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Benefits of Cross-Cultural Training for your Company

Despite popular beliefs to the contrary, the single greatest barrier to business success is the one erected by culture.

Hall & Hall, Hidden Differences: Doing Business with the Japanese [1]

Almost everyone in today globalized business environment is working in some type of multi-cultural environment; with colleagues at the office or with customers & business partners around the world. From business executives to human resources departments, more and more people are starting to realize that cross-cultural training and education programs are fundamental to the success of today’s organizations large and small. From interactions with multinational employees and customers, to the complex relationships with foreign companies and even governments, companies that embrace and understand the benefits of a cross-cultural approach continue to succeed while many others fail to take advantage of the new opportunities in the marketplace.

What is happening today in marketing, advertising and sales:

Image courtesy of uwex.edu
Image courtesy of uwex.edu

“Increased Customer Satisfaction is directly correlated to increased sales and profitability” is a recognized and well known fact in the business community. From academic to marketing studies, most business have recognized the importance of meeting their customers expectation in order to increase sales and profitability for their companies. According to research conducted through many years:

  • Satisfied customers come back for repeated purchases
  • Satisfied customers are willing to spend more on the same products reducing the need for additional discounts
  • Satisfied customers promote your company and products within their social groups acting as your informal marketing team.

Now the interesting part is that until recently most studies have only explored the tangible factors influencing customer satisfaction; but very few have attempted to address all of the environmental factors that may influence that customer satisfaction score. Studies have focused on the classical 4 Ps of marketing (product, price, promotion, place), and these have driven the majority of the typical company decisions of the last 75 years since the golden era of advertising. While (and as a former international marketing expert myself) I recognize the validity of these studies, they are based on research done back in the 30s, 40s, and 50s; a time that we can all finally agree that has been left behind long time ago.

What is needed in today’s marketing advertising and sales:

Insanity: doing the same thing over and over again and expecting different results.

Many company CEOs, COOs, HR Department, and even Sales and Marketing executives still basing most of their decisions on the decades old and tested 4Ps of marketing, fail to recognize the changes on their business environment severely affecting their business. From reduced trade, transportation, and travel barriers, to increased communication and purchasing power; the world is no longer divided by natural distances barriers and political ones. Today’s companies have their headquarters in the U.S. or Europe, their IT department in India, their manufacturing in China, and their sales teams all over the world, but many fail to understand the consequences of this new world business environment.

“Culture is the collective programming of the mind distinguishing the members of one group or category of people from others”

Geert Hofstede, PHD.[2]

If you are a CEO, COO, HR, or even Sales and Marketing multinational executive in today’s world, you must have recognized by now that the changes of the last 50 years have resulted in increased challenges due to cross-cultural misunderstandings. You are today conducting business across the globe, and that your customers, employees, and suppliers come from different geographies, time zones, and cultural backgrounds. While a direct approach to business may be acceptable in the U.S., most business people in Latin America or Asia expect you to develop a personal relationship before “you ask for the business”; causing many cultural misunderstandings when their “American” counterparts show to the first meeting with a contract ready to be signed even before they know the names of the people attending the meeting. Cross-Cultural challenges like these can substantially affect your company international business, and your own personal career by extension.

Benefit of Cross-Cultural Training for your Company

PROFITABILITY!

Image courtesy of thebrazillawblog.com
Image courtesy of thebrazillawblog.com

The primary benefit of cross-cultural training for your company is profitability. The primary reason for your company and the actual only reason why your company stays in business and the value of your stock grows is because your organization provides a ROI to the stakeholders. In yesterday’s business environment your stakeholders were physically and culturally very similar to your own company, since your business was mostly conducted in a relatively small geographical area, and even multinational companies from the 50s to the 90s had very diverse and separated business units “subsidiaries” dealing with their “international customers” in Brazil, Mexico, the Middle East, or even China. On this separated and different business units, marketing and sales used classical clustering techniques to catalogue and classify their customers and make decisions based on that information. Today the world has substantially changed, and the well defined cultural clusters methodologies are being challenged simply by current developments in communications, travel, and transportation.

With cross-cultural training your company can benefit from:

Reduction in Business Obstacles:

From contract negotiation to customer service, today’s business can be affected by cross-cultural misunderstandings. From preconceptions, prejudices and stereotypes, to simply misunderstandings, your company bottom line can be substantially impacted positively or negatively by its ability to deal with cross-cultural issues. Cross cultural training helps increase awareness about other cultures through presenting them under an objective light.  Learning about other cultures, helps reduce the classical barriers and allows  more open relationships and exchanges.

Develop Trust between Business Partners:

While in classical western cultures “getting down to business” is the classical approach, other cultures value more the development of a personal relationship before business is conducted. When you understand other cultures it is easier to develop trust and mutual understanding between partners. Once trust is established between partners even in very western cultures, participants find that it is easier and more profitable to conduct business.

Employee Motivation:

Studies have found that a 1% increase in employee satisfaction results in a direct 2% increase in employee productivity and their contributions to the company bottom line.

Customer satisfaction is one of the critical indicators of potential company profitability, but many people forget that the driving engine behind customer satisfaction is employee satisfaction.  One of the results of cross-cultural training for companies is that from first line employees, to upper management people begin to understand their roles within the workplace more clearly. Once employees understand the impact of culture on their own individual and organizational environment, communication improves at all levels and productivity is increased.

References and Related Articles

[1] Doing business with the new Japan. – Hodgson, Saro, Graham

[2] The Hofstede Center – Geert Hofstede

Jorge Mastrapa, PhD
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Jorge Mastrapa, PhD

Managing Partner at ICQ Consulting
Dr. Mastrapa is an internationally recognized author, public speaker, and cultural expert; with over 20 years of experience in the areas of culture and diversity, global leadership, and organizational culture.
Jorge Mastrapa, PhD
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