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Why Intercultural Communication is Critical in Business Today

Statistics on cultural operatives in the modern business environment

The U.S. workforce reality indicates the following:

  • Although most U.S. international employees are considered technically competent, they lack effective intercultural communication skills to perform satisfactorily in the new culture.
  • Overseas business failure rates, as measured by early returns, are about 14-40% for U.S. business personnel, and of those who stay, less than 50% perform adequately.
  • It is estimated that U.S. firms alone lose $2 billion per year in direct costs because of premature returns.

Sources:

  • Communicating Across Cultures by Stella Ting-Toomey (1999)
  • The challenge of international personnel selection by Kealey (1996) in Handbook of intercultural training (2nd edition)

In a study of international managers' experience, two researchers note that "The number of expatriate failures has been variously estimated at 16% to 40% of those assigned. The total cost to the organization for an expatriate employee may be as high as three to five times that employee's annual salary, with the cost of a failure estimated between $250,000 and $1,000,000 per employee."

Sources:

  • Communicating Across Cultures by Stella Ting-Toomey (1999)
  • Cross-cultural training in organizational contexts by Bhagat & Prien (1996) in Handbook of intercultural training (2nd edition)

In global transfers the spouse has the most difficult role of any family member. The spouse's dissatisfaction often leads to early return, and is the single most frequently reported reason for failure on a global assignment. Nearly half of 300 surveyed companies have brought families home early due to reported unwillingness or inability of the spouse to adapt. The average cost of repatriating an executive exceeds $100,000.

  • According to a recent Workforce 2020 report, in the span of 15 years, international trade grew by about 120% on the global level.
  • Four out of every five new jobs in the United States are generated as a direct result of international business.
  • Additionally, 33% of U.S. corporate profits are derived via import-export trade.

Sources:

  • Communicating Across Cultures by Stella Ting-Toomey (1999)
  • Workforce 2020: Work and workers in the 21st century by Judy & D'Amico (1997)

The study of intercultural communication in domestic U.S. society is especially critical for several reasons.

  • Immigrants, minority group members, and females will account for a third of the total new entrants into the U.S. workforce in the next decade.
  • While European Americans constitute 78% of the total U.S. labor workforce today, they will drop to 68% in 2020. Thus approximately one-third of the total U.S. workforce will consist of immigrants (many non-English speakers) and minority group members.
  • Over the next 20 years, the Asian and Latino/a shares of the U.S. labor force will grow dramatically to 6% and 14%, respectively (mostly in the South and West of the United States), and the share of African Americans in the labor force will remain constant, at 11%.

  • Over the next 20 years, Latino/a Americans will account for 47% of population growth in the United States; African Americans will account for 22%; and Asian Americans and other minority group members will make up 18% of this increase. European Americans will account for only 13% of the population growth.

Sources:

  • Communicating Across Cultures by Stella Ting-Toomey (1999)
  • Workforce 2020: Work and workers in the 21st century by Judy & D'Amico (1997)

For more information, contact:

Ann Block, Vice President, Client Relations
Tero International, Inc.
Phone: 515-221-2318 (ext. 204)
Email: ablock@tero.com