Cultural Competency and Financial Literacy for Employers

Afraid of making a cultural misstep? Don’t let that stop you. One employee’s “cultural difference” may be another employee’s much needed solution to a pressing financial problem.

A recent post on a financial bulletin board asked peers how best to tell their parents they weren’t paying for retirement. Wait, what? Whose retirement others asked. Yours? Or your parents? In other cultures, the children pay for the parents in retirement, and the parents have saved nothing. The befuddlement of those responding the post touched on a looming problem for employers who might be working on financial literacy programs for their employees: the burden on employees to save for their own retirement may be on the back burner to their parent’s immediate needs. Those employer’s plans may have missed the mark due to lack of cultural understanding. Sometimes employers think they have the idea of cultural competency locked up and yet, there are those employees who may be reading all-employee emails about saving for retirement and feel that they miss the reality of their economic needs.

What is cultural competency? This blog post defines it as “the ability to demonstrate in a practical manner a genuine understanding of historical and cultural influences that inform the experiences and responses of diverse population groups.” Another blog post breaks it down into slightly more actionable parts: “Cultural competence is the ability to understand, communicate with and effectively interact with people across cultures. Cultural competence encompasses: being aware of one’s own world view; developing positive attitudes towards cultural differences; gaining knowledge of different cultural practices and world views; and developing skills for communication and interaction across cultures.”

While this concept sounds like a nice aspirational element for financial literacy, the results are fairly important for employees from cultures other than the dominant American one. For example, financial support of parents in China is so widely ingrained in culture that elderly parents in China can sue their children for financial support. In Vietnam, elderly parents live in the household and are considered the decision-makers of household matters, like the budget.

And the differences don’t have to do just with aging parents in Asian cultures. As this article notes “those who work with African or Caribbean communities should know that susu collectors are popular in these cultures, and they made the idea of giving small loans popular long before microfinance became trendy. And if we work with Muslim communities, we must understand that Islamic law, known as Sharia, prohibits the acceptance or payment of interest fees on loans.”

These examples show a few places where employer financial seminars may fall short. While employers may think that working on financial education seminars for employees on caring for aging parents can help the burden on those caring for them, an estimated thirty-nine percent (39%) of adults in the U.S. are caring for a loved one with significant health issues according to WebMD, that might fall far short of those employees who are paying for additional household members or may not feel like they have the decision-making power over their budgets. Additionally, seminars about how to use loans from 401(k) programs to fund down payments on real estate or to cover emergencies may not square up with Sharia law.  

How can an employer use the concept of cultural competency to ensure that their financial literacy programs hit the mark? Looking back at the concept of cultural competency, the answer may be found in the action items within the definition. There, the concept involves gaining knowledge of cultural practices and developing communications skills. For some employers this may involve surveying employees for cultural practices across a range of topics – lending, borrowing, and community-shared resources to name a few – or it could start with asking employees how they want to learn about topics. Afraid of making a cultural misstep? Don’t let that stop you. Consider that the susu collectors in the Caribbean had a well-developed concept of micro-loans for a good amount of time before Muhammad Yunus, a Bangladeshi  banker won his Nobel Prize for developing his theories of microfinance. One employee’s cultural difference may be another employee’s much needed solution.

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