Soft stuff or hard cash?

Cultural competence is classified as a soft skill. Soft skills are personal and social characteristics that you need to be successful, which describe how you tackle challenges, interact with people and organize your work. In a multicultural context, there is an extra layer of complexity. Your colleague sees the world differently, gives feedback that is not understood or comes across much harder than intended, has a different view of good leadership or of a deadline. In short: cultural competence encompasses knowledge, sensitivity and flexibility.

Yet this competence is often dismissed as too soft. Attention to cultural skills is often one of the first things to go when a company or organization has to tighten its belt. The question is whether this is justified and whether having and using cultural competence in the workplace does not simply pay for itself in hard cash?

A good example of this is the story of Vasco Silva, a Portuguese manager who set up a subsidiary for a Portuguese multinational in Angola, Africa. The first few years went well, with annual turnover doubling each year. It was a technical company, so Silva had set up an internal technical training program. With his management team he installed good staff selection, HR procedures, and a healthy salary structure with 80 employees: Silva followed all the ‘best management practices’.

Such ‘best management practices’ are a good start but are often insufficient in a multicultural context. Silva and his management team discovered this in a shocking way. A spontaneous strike by employees clearly showed that there were major gaps in the internal communication.

An in-depth process of cultural awareness, research and competence building followed. Silva and the employees transformed the internal organization and set up a body for cultural dialogue. Decisions improved, new leadership emerged, and a radically different flow of information was created. This made the work more challenging and ultimately much more enjoyable for all levels of the organization, from the country director to the very last employee.

And the financial benefits? They followed immediately. Analysis of the figures showed that employee absenteeism fell from 2.4% to 0.7%.  More importantly (especially for a company that trains people internally), staff turnover plummeted from 2.9% to 1.1% and, a year later, to 0.6%.

Bear in mind that the direct replacement costs amount to an average of 50% to 60% of an employee’s annual salary. The total costs associated with staff turnover vary from 90% to 200% of the annual salary (according to a study by the Society for Human Resource Management SHRM).

In short: focusing on cultural competence is not only a fascinating journey, but it also translates into financial benefits for a team or organisation.

See the book on this case study: https://link.springer.com/book/10.1007/978-3-031-45403-5