It cannot be disputed that training in cross-cultural differences offers substantial benefits. A survey that was conducted by SHRM Global and GMAC/NFTC/GRS gathered information about global relocation and found that more than 80% of employees who took cross-cultural instruction believed that it was highly valuable.
So, just how big is this cultural gap?
Author Nancy Adler, who wrote International Dimensions of Organizational Behavior, put it simply. She said that in the modern age with fast, digital communication that allows people from around the world to communicate easily, many people believe that cultural differences no longer exist.
The reality is that culture, media, education, and language all have an impact on a person’s behavior, perceptions of others and the world around them, their attitude, and on life itself. These differences become apparent during interactions with other cultures. It is these interactions that lend themselves to cultural errors and insensitivities.
So, can cultural differences really have an impact on productivity and profitability?
Absolutely! Miscommunication because of cultural differences can easily lead to more than a simple financial loss. Employees who represent an organization in a country and culture they are unfamiliar with are at risk of unintentionally damaging relationships the company has with consultants, vendors, and even governments if they take an action or make a statement that is insensitive to the culture they are immersed in.
Even when they do not represent the company externally, employees who are in a multicultural work environment without a proper cultural sensitivity may demotivate the entire team – bringing down their performance and productivity. Employees who realize they are not culturally aware will be nervous about accepting a foreign assignment, and if they make a few missteps may decide to leave the company and increase attrition rates significantly. This, of course, leads to loss of time and money investing in training the employees who leave.
The Economist conducted research through its Intelligence Unit and found that differences in culture contribute 51% to failures of international projects, and that work environment and culture differences contribute 49% to failures.
These numbers are huge!
The survey conducted by SHRM Global and GMAC/NFTC/GRS showed that almost 20% of expats return to their home country before completing their international assignment. The approximately cost of an average 3 year international assignment is estimated at $1,300,000. Cutting these assignments short can result in significant losses. This statistic does need to be put in context. Recent reports show that 85% of American companies who are trading within China are seeing extremely large losses.
What are the benefits of cultural training?
• Intercultural training helps to incorporate best practices from both the home country and the host country cultures. In multicultural teams, this often leads to better understanding and acceptance of feedback styles and decision making styles.
• This training improves the collaboration of the team when it breaks down barriers to communication and creates an understanding of management styles.
• Training contributes to improving team performance and decreases the time required for product development, as well as for the project as a whole.
• Cultural training leads to a more thorough understanding of the market segments the company operates in, and helps create marketing strategies – which leads to increased revenue.
• Cultural training programs improve relationships with business partners, consultants, and government authorities located in other countries.
• And finally, cultural training results in improved employee satisfaction with international assignments, which decreases the attrition rate.
With an ever increasing count of companies – both large and small – who have global clients, it is not particularly surprising that GMAC found in their surveys that cultural training ranked third in a list of the most important factors affecting ROI of international projects.
• The Economistinsights.com,. ‘Competing Across Borders’. N.p., 2015. Web. 20 July 2015.
• Expatica.com,. ‘Global Relocation Trends 2008 | Global HR News’. N.p., 2015. Web. 20 July 2015.
• GMAC Global Relocation Services,. Global Relocation Trend Survey. Oakbrook, IL: GMAC Global Relocation Services, 2001. Print
• GMAC Global Relocation Services,. Global Relocation Trends Survey. Oak Brook, IL: GMAC Global Relocation Services, 2003. Web. 20 July 2015.