In 2015, Minneapolis passed the 3 million point in population. It’s the 3rd fastest growing region in the Midwest, behind Columbus and Indianapolis, and has more corporate headquarters per capita than anywhere else in the U.S. 54.% of the total population is in their prime working age (between 25 and 64), poverty is falling and productivity is growing, and importantly, the international population is also growing: one in 14 residents move to Minneapolis from out of the country. Mexico, India, Laos and Somalia are some of the key nations supplying the labor force of the Twin Cities, which is already higher than that of the average U.S. labor population. Globalization is here and it certainly is an exciting time for businesses. Having a diverse workforce is a new fact of life, and an asset to every company. A research study by McKinsey and Company found that firms with more ethnically diverse workforce are 35% more likely to financially outperform more homogeneous groups. The results suggested that companies with a culture that embraces diversity have better access to and retention of top talent from around the world. The researchers also found a direct correlation between ethnic diversity in top-level management and earnings before interest and taxes (EBIT).
So great, it’s important to be diverse. But just because HR brings in people from all different backgrounds doesn’t mean the company is going to magically start producing at higher levels with 90% profit margins. The other piece of the puzzle is getting employees to work together successfully. Communication across cultures can be challenging, especially when those cultures come from regions with significant geographical separation. Think of bringing a Canadian and an American together versus bringing together an American and a Korean: the degree of separation in culture correlates with the degree of separation in geography. But how important is it that people get along? We can start with the fact that conflicts in culture are the number one reason that mergers and acquisitions fail. German Daimler and American Chrysler could have resulted in an optimal combination of diversity in both portfolio and geography of markets, but differing German and U.S. cultures were simply too different in the end. The merger between Volvo and Renault was a similar story. The ability for employees to communicate effectively with one another is not merely a benefit, but even an indicator of life or death to the long-term health of a multinational firm.
So what’s a company to do to address cross culture in business? It can seem like a catch-22: to stay ahead, diversity is key. On the other hand, lack of appropriate strategy to prepare employees for cultural integration can be catastrophic. As any good businessperson knows, freezing time is not an option: evolution must occur.
What does it mean to put your feet up and let someone see the bottom of your feet? In the U.S., nothing. To someone from the Arab culture, on the other hand, it’s a serious insult. Patting the head of a child in the U.S. is a normal, friendly gesture. In Thailand, the head is the closest part of the body to God and thus the most sacred part of the body. You don’t touch anyone’s head. In New Zealand, sitting in the back seat of a taxi when you’re the sole passenger is considered extremely snobby, and tipping in Japan is considered an insult, since you’re indicating that the person receiving a tip is beneath you. In Ireland, displaying the “peace” sign (two fingers) is the equivalent of giving someone “the bird” here, and crossing your fingers in Vietnam will make others think you’re talking about a certain female body part. And don’t stick a Mexican’s business card in your back pocket upon receiving it. Take it gratefully, examine it, and put it on the table in front of you like the important document that it is.
The world is big and beautiful, and getting to know people from different countries can be a true gift, both to an organization and on a personal level. However, seemingly friendly gestures can result in the destruction of a potentially wonderful relationship with a business partner. But all hope is not lost: proper cross-cultural integration can make a world of difference, and even give a company the extra boost needed to become the crème de la crème in the dog-eat-dog world of multinational enterprises. Investing in a cultural training class and being able to speak a few words of a target culture’s language is a small piece of the puzzle you don’t want to miss out on. Your competitors have already started.