By Lori McNeill and Dr. Bobby Sanchez

In today’s global economy, Cultural Intelligence (CQ) is now more important than ever. With deregulation and the ability to easily transport goods and services across borders, many companies are expanding their sales and operations globally. Even if your company isn’t yet global, chances are you will do business with companies that are.

Despite the growing trend of multinational companies, there is a high failure rate and many challenges for operating internationally due to cultural differences.

According to a study in Business Standard:

  • 70% of international ventures fail because of cultural differences
  • 90% of executives from 68 countries believe cross-cultural management to be their top issue
  • 38% of companies offer cross-cultural education to employees who are sent abroad
  • 63% of assessed people have low motivation and interest to interact with other cultures

The emphasis, or lack of, on CQ can be a determining factor of success or failure for global organizations. Employers need to understand differences in culture to operate effectively, especially when employees are frequently interacting with coworkers from different cultures. In order to succeed internationally, companies need to assess and improve CQ throughout the organization.

Take, for example, this HSBC advertisement, which is a quick picture of how different cultures have very different perspectives on something as common as a cow.

What is Cultural Intelligence?
CQ is the ability to separate the aspects of behavior that are based in culture from those unique to an individual.

CQ can be divided into four parts: drive, knowledge, action, and strategy. CQ Knowledge is the ability to understand how cultures are similar and different. CQ Strategy is the ability to plan for multicultural awareness. CQ Action is the ability to adapt when relating and working inter-culturally. CQ Drive is the interest and confidence to adapt in multi-cultural situations.

How to Assess CQ
There are a variety of cross-cultural assessments available to analyze and assess your employees’ CQ.

Qualitative approaches include research design methods, which are comprised of data collection techniques such as individual interviews, focus groups, and ethnographic study of sample populations.

Quantitative approaches to assess CQ are conducted primarily through the use of validated data collection instruments such as the Cultural Intelligence Scale.

How to Improve CQ
Companies can promote CQ programs at all levels of the organization. Doing so will increase awareness of biases and assumptions about different cultures. A formal CQ program can also improve communication, reduce turnover rate and improve the success rates for multinational assignments.

Aside from formal programs implemented by organizations, employees can take individual steps to improve CQ. A recent article published in the Harvard Business Review suggested individuals devise a holistic approach to improve CQ based on three components: cognitive, physical, and emotional.

First, observe behavior for people in a particular culture and look for patterns of behavior. Simply being aware and observant goes a long way to better understanding. Second, observe and mimic body language of individuals from other cultures. So, for example, if an employee travels abroad where the custom is to bow upon greeting someone, then that person should greet others from that culture in the same way. Third, be open to new experiences and do everything to suspend judgment until experiencing or fully understanding more about a particular custom, food, event, etc.

Global demographic shifts in populations across the world continue to occur at an unprecedented rate. These shifts will have long-term implications for organizations in several areas such as the recruitment, retention, and training of cross-cultural population groups comprising the workforce.

Multinational businesses are, by design, open loop systems, which are impacted by both external and internal shifts in the population. In a dynamic and rapidly changing world, CQ will continue to play a critical role on our ability to comprise mixed teams in a way that will leverage strengths and create a common language and mitigate our differences.