The Scientific Leader Blog

Cultural Insensitivity as a Human Capital Liability

November 22, 2008 · Leave a Comment

US Citizen Gary Khera

US Citizen Gary Khera

A North Carolina US Citizen, Gary Khera, was asked to “take your turban off.  This is the United States”, when he tried to make a donation to a local charity, reports local news source WRAL.  In prior years, he mailed in his donation, but this year he wanted to see where his money was going to help the less fortunate.  In a surprising display of insensitivity, the Christian charity refused to allow him to donate his money unless he remove his turban – which is not allowed in his religion.  A video interview with both the mission’s Director, a Reverent and Mr. Khera appears here.

It’s a good example that a closed mind and rigid set of rules can hurt your organization’s ability to serve different types of honest, hard working customers – or in this case, charitable donors.  Hiring and training employees to adjust these policies, and exercise good judgment represents an example of a Human Capital “real option” to invest a bit in selecting culturally sensitive people; and growing them internally with profits to follow.  Ethics aside, the business question is the probability of unique cultures walking through my door is uncertain, and in many cases might be a rare event.  What would it be worth for me to invest a little in selection and training now, for uncertain payoff later.  This is precisely the value of the Real Options method, taught by The Scientific Leader and others.  It is an approach that quantifies the value of choice, given situations of uncertainty.  In smaller locales, like the one Mr. Khera frequents, there may be little value in this sort of investment.  But in cities with massive amounts of diversity, it might be absolutely essential to ensure that a wide variety of customers and donors are happy to do business with your firm.  What losses is your firm likely to experience because you’re exposed to this sort of human capital risk?

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Categories: Enterprise Risk Management · Human Capital · Personnel Selection · Real Options · Training
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