The business environment is becoming more international and diverse by the day.
Studies consistently show that diversity in corporate culture increases innovation and profitability.
This is a good thing because diversity opens up new markets and increases profitability. Diversity Inc. annually selects the 50 most diverse companies, and they have consistently found that the most diverse public corporations were significantly more profitable than the S&P 500. Comprising just 7% of the Fortune 500, these diverse businesses generate 22% of its total revenue.
Cultural diversity in the corporate world builds trust with a more diverse target market. Moreover, corporate respect for cultural diversity tends to reduce absenteeism and increase employee engagement. And diversity within innovation teams helps those teams create new products that satisfy the needs of an increasingly heterogeneous marketplace.
Making the most of cultural diversity requires understanding how different cultures transact business.
How Different Cultures Build Trust and Compartmentalize Professional Life
Building strong business relationships requires an understanding of how professionals from different countries and cultures understand work life. It also requires understanding how professionals build trust in different cultural environments.
Some cultures have relatively soft boundaries between social and work life, and in these cultures, professionals are expected to engage in non-work social activities with their peers. In other cultures, work is work and social life is social life and the two worlds may never meet. Understanding the professional cultures of people on your team or with whom you’re negotiating is essential to clear communication and developing shared goals.
Power Structures and How People Relate to Them
Likewise, the shape and rigidity of power structures varies from one culture to the next. In many Scandinavian countries, for example, power structures are relatively flat. Cooperation across departments is expected, and communication styles are informal. By contrast, in countries like Japan and South Korea, hierarchies are more rigid, and deference of junior staff to senior staff is expected and seen as a sign of general cultural respect.
Corporate hierarchies are “flatter” in some cultures, and more formal in others.
Similarly, the concept of negotiation varies across cultures. In some cultures, the negotiation itself represents a “contract,” while in others, negotiations are only a prelude to the creation of formal contracts. It’s important to be aware that in some cultures, your word is as binding as a formal written agreement is in the United States.
Communicating Effectively Across Cultures
Communication in some cultures is more context-dependent than in others. For example, Americans, the Dutch, and those in many Western European countries communicate in a direct, straightforward manner. In other countries, such as Russia, communication is more highly nuanced. Communication and listening skills are perhaps never more important than they are when dealing with international teams and partners.
Comfort with silence varies with culture too. Silence during business conversation tends to bother many Americans, yet for many people in Far Eastern cultures, occasional silence in business communication is normal and doesn’t cause discomfort. Asking questions is another cultural differentiator. Many Western cultures assume questions will be asked, and they are encouraged. There are cultures, however, where asking questions is seen as less respectful.
The most important thing leaders can do is to educate themselves about the backgrounds of those with whom they work. Ask questions, study cultures, and try to understand the cultural backgrounds that produce different attitudes. Leadership coaching can be an excellent tool for leaders who want to improve their communication and listening skills in an increasingly diversified world of work.
There is no question that diversity in corporate culture benefits business. But being unaware of cultural differences can cause needless misunderstandings and slow progress. Embracing diversity and the advantages it brings requires education, but the payoff can be immense. If you are interested in learning more about transforming corporate culture, I encourage you to check out my books, which address these topics in the context of leadership excellence.