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Importance of Cultural Intelligence in Business
What does cultural intelligence mean? How important is it for businesses today? Culture plays a huge role in our lives. From the way we dress to the food we eat, culture influences us every day. Recently, it has become important to understand other cultures better. Today's businesses are globally established and operating within a wider variety of countries. This means they must adapt their strategies to suit local customs and traditions.
What is cultural intelligence?
Cultural intelligence refers to the ability to identify and understand cultural differences between individuals and groups. While some cultures are similar, others are very distinct. Understanding these differences can help companies succeed in international markets. To achieve this, you need to understand the culture you're in, and apply that knowledge to your own life.
Emotional intelligence focuses on understanding emotions, whereas cultural intelligence focuses on understanding people from different cultures. Cultural intelligence is about having a deeper understanding of cultural differences and working in a way that respects those differences. This includes understanding the culture and behaviours of others, and being sensitive to how you behave towards others. Read more about how to develop cultural intelligence in this blog post.
Benefits of cultural intelligence
The combination of cultures can bring significant benefits to your company. One of the most important of them is the fact that cultural intelligence brings a competitive advantage to a business.
According to David Livermore, the President of the Cultural Intelligence Centre in Michigan, US, "90% of leading executives from 68 different countries have said that cross-cultural skills are one of the vital capabilities needed to remain competitive". This highlights the importance of CQ not just for businesses, but for individuals within them.
CQ creates harmony
Highly effective teams are often those where everyone understands each other and works well together. This requires both cultural intelligence and emotional intelligence. In fact, research suggests that people with high levels of cultural intelligence and cultural sensitivity tend to be better able to adapt to different situations and environments. They're also more likely to succeed in the workplace.
In one study, researchers found that employees with high levels of cultural intelligence were more likely to report feeling safe, happy, and satisfied at work. Another study showed that people with high levels of cultural intelligence were more likely to feel a sense of belonging. These findings suggest that having a greater ability to understand others' perspectives and values helps us connect with our colleagues and co-workers.
Improved communication, internally and externally
Communication at work reflects how behaviour is perceived in a foreign environment. People often don’t realize how their actions impact those around them. In addition, some behaviours are considered rude or inappropriate in one culture, while perfectly acceptable in another. Often people are not aware of the cultural barriers to communication. Therefore, you should familiariaze yourself with the most common mistakes in intercultural communication.
For example, it might seem like a good idea to ask someone what he thinks about something you just did, but in many cultures, asking questions is considered disrespectful. If you want to know what your colleagues think about something, try observing them closely. You might learn something interesting.
In today’s digital world, where globalisation is becoming increasingly important, businesses are looking for ways to connect with customers across borders. This includes understanding how to work effectively with people from diverse backgrounds, which requires developing interpersonal skills in a global environment.
But cultural knowledge isn’t just something that happens within the four walls of your office. It goes much deeper. Culture influences everything - from how employees interact, to how managers treat their teams, to how companies operate.
Understanding the impact of culture on performance is vital because not only does it give you a competitive edge but also insights into how to improve customer experience and build loyalty.
A company with cultural intelligence knows what its customers want and needs. It also understands the cultural nuances and cultural sensitivity of different markets and regions. This insight allows it to create products and services that resonate with consumers coming from foreign cultures.
CQ expands innovation
Cultural Intelligence is based on the idea that people are naturally creative beings. This creativity helps us solve problems and adapt to changing situations.
But it can be difficult to tap into our natural creativity. We often feel threatened by our fear of failure and making mistakes. In addition, we tend to think about things too narrowly and don't look beyond the obvious solutions.
Cultural intelligence can develop one's abilities to adapt while also creating an environment where everyone feels comfortable enough to speak up.
Cultural diversity also improves decision-making process thanks to the wide spectrum of ideas that a diverse team can come up with.
CQ encourages healthy competition
The International Association for Business Communication (IABC), a professional association focused on advancing communication across cultures, recently published a study indicating that companies that encourage applications from international employees outperform those that select only domestic candidates.
In addition to helping companies recruit qualified workers, promoting diversity increases employee retention rates. Diversity fosters trust among co-workers and management, leading to better morale and increased productivity.
In fact, according to IABC research, companies that embrace diversity tend to experience lower turnover rates. A lack of diversity leads to a decrease in productivity, poor decision-making, and less innovation.
CQ helps to understand consumer behaviour
It's one thing to understand what your customers want; it's quite another to understand what makes them tick. And yet, understanding cultural differences between people is critical to doing business in the 21st century.
In fact, according to research by McKinsey & Company, "the most significant competitive advantage of any company lies in its ability to adapt to changing consumer preferences."
It's more than just knowing what people want. It's about understanding cultural differences and making sure your products and services work well with those different cultures.
https://www.researchgate.net/publication/343565481_Cultural_intelligence_perceived_inclusion_and_cultural_diversity_in_workgroups
https://sites.lsa.umich.edu/scottepage/wp-content/uploads/sites/344/2015/11/pnas.pdf
Tanja is a Certified Intercultural Communication Coach and an expert on Work Style Analysis (WSA). With a Master's Degree in Business Administration, specializing in Leadership and People Management, she helps companies and assists leaders in comprehending cultural dimensions and leveraging existing cultural differences to create powerful organizational strengths.
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