13 benefits and challenges of cultural diversity in the workplace

As national politics and discourse seem to grow more inward-looking and divisive across America and Europe, successful businesses must continue to think inclusively and globally. Embracing cultural diversity in the workplace is an important first step for businesses that want to be competitive on an international scale.

From the Virgin Group to Disney and PricewaterhouseCoopers, organizations across industries are embracing the benefits of a diverse workforce. But with benefits necessarily come challenges of working across borders, cultures, and languages.

At Hult, diversity and global mindedness are integral to our DNA. Our mission is to prepare our students to thrive in a fast-paced, unpredictable, and fundamentally international business environment. As our students develop into the global business leaders of tomorrow, they can certainly expect to encounter these 13 key benefits and challenges of cultural diversity in the workplace.

Benefits:

Diverse cultural perspectives can inspire creativity and drive innovation
Local market knowledge and insight makes a business more competitive and profitable
Cultural sensitivity, insight, and local knowledge means higher quality, targeted marketing
Drawing from a culturally diverse talent pool allows an organization to attract and retain the best talent
A diverse skills base allows an organization to offer a broader and more adaptable range of products and services
Diverse teams are more productive and perform better
Greater opportunity for personal and professional growth

Challenges:

Colleagues from some cultures may be less likely to let their voices be heard
Integration across multicultural teams can be difficult in the face of prejudice or negative cultural stereotypes
Professional communication can be misinterpreted or difficult to understand across languages and cultures
Navigating visa requirements, employment laws, and the cost of accommodating workplace requirements can be difficult
Different understandings of professional etiquette
Conflicting working styles across teams

1. Benefit: Diverse cultural perspectives can inspire creativity and drive innovation

Our culture influences the way in which we see the world. A variety of viewpoints along with the wide-ranging personal and professional experience of an international team can offer new perspectives that inspire colleagues to see the workplace—and the world—differently.

Diversity of thought has been shown to breed creativity and drive innovation, helping to solve problems and meet customer needs in new and exciting ways. For example, cosmetic giant L’Oréal attributes much if its impressive success in emerging markets to its multicultural product development teams.

Multiple voices, perspectives, and personalities bouncing off one another can give rise to out-of-the-box thinking. By offering a platform for the open exchange of ideas, businesses can reap the biggest benefits of diversity in the workplace. A recent study from Forbes echoed this notion, concluding that “the best way to ensure the development of new ideas is through a diverse and inclusive workforce.”

2. Benefit: Local market knowledge and insight makes a business more competitive and profitable

A multicultural workforce can give an organization an important edge when expanding into new markets. Often, a product or service needs to be adapted to succeed overseas. Understanding local laws, regulations, and customs, as well as the competitive landscape, can help a business to thrive. Moreover, local connections, native language skills, and cultural understanding can boost international business development exponentially.

And being more competitive ultimately means being more profitable. Diversity Inc annually recognizes the top 50 most diverse companies and measures their success against the broader market. Recent research from McKinsey also underscores the fact that diversity is good for a business’s bottom line. In fact, ethnically diverse companies were shown to be 35% more likely to have financial returns above the national industry median.

3. Benefit: Cultural sensitivity, insight, and local knowledge means higher quality, targeted marketing

Cross-cultural understanding, along with local market knowledge, lends itself the production of more effective marketing strategy and materials. For example, high quality and culturally sensitive translations of websites, brochures, and other assets are essential. But these can be overlooked without the input of a native speaker.

Even brand taglines can get badly lost in translation. A frequently cited example is from KFC in China, whose chicken was marketed as so tasty, you’ll “eat your fingers off!” (A poor translation of their brand tagline, “Finger lickin’ good.”)

Market-specific knowledge and insight is invaluable when it comes to for imagery and design, too. What might work well on a billboard for a British company could fail or offend elsewhere. A memorable McDonalds print ad in Finland may have been considered clever locally, but it was seen as confusing and even grotesque by foreign audiences.

The danger of making a serious marketing blunder, which can cause irreparable damage to a brand or business abroad, can be mitigated by employing a diverse workforce with local marketing savvy.

4. Benefit: Drawing from a culturally diverse talent pool allows an organization to attract and retain the best talent

According to a Glassdoor survey, two thirds of job hunters indicated that diversity was important to them when evaluating companies and job offers. In a competitive global job market, demonstrating that your business is invested in fostering a multicultural and inclusive environment can make you stand out to the right candidates. Making diversity an important part of the recruiting process will broaden your talent pool of prospective employees.

Not only does hiring from a more diverse talent pool makes your business attractive to ambitious, globally minded candidates, it also helps you to keep them on board. Diversity, including diversity of gender, religion, and ethnicity, has been shown to improve retention and reduce the costs associated with employee turnover.

In a diverse workplace, employees are more likely remain loyal when they feel respected and valued for their unique contribution. This, in turn, fosters mutual respect among colleagues who also value the diverse culture, perspectives, and experiences of their team members. An inclusive atmosphere of cross-cultural cooperation is an excellent way to bond colleagues and teams across the business.

“One of the main reasons I chose Hult was the incredible diversity of students and the international element we possess here. Studying and sharing a campus with students from different nationalities has been an awe-inspiring experience. Diversity and international exposure have always been important to the decisions I have made in my career.”

Vishnu Subramanian, Hult MIB Class of 2017

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5. Benefit: A diverse skills base allows an organization to offer a broader and more adaptable range of products and services

By drawing from a culturally diverse talent pool, companies benefit from hiring professionals with a broad range of skills that are often not accessible when hiring locally. Globally oriented companies can add to their service range by leveraging the skills and experience their international employees bring to the table.

A broader skills base and a more potentially diverse offering of products and services can help your business to have the competitive advantage of adaptability. In today’s volatile and uncertain global business environment, nimble and adaptable organizations are the ones that thrive.

Adaptability means faster and more effective planning, development, and execution. A company with cultural and cognitive diversity can be quicker to spot a gap in the market. It will also have the global (or market-specific) insight and experience to help a new or adapted product to meet changing consumer behavior—and succeed.

6. Benefit: Diverse teams are more productive and perform better

The range of experience, expertise, and working methods that a diverse workplace offers can boost problem-solving capacity and lead to greater productivity. In fact, studies have shown organizations with a culture of diversity and inclusion are both happier and more productive.

Where working in homogeneous teams can seem easier, it can cause a business to settle for the status quo. Diversity, on the other hand, can breed healthy competition, stretching a team in a positive way to achieve their best. This atmosphere of healthy competition can lead to the optimization of company processes for greater efficiency. As a recent article in the Harvard Business Review argues, the challenges of working in a diverse team are one of the reasons why diverse teams perform better: “working on diverse teams produces better outcomes precisely because it’s harder.”

7. Benefit: Greater opportunity for personal and professional growth

Fundamentally, an inclusive and culturally diverse business will attract talented, ambitious, and globally minded professionals who will appreciate the opportunity for personal and professional growth.

Working across cultures can be a truly enriching experiencing, allowing others to learn about perspectives and traditions from around the world. Bonding over similarities and differences can help you to become a global citizen, abandoning prejudices or an ethnocentric world view—something that is increasingly valuable.

A diverse set of colleagues can be professionally enriching too—exposing you to new skills and approaches to work, and developing an international network that can take your career in exciting new directions or abroad.

8. Challenge: Colleagues from some cultures may be less likely to let their voices be heard

However, the presence of diverse brain power alone is not enough. It’s also critical to create an open and inclusive workplace environment, so all team members feel empowered to contribute.

This can be particularly challenging for colleagues from polite or deferential cultures. For instance, professionals from Asian countries such as Vietnam or Japan may feel less comfortable speaking up or sharing ideas, particularly if they are new to the team or in a more junior role.

Conversely, assertive colleagues from the U.S. or Western Europe, or those from Scandinavian countries who emphasize flat organizational hierarchy, may be more inclined to speak up meetings or negotiations when others don’t.

9. Challenge: Integration across multicultural teams can be difficult in the face of prejudice or negative cultural stereotypes

While local expertise is an invaluable asset, it’s also important to foster integration among teams to avoid colleagues from different countries working in isolation and limiting knowledge transfer.

This can be a challenge to overcome, particularly if there are underlying prejudices between cultures, making them less inclined to work together. Negative cultural stereotypes can be seriously detrimental to company morale and affect productivity. For instance, the centuries-long antipathy between the British and French, or the Polish and Germans can sometimes creep into the workplace.

Although not all stereotypes are necessarily negative—like the notion that Americans are confident or Asians are intelligent—all are simplifications that can prove limiting or divisive in the workplace. And while outright prejudice or stereotyping is a serious concern, ingrained and unconscious cultural biases can be a more difficult challenge of workplace diversity to overcome.

Sometimes, a little bit of humor is the best way to diffuse negativity. Here are the top 10 wrong (yet persistent) cultural stereotypes and the truth behind them:

10. Challenge: Professional communication can be misinterpreted or difficult to understand across languages and cultures

While quality translations are key for effective marketing, there can also be a real risk of communication getting lost in translation among multicultural colleagues. Language barriers are just one challenge. Even in an office where everyone speaks English, comprehending a range of accents, or understanding a native-speaker’s use of idioms, can be difficult.

Moreover, effective cross-cultural communication comes down to much more than just words spoken. Non-verbal communication is a delicate and nuanced part of cultural interaction that can lead to misunderstandings or even offense between team members from different countries. Things like comfortable levels of physical space, making or maintaining eye contact, and gesturing can all be vastly different across cultures.

Even something as simple as a greeting or handshake has cultural implications that should be considered in a work environment. Business Insider put together this useful infographic to highlight the differences in handshakes and professional greetings around the world:

11. Challenge: Navigating visa requirements, employment laws, and the cost of accommodating workplace requirements can be difficult

Despite the clear benefits, hiring talent from overseas can present an HR challenge. Not least among this is the complicated process of navigating employment laws and visa requirements for international workers. Requirements and regulations are different in each country and between countries, and can change frequently.

Beyond visas, further accommodations for a recruiting and retaining a culturally diverse workforce should be taken into account. For instance, providing a quiet space for prayer can make a workplace more welcoming and inclusive for employees with a range of beliefs, as can taking into account different cultural or religious holidays. Of course, these considerations and accommodations can sometimes be an added business cost as well as a logistical challenge.

12. Challenge: Different understandings of professional etiquette

Colleagues from different cultures can also bring with them different workplace attitudes, values, behaviors, and etiquette. While these can be enriching and even beneficial in a diverse professional environment, they can also cause misunderstandings or ill feelings between team members.

For instance, the expectation of formality (or relative informality), organizational hierarchy, and even working hours can conflict across cultures. Where a Japanese colleague may not feel it appropriate to leave work before their manager (or, indeed, anyone else), a Swedish professional may be used to a 6-hour working day.

Additionally, different approaches to punctuality, confrontation, or dealing with conflict can prove an issue.

13. Challenge: Conflicting working styles across teams

However, working styles and attitudes towards work can be very different, reflecting cultural values and compounding differences. If not recognized and accounted, conflicting approaches to work can put the brakes on productivity.

For instance, approaches to teamwork and collaboration can vary notably. Some cultures, including many in Asia and Central America, value collective consensus when working towards a goal. Whereas others, such as Germany and America, put emphasis on the independence of the individual. Likewise, emphasis on order, rigor, and organization in the workplace versus flexibility and spontaneity can also reflect underlying cultural values.

The Virgin Group is recognized as a leader in promoting workplace diversity and fostering a positive working culture. Hear how Richard Branson makes culture work in a multinational business by being flexible and open to different working styles:

In many ways, the Hult classroom mirrors this experience, immersing you in a diverse and collaborative working environment from day one. By studying around the world and learning with peers and professors from over 150 different countries, you will master the skill of communicating effectively across cultures and embrace the value of diversity in the workplace.

Interested in giving your cultural competency and business acumen a boost?

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Have you experienced any particularly positive or negative aspects of working in a culturally diverse team? Do these influence your professional life today? Let us know in the comments below.

Make the most of what your career has to offer with a Masters in International Business from Hult. To learn more, take a look at our blog How volunteering prepared me for business school, or give your employability a huge boost with an MBA in international business. Download a brochure or get in touch today to find out how Hult can help you to explore everything about the business world, the future, and yourself.

Resources:

https://www.globalissues.org/news/2017/01/02/22768

https://www.virgin.com/entrepreneur/why-richard-branson-values-diversity

https://thewaltdisneycompany.com/the-walt-disney-company-recognized-for-diversity-leadership/

https://www.pwc.co.uk/who-we-are/corporate-sustainability/encouraging-diversity.html

https://www.innovationmanagement.se/imtool-articles/why-diversity-is-the-mother-of-creativity/

https://hbr.org/2013/06/loreal-masters-multiculturalism

https://images.forbes.com/forbesinsights/StudyPDFs/Innovation_Through_Diversity.pdf

https://www.forbes.com/sites/sylviavorhausersmith/2012/06/22/cultural-homogeneity-is-not-an-automatic-by-product-of-globalization/#6dd7a3d5d6bb

https://www.diversityinc.com/the-diversityinc-top-50-companies-for-diversity-2016/

https://www.mckinsey.com/business-functions/organization/our-insights/why-diversity-matters

https://marketeer.kapost.com/marketing-to-different-cultures/