Cultural Competence in Business: What It Is and How to Master It
- Daphne, FNDR of Tough Convos
- Apr 18
- 4 min read
Updated: Sep 9
Cultural competence is an essential skill for today’s global workforce. It’s defined as the capacity to interact successfully with people from diverse cultural backgrounds.
It’s considered an extension of cultural awareness—an understanding that different cultures practise different beliefs, practices, and traditions. Cultural competence takes this awareness and proactively translates it into behaviours and actions.
One of the many benefits of cultural competence is enhanced engagement, which promotes a democratic relationship between management and employees. The knock-on effect is enhanced engagement, retention, and productivity.
In this article, we’ll explore cultural competence and why it matters for business success. We’ll also find out about the Cultural Growth Framework, the benefits of Cultural Competence, and how to build Cultural Competence in your Workplace. Table of Contents:
From Awareness to Competence to Intelligence: The Cultural Growth Framework
Achieving confidence in multicultural settings is a learning process, with stages that you can work through.
It starts with cultural awareness—recognizing that cultural differences exist. In the workplace, this could play out as being aware that your co-workers are celebrating a particular religious festival. Or you may be setting out on diversity and inclusion training to help you understand these areas.
The next step is cultural competence. This stage is about developing skills to adapt and engage effectively. For example, you may practise cross-cultural communication by initiating a conversation with a co-worker about a cultural matter that’s relevant to their community.
Then comes cultural intelligence (CQ). Here, you apply cultural competence strategically in high-stakes or complex situations. In business, you may have dealings with clients from a culture that has very different practices from your own. You make an effort to research their customs and traditions, integrating them into your interactions.
Each stage involves the development of distinct skills. As you work through the stages, you become increasingly confident, workplace interactions are enhanced, and relationships are strengthened.
The Business Benefits of Cultural Competence
Incorporating cultural competence practices into your day-to-day business reaps many rewards, giving you a competitive advantage. Cultural competence benefits include:
Employee Engagement and Retention. A great example is Starbucks. They offer American Sign Language (ASL) training to all employees to ease communication with the deaf and hard-of-hearing community, including co-workers and customers. It's no coincidence that Starbucks is in the top 35% of similar-sized companies in terms of staff retention.
Improved Customer Experience. Companies that react to their customers’ specific cultural needs offer an enhanced client experience and higher satisfaction levels. Examples include McDonald’s, which adapted its menu to exclude beef and pork and include plenty of vegetarian options to cater to cultural considerations in India.
Conflict Reduction. In 2021, Built In surveyed HR and DEI leaders. They found that cultural competence skills, including empathy, active listening, and adaptability, meant a reduction in misunderstandings and conflict in the workplace.
Increased Innovation. Global multinational Accenture proactively recruits from a wide variety of cultural groups, offers a cross-cultural understanding program that focuses on topics such as communication, customs, and language, and champions inclusivity and accessibility. These practices help to drive innovation and reinvention.
How to Build Cultural Competence in Your Business
Given the wide range of benefits discussed in the section above, it makes sense to embed cultural competence into your company ethos for an inclusive workplace. Here are some actionable steps that you can take to improve cultural competence:
Company Policies. Ensure that your company policies reflect DEI (diversity, equity, and inclusion) values—for example, an understanding of race and ethnicity, and promoting fairness and a sense of belonging.
Leadership Training. Set an example as a manager or leader by prioritizing your own cultural competence training and sharing insights with employees.
Inclusive Hiring Practices. Write inclusive job descriptions, appoint diverse interviewing panels, and make your DEI policies readily available to candidates.
Mentorship Programs. Set up mentorship programs so that employees from diverse backgrounds get the support they need to progress their careers. Follow the example of New York Life, whose Empower Mentorship Program supports ethnic minority groups.
Cultural Training. Establish a cultural training program, focusing on building awareness and promoting communication via interactive and engaging teaching channels.
Before you set out on establishing a cultural competence program, think about these key questions:
Does the Workforce Reflect a Diverse Community?
Are Leaders Aware of the Value of Cultural Competence?
How Can We Add to Existing Learning Programs to Highlight Cultural Competence?
Do We Give Employees the Opportunity to Share Their Culture?
Do Managers Understand How Stereotypes Arise and How to Challenge Them?
When building cultural competence, you may encounter challenges such as unconscious bias, resistance to change, or assuming that diversity alone equals cultural competence. Here’s how you can address such issues:
1. “This is just about being politically correct.”
Response: “All perspectives and backgrounds are valid. It’s important to recognize them.”Statistic: Companies that score highly for ethnic diversity are 35% more likely to outperform their competitors.
2. “We already have a diverse team.”
Response: “Complacency doesn’t work. We have to keep striving to promote diversity and inclusion.”Statistic: 76% of job seekers say that a diverse workforce is a significant factor when considering job offers.
3. “What difference will it make?”
Response: “Cultural competence makes a tangible difference. Employees will be more engaged and satisfied. Clients will feel included and respected.”Statistic: Diversity improves performance by up to 30%.
Showing consistent leadership commitment, offering an ongoing training program, and encouraging continuous learning can all help to embed values that support cultural competence.
Take Action to Achieve Cultural Competence Now!
Cultural competence is about continual growth—recognizing gaps in your knowledge and undertaking continual professional development to fill them.
Ask Yourself Challenging Questions:
What Areas of Cultural Competence Am I Confident In?
Where Could I Improve?
Which Personal Traits Could I Work on to Gain a Greater Understanding of Diversity Issues?
How Will My Performance at Work and in My Personal Life Improve with Greater Cultural Competence?
To help develop your and your company’s cultural competence, reach out to us at Tough Convos. We’ll partner with you to build a culturally competent team with a program customized to your needs. Let’s do this together!
Comments