IQ, EQ – now there’s CQ: the case for 'cultural intelligence' in New Zealand business

Image courtesy of Human Rights Commission
The case for diversity, and cultural intelligence in New Zealand business.

Finance Minister Bill English doesn’t delay caucus for just any old event, but this week he put his party colleagues on hold to be part of the launch of Champions for Change, a Global Women initiative to promote diversity in New Zealand business.

This latest push for diversity is geared around the idea that diversity is critical for New Zealand, not because it’s a good thing (equitable, just, fair etc), but because a super-diverse society makes sound business sense.

The message from the great and the good at the launch: With more than 200 ethnic groups and 160 languages in New Zealand, and with the proportion of New Zealand’s population identifying as Asian, Maori or Pacific Islander set to increase to more than 50% by 2038, companies that don’t embrace a diverse workforce will struggle to sell to a diverse customer base.

“This is not the same country we grew up in, and the New Zealand of tomorrow will be markedly different again,” said Champions for Change co-chair Anthony Healy, CEO of BNZ at the launch. “The status quo where European-staffed businesses service European customers is unsustainable.”

Image courtesy of Human Rights Commission

He said in the case of women in management, the situation in New Zealand was actually getting worse. In 2011, a third of senior managers in the private sector were women, but by 2015 this had decreased to a fifth.

A recent McKinsey report suggested that if every country matched the progress towards gender parity of the fastest-improving country, global GDP could increase by up to $US12 trillion in 2025. And in New Zealand, a 2011 Goldman Sachs report estimated closing the gender gap here would boost our GDP by 10%.

So far, 39 companies have signed up for the Champions for Change programme, including Fletcher Building, Fonterra and PwC as principal partners. The plan is for all the member organisations to come together in March 2016 to nut out measurable targets and timeframes, and then a public reporting programme that the organisations can be judged against.

Bill English said the biggest problem for male-dominated, mono-cultural companies was that they missed out on the diversity of ideas.

“If diversity of gender and ethnicity aren’t present, you can almost guarantee there will be less diversity of thinking and ideas.”

Meanwhile, former Prime Minister Jenny Shipley, now co-chair of Champions for Change, said it was a mistake to leave diversity initiatives solely to government. In the UK, a joint initiative between the 30% Club (set up to lift female board representation to 30%) and politicians saw the number of women on boards of FTSE-100 companies rise from 12.5% in 2010 to over 26% today.

Cultural capability

Mai Chen, the inaugural chair of Global Women, and founder (in 2013) of NZ Asian Leaders, says the burgeoning diversity of the NZ talent pool, and the domestic customer base for our companies, means it’s not enough for companies to have a “Chinese team” or “Korean customer group”.

“Ethnicity has disrupted us. If you are thinking about your bottom line, you need to be making sure your whole organization is culturally capable. Or they won’t be able to manage staff, to get the most out of people.”

Chen says in the future having “CQ” (cultural intelligence) is going to be as important for employees as IQ and EQ (emotional intelligence).

“Companies will need to know how to manage people not born here, speaking multiple languages and having different cultural networks.”