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Updated Jun 21, 2024

6 Ways Businesses Benefit From Cultural Competence

Recognizing differences in others can help improve your business.

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Sean Peek, Senior Analyst & Expert on Business Ownership
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Table of Contents

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Understanding cultural differences isn’t just a skill for global businesses. If your company is culturally competent, you can avoid making decisions that may hurt and alienate both your customers and the community. Below, we’ll examine the basic definition of cultural competence and the benefits of integrating it into your business model. 

What is cultural competence?

Cultural competence is the ability to understand and empathize with individuals from a variety of backgrounds and experiences. There are three main facets of cultural competence: understanding your own culture, being willing to learn about other cultures and worldviews and having a positive perspective and acceptance of cultural differences. 

Cultural competency encourages people to develop genuine connections with one another while minimizing the likelihood of misunderstandings and conflict. These effects can be crucial in your business development. 

What are the business benefits of cultural competence?

A culturally competent leader understands that differences exist among all people and that the skills used in international business apply equally to local businesses. If you want to discover the ways cross-cultural competence can increase the bottom line, pay attention to the bridges that span these differences, obvious or not.

When business leaders focus on cultural competence skills, six predictable outcomes and benefits follow.

1. Cultural competence creates rapport.

Rapport gets us to our goals faster. In most businesses, time is money, so time saved translates into dollars earned. It is easier to develop rapport if you demonstrate a willingness to understand someone else and meet them where they are. When you’re open to learning a few words of another language or educating yourself on a different culture’s important holidays, you show people that you care about their cultural identity.

2. Cultural competence improves efficiency.

A culturally competent workplace runs more efficiently. If a team understands each other, they can work better together with fewer hiccups or misunderstandings. Similarly, as cultural competence builds better rapport in teams, such genuine connections will help them come together as a team and tackle tasks more effectively.

3. Cultural competence opens new markets and networks.

When you become a culturally competent person, you are more willing to accept other cultures. The same is true for your business. Your ability to step outside of your comfort zone while researching and respecting cultures, beliefs and languages unfamiliar to you gives you the chance to unlock completely new markets and networks. A closed-minded company is a stagnant company. 

Did You Know?Did you know
When expanding into foreign markets, it could make sense for your company to hire employees in different countries to best serve those areas.

4. Cultural competence makes people feel valued and builds loyalty.

When customers feel understood and appreciated, they are far more likely to continue doing business with your company. Consumer loyalty happens when brands have a thorough understanding of their consumers’ demographics and cultural identities, allowing businesses to better appeal to and serve them. 

5. Cultural competence creates innovation. 

One of the facets of cultural competency is openness to learning and accepting new ideas and beliefs. Therefore, a culturally competent company is willing to try new things and ideas. Innovation yields higher profit products and services. A company that is not culturally competent is more likely to fear the unknown and limit its capacity for transformation. 

6. Cultural competence helps you avoid mistakes, miscommunication and dissatisfaction.

Better understanding among co-workers reduces the likelihood of miscommunication or hard feelings within your team. You can see those same benefits between your team and your customers. Embracing your customers’ language and culture means you can communicate with them more clearly and effectively. Decreased dissatisfaction reduces cancellations and returns.

What should leaders do to foster cultural competence? 

Some of the top skills leaders use and can teach to their team members, include:

Eliminating workplace biases

A culturally competent business can shift a team’s perspective by putting a positive spin on differences and highlighting how they make our lives more interesting. This change in perspective of supposed differences in cultures reduces the sense of competition or an “us vs. them” mentality within your workplace. 

If leaders break down biases through educational materials and diversity training, they become more willing to promote based on ability as they can see beyond cultural differences. Similarly, teammates can work more openly and fairly with each other instead of adhering to cliques based on their differences. 

Cultural competency encourages diverse teams to be more creative and innovative at problem-solving. Team members can be proud of the differences in their various backgrounds and how that makes them more nuanced, interesting workplace contributors. 

FYIDid you know
Make sure you familiarize yourself with and stay up-to-date on anti-discrimination laws so that you can make sure your workplace is safe and comfortable for everyone.

Practicing empathetic responsiveness

Empathy is all about stepping out of your own worldview and responding after taking a moment to understand another’s vantage point. This is easier said than done. It can be difficult to understand someone else’s perspective if it doesn’t match your own experiences. This is why leaders need to expand their own worldview by creating as many new experiences as possible and taking the time to listen to others before responding.

Although researching and educating yourself on different cultures is crucial to cultural competency, remember that you will never be an expert. Listening attentively to others and caring about what they have to say will enlighten you on their own unique perspectives and experiences. That ability to listen can make the difference between performative, diversity quotas and a genuinely open, respectful workplace. 

TipBottom line
If you're looking for more ways to improve diversity and inclusion within your team, try anonymous recruiting, celebrating a variety of holidays as a team or reprogramming biased AI.

Reserving value judgments

In customer service, a common complaint from staff members is, “Our customers are idiots!” If your staff believes this, your customers will sense that they are disdained even if it is unspoken.

The No. 1 reason for this belief is that customers who are new to a product or service do not have the same experience trained customer service people have in the same product or service. We often forget that one person’s experience is different from another’s and inject a value judgment about the situation. Learning how to put space between our thoughts and our value judgments is an essential skill. When we do this, instead of driving customers away with a culture that disdains them, we build a culture that affirms them and values them and that always fosters loyalty.

Valuing clarification

One skill you should develop is the ability to ask customers what is most important to them. For instance, picture a window salesperson who spent 30 minutes losing rapport with a customer when he focused on the durability of his product. Yes, durability is important, but for this customer, aesthetics were far more important than durability. Both were features of windows and both are important, but a simple question at the outset of the sales call could have changed the dynamic. 

In this scenario, it’s better to lead with a visualization, asking the customer a question like: “If you came home tomorrow and all your windows were magically replaced with new ones, why would you be happy about it?” The answer will always contain the customer’s core values.

Cross-cultural competencies lead to higher profit, innovative teams and outcomes that benefit everyone. There are no downsides to paying attention to cultural competencies – only positives for every leader, in every organization and in every place.

Skye Schooley and Dr. Richard Nongard contributed to this article.

author image
Sean Peek, Senior Analyst & Expert on Business Ownership
Sean Peek co-founded and self-funded a small business that's grown to include more than a dozen dedicated team members. Over the years, he's become adept at navigating the intricacies of bootstrapping a new business, overseeing day-to-day operations, utilizing process automation to increase efficiencies and cut costs, and leading a small workforce. This journey has afforded him a profound understanding of the B2B landscape and the critical challenges business owners face as they start and grow their enterprises today. In addition to running his own business, Peek shares his firsthand experiences and vast knowledge to support fellow entrepreneurs, offering guidance on everything from business software to marketing strategies to HR management. In fact, his expertise has been featured in Entrepreneur, Inc. and Forbes and with the U.S. Chamber of Commerce.
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