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Why cultural competency is important for your business
By John Eing
Malcolm Gladwell uses the Power Distance Index (PDI) to analyze two plane crashes in “The Ethnic Theory of Plane Crashes,” a chapter in his book Outliers: The Story of Success. The PDI, which was created by Dutch psychologist Geert Hofstede, basically measures a country’s level of deference toward authority, with a high PDI score indicating a hierarchical culture where there is a deep respect for authority. For example, South Korea has one of the world’s highest PDI scores, while the U.S. ranks in the bottom five.
Gladwell describes how the ability of the co-pilot to override the captain in the event of danger is critical for safe flying. As you might imagine, this works well in a country with a low PDI score—like the U.S.—and has proven fatal in countries with a high PDI score. In fact, this contributed to the poor safety record of Korean Air in the 1990s.
How did Korean Air fix its problem? The pilots were retrained to speak to each other in English, which allowed the Korean pilots to let go of their cultural legacy and adopt the customs of a country with a low PDI score.
Why this matters
Understanding cultural differences like those measured by the PDI can have an impact on your business.
You’ve all probably heard the statistic that by 2050 the U.S. will become a “majority minority” country. The demographic forecast is that the U.S. will have a population that’s 29% Hispanic, 13% Black, and 9% Asian.1 By then it is also projected that one in five workers will be foreign-born.
With the changing demographics will come new cultural norms, making cultural competency an increasingly important skill for bringing out the best in our employees and our clients.
What is cultural competency?
To understand cultural competency, we start with culture, “the customary beliefs, social forms, and material traits of a racial, religious, or social group,” according to Merriam-Webster.com. Global Cognition, a cognition and education research firm, defines cultural competency “as the ability to work effectively with people from different cultural backgrounds.”2
Considering these two definitions, it is hard for me to imagine that as CFP® professionals, we can truly understand our client’s personal and financial circumstances without also understanding their culture.
How culture can affect a meeting
Let’s look at how culture could potentially affect a meeting with a prospect.
Say you are meeting with a potential client who is originally from Brazil. You know they will soon sell their company, so you put your best foot forward. You make sure you are punctual, available 10 minutes early, and you have rehearsed your presentation what feels like 100 times to ensure your meeting ends right on time. As the clock ticks closer to the meeting time, the prospect does not arrive. In fact, they arrive 20 minutes late and then spend the next 15 minutes making “small talk” as you anxiously try to make your next appointment. You did your best to address the prospect’s concerns, even finishing on time. A week later you find out that the prospect decided to hire another advisor. What went wrong?
The answer is a lack of cultural awareness. I understand that this can cut both ways, but I am looking at this from the perspective of the prospective client. I learned from a Brazilian colleague that it is common in Brazilian culture to show up for a meeting “late” and to continue past the meeting’s “end time.” In Brazilian culture, this generosity and flexibility with time can be a way to show you care and that someone is important to you.
Now imagine that you knew this before your meeting. Most likely, the quality of your meeting would be much higher because you would have allocated the proper amount of time to do what you do best, which is to learn deeply about your client and discuss how you can create value for them as their financial planner.
In all fairness, not every Brazilian person may be this way, and it is impossible to know this about a person until you meet and learn more about them. However, given the potential consequence of not knowing someone’s culture, it seems that investing a little bit of time may yield a big return on investment.
4 ways to improve your cultural competency
Here are some ways you may improve your cultural competency:
- Ask a friend or colleague to share their culture with you. Remember that most people are more than happy to do this, as long as you are being respectful and authentic. For example, you might say, “I heard from Mindy that your family celebrates Lunar New Year. I would love to learn more about the holiday, would you be open to sharing with me how your family celebrates it?”
- Review the Peace Corps Cross Cultural Workbook. This workbook is designed to help Peace Corps volunteers adjust to living in different countries.
- Learn about major holidays of other countries. You can find a great list of holidays by doing a simple Google search. I like the calendar on diversityresources.com because it consolidates all holidays on a single page, along with a short description for each holiday.
- Hire a consultant. At NAPFA’s recent Summer Leadership Meeting, Seema Jain, founder of Seva Global, a cultural competency consulting firm, shared with us how she was able to leverage her knowledge of Indian culture to create a marketing program that doubled the revenue of a Marriott hotel during the 2008 recession. Her program at Marriott was so successful that Marriott created a new position for her as senior director of multicultural affairs. This story taught me how ethnic or other multicultural groups are often overlooked and that developing cultural competency can create a great business opportunity with the right guidance.
I hope this article will serve as a springboard for further discussion and learning.
1. Paul Taylor and D’vera Cohn, “A Milestone En Route to a Majority Minority Nation,” Pew Research Center (Nov. 7, 2012).
2. Winston Sieck, “Cultural Competence: What, Why, and How.”
John Eing, CPA, MBA, CFP®, is a partner and chief strategy officer at Quantum Financial Advisors in California, and is a member of the firm’s investment committee. He also co-chairs the NAPFA Diversity, Equity, and Inclusion Initiative.
image credit: istock.com/Cecilie_Arcurs