupthink (consensus reached because of social conformity and pressures on individual members of a group to conform to group norms)
However, it is not that simple. To enjoy all these benefits, companies need to overcome potential problems that can arise in diverse and inclusive organizations.
Why Do You Need Cultural Intelligence in a Diverse and Inclusive Workforce?
Diverse members of an organization have different cultures, norms, values, and beliefs. They have different attitudes toward work, communication styles, motivators, etc. Thus, diverse and inclusive organizations can struggle with achieving full collaboration and decreased productivity, efficiency, and effectiveness. This can result in the deficient performance of the overall organization.
It is also unreasonable and unrealistic to expect leaders and managers to know and remember all different cultures, various communication styles, and ways to motivate people. But it does not mean that you should not know how to lead, manage, and motivate diverse employees successfully. Cultural Intelligence can help.
Using Cultural Intelligence as a tool for leaders, managers, and employees, organizations can resolve or minimize issues such as:
- tensions
- conflict
- perceptual problems (e.g., use of stereotypes)
- unconscious/implicit biases
- miscommunication
- misinterpretations
- different perceptions of time
- different attitudes towards work, etc.
In the constantly changing world, it is not enough to react to the issues, companies need to be proactive. Instead of increasing awareness of the issues (which is a great initial step), companies need to develop the skills of their leaders, managers, and employees. Companies need to develop Cultural Intelligence to overcome potential problems with diverse and inclusive organizational environments.
What is Cultural Intelligence?
Cultural Intelligence is the ability to function effectively in a diverse and inclusive environment.
Overall Cultural Intelligence of the leaders and top managers helps the diverse and inclusive organization to:
- have positive concerns about racial diversity within an organization
- increase leadership performance
- increase the performance of diverse teams
- increase the feeling of the diverse team members that they are
- treated fairly and with respect
- valued
- belong
- confident
- inspired
4 Components of Cultural Intelligence
Motivational Cultural Intelligence:
- helps to increase our willingness to learn about diverse others. Increasing Motivational Cultural Intelligence of top executives and leaders helps them to create an inclusive organizational climate that supports racial diversity and minority employees.
- Did you know that money is not the best motivator for Millennials or Gen Z? More and more people are switching their jobs not to get a $10,000 raise, but to find a more flexible schedule and more inclusive organizational culture.
- Did you know that non-smoking employees might be excluded from the decision-making process because they do not smoke with their manager?
- Did you know that in some industries (e.g., healthcare, tire industry) gender can be a factor? For example, in the healthcare industry, in professions where women represent a majority group, men can be excluded from a conversation and decision-making because they are often not invited to join women for a break or a talk. A reverse situation happens in the tire industry where men represent a majority group, women can be often excluded from conversations.
- Did you also know that having or not having a child can be a factor? Often, employees with children would create social groups and unintentionally exclude colleagues without children.
- Does your company sell your products in Canada? Did you know that Canada’s second-largest shopping day is called Boxing Day? Canadians celebrate it on December 26th. According to the Retail Council of Canada, Black Friday only recently became Canada’s largest shopping day.
Motivation Cultural Intelligence increases our curiosity.
Metacognitive Cultural Intelligence
- is our ability to acquire the knowledge to better understand diverse others. Metacognitive Cultural Intelligence helps us to learn about cultural differences, attitudes towards a time that different people have, communication differences, etc., and adjust our mental models (or thoughts) to be more successful in recognizing the patterns, identifying reasons, and acting on the information.
- Have you wondered why your team member is always late to the meetings? It seems “rude” and “disrespectful”. However, when we understand that it is a cultural norm where noon starting time means sometime between 12:30 and 12:45 pm, we might change our view. We might also adjust our behavior and reaction toward the person. Not only we will learn that not everyone acts and thinks differently, but also, we will understand why and how they act and thinks differently.
- Did you also know that relationship building and learning about other people is more important when conducting business in the South as opposed to the Northeast of the U.S? In the South, it is a prerequisite for a successful partnership, especially during your first meeting. In the Northeast, it might seem like a destruction and waste of time. Jump straight to the business.
- Did you know that in interaction with Japanese, you need to understand the context of the conversation? Because “Yes” does not necessarily mean “Yes”. It might mean “No”, or “Let me think about it” depending on the situation.
“Saving face” or avoiding embarrassment and loss of respect in Japanese culture dictates the interaction.
Metacognitive Cultural Intelligence is a crucial skill of successful leaders and managers.
Behavioral Cultural Intelligence
- is our ability to effectively interact with diverse others. It includes verbal communication and body language. Behavioral Cultural intelligence helps leaders and managers to identify verbal and non-verbal cues to make needed adjustments in their behaviors.
- Did you notice that people from and the South have different conversation paces? People from the Northeast tend to speak faster compared to the Southern people, they also can grow impatient quicker. While Metacognitive Cultural Intelligence will help us to recognize that, Behavioral Cultural Intelligence will help us to adjust the pace of our conversation to avoid negative outcomes.
- Have you heard the phrase “Bless your heart”? This is a common phrase in the South of the U.S. Did you know that it has several meanings, from expressing sympathy to condescension and insult? One needs to understand the context of the conversation to know the meaning.
- Did you know that depending on culture, people have different personal spaces? For instance, here in the U.S., our personal space is relatively large. In Brazil, on the other hand, personal space is smaller. Thus, it is common to see “samba” dancing during a business meeting between an American and a Brazilian colleague. Brazilians will try to move closer, while Americans are backing away. This “dance” makes all parties unhappy and maybe even frustrated.
Behavioral Cultural intelligence is your interaction with diverse others.
Cognitive Cultural Intelligence
- is our actual knowledge of norms, practices, and conventions of diverse others. Our norms, practices, and conventions are influenced by our race and ethnicity, religion, place of birth, history of our community, etc. Our norms, practices, and conventions influence how we dress, how we talk, and what we eat.
Knowing why a person wears a specific hairstyle or attire, uses slang or gestures, and eats certain food helps to reduce the use of stereotypes. Understanding business etiquette and business culture, decision-making processes, communication, and negotiation styles helps leaders and managers to avoid costly mistakes.
Cognitive Cultural intelligence combined with Metacognitive Cultural Intelligence allows leaders and managers to treat people with respect, create a safe and inclusive environment, and help people to be themselves.- Did you know that our cultures influence:
- business etiquette and business culture
- gift giving
- business attire
- meetings (places, length, time, etc)
- taboos
- stereotypes we have and people have about us
- decision-making processes
- hierarchical or not
- individual vs group
- fast or slow
- risky or not
- communication styles
- direct vs indirect
- succinct vs elaborate
- contextual vs personal
- affective vs instrumental
- negotiation styles (distributive vs integrative)
- business etiquette and business culture
- Did you know that our cultures influence:
Cognitive Cultural intelligence is your actual knowledge.
The Model of Cultural Intelligence
In today’s globalized world, Cultural Intelligence has emerged as a critical skill for individuals and organizations seeking to thrive in diverse environments. At SAVA Consulting Group, we recognize the importance of Cultural Intelligence and have developed a comprehensive framework known as the Model of Cultural Intelligence. This model reveals the interconnectedness of the dimensions of Cultural Intelligence, providing valuable insights for effective training and development. Complementing this model is the Inclusive Intelligence Experience (IIE), a transformative program designed by SAVA Consulting Group, which utilizes lectures, workshops, and role-playing experiences to enhance Cultural Intelligence.
Understanding the Relationships:
Developed by SAVA Consulting Group, the Model of Cultural Intelligence demonstrates how each dimension of Cultural Intelligence is related. It emphasizes that Motivational Cultural Intelligence influences Metacognitive Cultural Intelligence, which, in turn, influences Behavioral Cultural Intelligence and Cognitive Cultural Intelligence. This interconnectedness highlights the intricate dynamics among an individual’s motivations, metacognitive processes, behavior, and cognitive abilities, all of which shape their overall Cultural Intelligence.
The Importance of The Inclusive Intelligence Experience:
Built upon the Model of Cultural Intelligence, The Inclusive Intelligence Experience (IIE) serves as a powerful tool for companies seeking to develop the four components of Cultural Intelligence and increase financial performance. Specifically, developed by SAVA Consulting Group, the IIE utilizes a combination of lectures, workshops, and immersive role-playing experiences to enhance Cultural Intelligence. Participants engage in hands-on activities that foster self-awareness, challenge biases, and develop strategies for effective cross-cultural communication and collaboration, among other outcomes.
By participating in the IIE, companies and their employees gain a deep understanding of the interconnected dimensions of Cultural Intelligence. Particularly, they learn to align their motivations with their metacognitive processes, allowing them to adapt their behavior and enhance their cognitive abilities in diverse cultural contexts. The IIE creates a safe and supportive environment for individuals to practice and refine their Cultural Intelligence skills, enabling them to navigate complexities, foster inclusive workplaces, and drive organizational success.
Unlocking the Benefits:
Through the Model of Cultural Intelligence and The Inclusive Intelligence Experience, individuals and organizations can unlock numerous benefits. Participants gain a heightened awareness of their motivations, enabling them to align their actions with their cultural goals and values. They develop metacognitive strategies that enhance their understanding of cultural differences and biases, fostering more effective and respectful interactions. These insights influence their behavioral responses, empowering them to adapt and connect with individuals from diverse cultural backgrounds. Additionally, participants’ cognitive abilities are sharpened, enabling them to analyze and interpret cultural nuances and respond appropriately in a variety of situations. As a result, Cultural Intelligence helps organizations increase financial performance.
Conclusion
In the current environment where diversity and inclusion are expected and demanded by stakeholders, companies can no longer ignore the issue. However, just creating a diverse and inclusive workforce is not enough. To achieve superior financial performance, organizations need to provide leaders, managers, and employees of diverse and inclusive organizations with a tool and help them to develop the required skills. Thus, Cultural Intelligence helps organizations to achieve superior financial performance.
Cultural Intelligence is an underlying mechanism that not only helps organizations to become more diverse and inclusive but also transforms the diverse and inclusive organization into an organization with superior financial performance.
Cultural Intelligence is a requirement for superior performance.
At SAVA Consulting Group, we believe that the Model of Cultural Intelligence and The Inclusive Intelligence Experience are transformative tools that enable individuals and organizations to unlock the full potential of Cultural Intelligence. By understanding the relationships among the dimensions and participating in the immersive IIE program, companies can cultivate a culturally intelligent workforce that thrives in diverse environments. Let us guide you on your journey toward building inclusive and culturally intelligent organizations that drive success in our interconnected world. Contact us today to embark on your path to unlocking Cultural Intelligence and achieving superior financial performance.
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