The Value Proposition

The best leadership in an organization recognizes that conflict and other behaviors that put a temporary drag on production can ultimately be transformative as well as good for the bottom line. Even incidents that seem the most polarizing can lead to the kind of cultural intelligence that effects positive change for a company.

In a conversation we recently had, here’s how that unfolded for one manufacturing CEO, who you’ll see saw how to put cultural intelligence to work for his company:

CEO: What do I do about this guy who is always late for work?

AMY: Are you asking me because the guy is black?

CEO: Yes

AMY: Do white people show up late for work?

CEO: They’ve already been fired. I don’t know what to do about this black guy. Should I call my black pastor friend and see if he’ll have a talk with them?

AMY: Is that idea sustainable? What I mean is, will you be able to call him for help each time someone is late or needs to talk with a black employee?

CEO: No, that’s not possible; I can’t call him every time.

AMY: Would it be more helpful to empower his manager to work through the problem so he’ll be able handle the issue next time too?

CEO: Probably. They report to the plant manager.

AMY: But you’re concerned about tardiness too?

CEO: Yes. What confuses me is that we have a white guy who is a single dad and lives an hour west of town and still makes it to work on time. But this guy who lives 20 minutes from work is single and is regularly late.

AMY: It seems like your company has a double standard for blacks and whites.

CEO: Yes. It’s frustrating.

AMY: I bet! Do you want to keep your plant diverse?

CEO: Yes. Because I didn’t grow up in this country, I see the value of having different perspectives at our company. It’s also expensive to recruit and train new people. This guy is a good worker once he’s on site. Besides, it’s just hard to find good people in this economy.

Value proposition

This CEO is acknowledging that, with the unemployment rate at less than 4%, attrition is costly. And because of his international background, he inherently understands the value of having diverse perspectives in his company. The research supports his experience.

  1. “…when at least one member of a team has traits in common with the end user, the entire team better understands that user. A team with a member who shares a client’s ethnicity is 152% likelier than another team to understand that client.”(1)
  2. “Catalyst found that companies with the most women board directors outperformed those with the least on return on sales (ROS) by 16 percent and return on invested capital (ROIC) by 26 percent.”(2)
  3. “Companies reporting the highest levels of diversity brought in nearly 10-15 times more sales revenue on average than those with the lowest levels of diversity.” (3)
  4. Companies with the most ethnic diversity on their executive team were 43% more likely to experience higher profitability. (4)

However, further research reveals that merely making an organization look more diverse actually lowers performance. When leaders of multicultural teams ignore and suppress cultural differences, research shows mono-cultural teams are more productive. So it’s not diversity all by itself that has the positive impact.(5)

How an organization benefits from diversity

That same research shows multicultural teams significantly outperform mono-cultural teams when their leaders acknowledge and support cultural differences and see them as an asset to the company.(5)

To acknowledge and support cultural differences, the leader and their team need cultural intelligence. Cultural intelligence, a skill that can be measured and developed, is the ability to shift our perspective and change our behavior to bridge across cultural differences. With this mindset in the workplace, people with diverse backgrounds feel valued, heard and engaged.

With cultural intelligence, people are becoming more aware of what they value individually and as an organization. They’re better able to communicate expectations for success. Cultural intelligence and inclusion in a diverse workforce are the tools that organizations need to close the productivity gap.

Cultural intelligence in action

Our conversation continued…

CEO: So what do we need to do?

AMY: You and your plant manager may want to become aware of how your own cultural bias can negatively influence a conversation with the employee, and inadvertently shut him down. Because we all tend to favor people who look and think like us, and he doesn’t share your skin color, our hidden assumptions can get in the way of really hearing the employee and the needs.

CEO: This’ll take some work.

AMY: Initially it’s more work. With some training and practice, and making those hard-to-replace-workers the priority, it becomes second nature. In fact, once people learn the skills, communication becomes streamlined. Once a manager learns how to slow down, notice their own assumptions, forgo the assumptions and hear the employee out, the relationship and process work more effectively because of the trust they build. The manager can then hold a quick weekly meeting to give and get feedback around questions such as:

  1. What are you working on?
  2. What are your next steps?
  3. What can I do to help?”

So here’s what happened

With the employee that was late, the CEO and plant manager had a conversation with the employee. They slowed down and recognized that their bias was getting in the way of them really hearing the guy out. They learned that the employee was often late because the public transportation wasn’t reliable. The factory is in a remote part of town and hard to get to without a car. And on top of that he had recently lost his license. The plant manager ended up helping him find an apartment within walking distance of the factory and fronted him the money for the first month’s deposit. The employee has since paid back the loan for the deposit and is consistently on time for work.

In this case, diversity was about racial differences. But visible differences, such as race, age, gender and nationality aren’t the only assets worth considering. Then there are differences that may not be visible, such as a person’s disability, religion, educational level, or social class if supported and seen as an asset, can bring about unique perspectives and innovative ideas that increase productivity, collaboration and profit to any organization.

To realize the promise of diversity, organizations need to make sure their people feel valued and heard. The best corporate leadership recognizes that while diversity is the state of being in our society, it is cultural intelligence that is the state of doing well by each other.

-Amy S. Narishkin, PhD

References:

  1. Hewlett, S., Marshall, M. & Sherbin, L. (Dee 2013). “How Diversity Can Drive Innovation,” Harvard Business Review: https://hbr.org/2013/12/how-diversity-can-drive-innovation
  2. Troiano, E (July 23, 2013) “Why Diversity Matters,” Catalyst: https://www.catalyst.org/research/why-diversity-and-inclusion-matter/
  3. Herring, C (April 2009) “Does Diversity Pay?: Race, Gender, and the Business Case for Diversity,” American Sociological Review: https://www.asanet.org/sites/default/files/savvy/images/journals/docs/pdf/asr/Apr09ASRFeature.pdf
  4. Hunt, V., Prince, S., Dixon-Fyle, S. & Yee, L (2017) Delivering Through Diversity. New York: McKinsey & Co.
  5. Distefano, J. & Mazevski, M. (2012). “Creating Value with Diverse Teams in Global Management.” Organizational Dynamics