How Culture Affects Profit and Loss

Larry S. Persons, PhD

Cultural training has taken a bad rap.

What do I mean? It’s an optional “soft skill,” something you address if you have surplus in your budget and you’re looking for a feel-good team activity. In other words, it’s inconsequential. It can’t possibly affect P&L.

Oh, is that right? If you really believe that, I think you’re dead wrong.

Imagine this. Here we have a culturally diverse work team working on a high-stakes innovative project with “must-have” deliverables. Tension has been building because of a series of cultural miscues and misplays, and suddenly there’s a blowup, there’s an ugly rupture.

Business profit
Business profit and loss

What’s happens next?

Team members choose either “fight” or “flight.” But the result is always the same. Relationally speaking, they step away from each other. The team no longer feels safe. The trust level goes down the toilet.

Now, that’s a problem. Why? Trust is the new global currency.

When trust goes down on any work team, the speed of the project goes down, and what happens to costs? Costs go UP.  That means that somebody who really cares about the bottom line is not going to be very happy.

When trust goes up, the speed of the project goes up, and—guess what!—costs go…DOWN. If that isn’t good news to senior leadership, then they must not care that much about P&L.

That’s why I shamelessly argue that culture affects the bottom line. It’s just that it sneaks up on us and we find ways to blame the bad numbers on other things.

Cultural misunderstandings are inevitable, but when we ignore them, they are one of the most potent silent killers of success in global business.