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When I went to college, it was the first time I truly interacted with a bunch of people who were completely different from me.

I grew up in Orange County, an almost infamously undiverse, homogeneous place.

It was during college that I was able to broaden my horizons and I quickly realized how important diversity is to every area of life whether it be education, or even business.

In fact, did you know that companies in the top quartile for racial and ethnic diversity are 35% more likely to have financial returns greater than their industry mean?

Additionally, findings show that diverse teams make better business decisions 87% of the time.

As business leaders, it’s impossible to ignore those stats.

But, if you have a similar background (or lack thereof) in diversity as I did growing up, you might not know how to develop cultural competence and cultivate a diverse team.

To help, I talked to a wide range of experts on diversity, inclusion, and belonging, from both internal HubSpot employees to external thought leaders.

In this post, we’ll learn what cultural competence is, why it’s important, and how to develop it at your company.

What is Cultural Competence in Business?

Cultural competence in business means that your company understands and appreciates cultural differences. It means that you approach your business strategy through a lens of diversity, inclusion, and belonging so individuals of all backgrounds feel included to either work at your company or be a customer.

It’s important to discuss that cultural competence isn’t about hitting a diversity quota. It’s about facilitating an environment of open and honest communication in a diverse setting. If you aren’t culturally competent, you might not attract the best talent for your employee base.

On the consumer side, cultural competence is important because customers might not support your company if they don’t think you’re inclusive.

So, what does cultural competence really mean?

According to Martin Tettey, co-chair of diversity and inclusion at PRSA-NY, “To be culturally competent in business, an organization must be fully aware of their surroundings to ensure that the contributions being shared are from a diverse group of people — differences in race, gender or sexual identity.”

Mita Mallick, the head of diversity and cross-cultural marketing at Unilever, says “While companies are focused on diversity of representation and who gets to sit around the table, they can no longer ignore how their products, services and content show up in the marketplace. Consumers are voting with their wallets and want to buy from inclusive companies and brands.”

Being a culturally competent company means that your organization actively and vocally invests in continued learning, listening, and change (when need be).

Your business should benefit all your customers and your employees, so people from all backgrounds and experiences can find success.

Additionally, Melissa Obleada, a previous diversity, inclusion, and belonging team member at HubSpot, says “Cultural competency positively impacts your company culture, which we know has a multitude of benefits for your employees as well as your bottom line.”

Being aware of the space you take up, and exist within, will allow you to navigate those differences with empathy and understanding.

Cultural competence should impact all areas of your business from hiring practices to company culture to marketing.

Lucy Alexander, a coordinator of a HubSpot discussion group focused on diversity and inclusion, says doing this will “Allow you to think about questions like, ‘How will this sales approach resonate with cultural norms of that country?’ or ‘How could this marketing campaign be perceived by this group of people?'”

She continued, “It’s about creating truly inclusive strategies from the ground up. Crucially, you need employees of all different racial, ethnic, and religious backgrounds who represent different genders and sexualities if you hope to apply this lens consistently — otherwise, you’ll come off as inauthentic and you won’t be walking the walk.”

How to Develop Cultural Competence at Your Company

Provide workplace bias training.
Have an ethical hiring process that ensures opportunities are readily available to all.
Proper compensation that is based on experience.
Invest in meaningful cross-cultural relationships.
Prioritize cultural competence learning and work on your leadership team.
Be willing to listen.
Evaluate where you stand.
Create a psychologically safe environment.

1. Provide workplace bias training.

To develop cultural competence, Tettey suggests providing workplace bias training.

With bias training that’s focused on empathy through academic and experiential learning, you can create a more inclusive workplace.

The training strategy should help get the conversation started on implicit bias and how to minimize workplace bias through education and discussion.

Remember, this shouldn’t be the only thing your company is doing to become culturally competent. Rather, this is a good first step to lay the foundation.

Additionally, it’s important to keep in mind that implicit bias training should include conversations on systemic and structural issues at your company. This means that you might discuss company practices and hold the leadership team accountable for enacting change on a structural level.

Tettey says, “Companies shouldn’t do these things just to avoid lawsuits or fulfill a quota, but make it a part of the backbone that fuels the company and keeps it standing.”

2. Have an ethical hiring process that ensures opportunities are readily available to all.

Another suggestion from Tettey is to implement an ethical hiring process that ensures opportunities are readily available to everybody.

Think about it like this — how can you become culturally competent if your own employee base isn’t very diverse?

To attract a diverse pool of candidates, you should advertise jobs through diverse channels, like diverse job boards. Plus, your recruiters should proactively recruit from a diverse talent pool.

Alexander says, “If your employee base is not very diverse yet (and the vast majority of companies in America could do better), you must couple efforts to tangibly change the makeup of your organization with internal education efforts.”

For instance, “That means that while you’re improving your hiring process to bring more diverse talent in and setting up your employees from underrepresented backgrounds for success and promotion, you’re also running internal education initiatives like content discussion clubs or anti-bias training. Do not give up when you hit roadblocks. The work takes time, and consistent effort is key.”

3. Proper compensation that is based on experience.

Another way to develop cultural competence is to evaluate your compensation packages. You should ensure that people with the same experience and professional backgrounds are being offered the same compensation.

Doing this will help you attract the top talent, increase employee retention, and improve job satisfaction.

It might feel difficult to evaluate your own compensation packages, but it’s important to recognize that implicit bias could have impacted compensation offerings. If it did, you need to correct it.

4. Invest in meaningful cross-cultural relationships.

Cultural competence is really all about knowing your customer.

According to Mallick, “My job as a marketer is this: To surprise and delight a consumer with a product or service they never would have expected. In order to do that, I need to intimately know the consumer. But do I know their history, and the history of their communities? And the bigger question is, in today’s environment, how can I as a marketer afford not to know all of this?”

The answer is that developing cultural competence starts outside of work. That means that your leadership team should invest in cultivating meaningful cross-cultural relationships.

Additionally, you should encourage your employees to do this as well.

Mallick says, “How can we expect to show up and be culturally competent in our workplaces if we live the majority of our lives in communities surrounded by people who only look like us?”

5. Prioritize cultural competence learning and work on your leadership team.

To truly develop cultural competence, continued education in diversity, inclusion, and belonging is imperative.

Obleada says, “Your organization — particularly leadership — needs to make it clear to everybody internally that you prioritize this type of learning and work. Look into resources – blogs, podcasts, consultants, workshops, etc — that focus on building this particular muscle, and make sure that you’re making it possible for your colleagues to share their feedback (both positive and constructive) with those leading these initiatives.”

Essentially, this means that you should implement cultural learning into the fabric of your company culture. You could invest in resources to help cultivate culturally competent teams and practices.

“Rome wasn’t built in a day, so it’s not like you can flip a switch (or attend one training) and magically be culturally competent,” Obleada says. “It’s a process that involves being more open as individuals and bringing our learnings and empathy into each workplace interaction we have. Have patience with yourselves and one another as you work on developing your cultural competence.”

6. Be willing to listen.

A major part of cultural competence learning is listening. In fact, most cultural competence education is about listening to other people about their experiences.

Gabrielle Thomas, a program manager on the diversity, inclusion, and belonging team at HubSpot, says “Listen to those inside and outside of your organization and make sure those voices create a diverse group. You can’t build that awareness if you aren’t willing to listen. It means you have to truly be okay with hearing feedback that may not always be positive and to make progress you have to be okay with doing things differently.”

7. Evaluate where you stand.

Just like you did with your compensation packages, you should look at where your company currently stands in terms of cultural competence.

Alexander says, “Look critically at who gets opportunities to lead in your company (not just in official leadership positions, but who gets to lead projects? Lead meetings? Own initiatives?). Survey your employees anonymously and regularly solicit feedback, and create tangible action plans to address inequities. Then, revisit those plans to create accountability and ask where you could’ve done better and what needs to change.”

You can only get better when you know where you’re starting from and what needs to be done. It’s time to make space for this type of work in your business strategies.

8. Create a psychologically safe environment.

Psychological safety is essential in the workplace. This means that employees have the option to be included and feel safe to have conversations with their coworkers or managers when they don’t feel included.

Richard Ng, a coordinator of a HubSpot discussion group focused on diversity and inclusion, says, “To become culturally competent, you need to invest in psychological safety to enable day-to-day communication between employees.”

Creating psychological safety can help build true allyship among your employees. With allyship, the burden of speaking up is fairly distributed across everyone on your team.

To create a psychologically safe environment, it’s important to have solid guidelines and training for conflict and de-escalation.

So, you might be wondering, “Why are we talking about this?” Below, let’s dive into why cultural competence is important.

Why is Cultural Competency Important?

Cultural competence is important for both your bottom line and creating a workplace culture that employees are proud of.

Mallick says, “It’s not the job of your employees to lead diversity and inclusion efforts on top of their day jobs. You need a diversity and inclusion strategy, which then informs the structure you will need to implement your vision. You need to make a commitment to invest with headcount/resources, budget and time. If you don’t see the benefits of having a diversity and inclusion team, your organization will be left behind in the marketplace.”

Tettey would agree. He says, “Companies are nothing without a team that strategically helps with the D&I efforts.”

In that same vein, Obleada says that companies with leadership that don’t dedicate itself to diversity, equity, and inclusion are in the minority.

“A 2017 Deloitte study showed that over 75% of employees at all levels would consider leaving their current organization for a more inclusive one,” Obleada adds. “Exclusive and rigid company environments where only certain types of people are granted access and set up for success hurt everyone involved – your employees, your business, and your customers.”

Essentially, when it comes to diversity and inclusion efforts, you get what you give.

Thomas says, “We invest in what we value. If you don’t invest energy, money, or both into D&I then that makes it clear to your team and customers that you don’t value an experience based on an inclusively built foundation.”

This work is important because it’s essential to see your company and employees grow and thrive.

Alexander adds, “In a fair work environment that celebrates a variety of backgrounds and diversity of thought, employees will be more prone to share ideas, stay longer, and feel brought into the company’s mission and work. Most importantly, they’re more likely to feel valued as human beings, which is crucial for personal happiness and professional fulfillment.”

Additionally, cultural competence is important because it takes into account that minorities face a harder time when it comes to making a living.

Ng says, “We should also acknowledge that people’s value comes not from their ability to generate revenue for your company but from the fact that they are human. What happens when they don’t improve company numbers? Do they not matter then? They, like everyone else, deserve a chance at working and growing at a company that recognizes the steeper climb minorities face when making a living and supports them through it.”

Ultimately, cultural competence can benefit your company in many ways. You’ll have better employee retention, customer satisfaction, and attract the top talent and customers. Cultural diversity impacts every area of your business, and you should give it the attention it deserves when you’re developing your overall business strategy.