Speexx Executive Summary September 2016: ROI on Multilingual Employees
Everyone marvels at the employee who can speak five languages, but just how valuable is the skill exactly? Can you measure the ROI of Spanish, for example?
As it turns out, you can. According to MIT economist Albert Saiz, there’s a 1.5% premium on returns for Spanish language skills in the U.S., just behind French at 2.3% and German at 3.8%. That means that employees who can speak these languages in addition to English tend to earn a high income. Why might that be?
Supply and Demand
English-speaking in particular is tied to higher wages, which in turn gives the countries more money to invest in language development. It’s also associated with a higher standard of living. And the better your English, the better you do: these factors are positively correlated with English proficiency.
But English is far from being the only valuable language. In a globalized economy with emerging markets, language skills are more evenly distributed. The Chinese languages are another worthwhile investment. With over 1.2 billion native speakers, Chinese is the most spoken language in the world, and the second-most used language on the internet. And even with only 23 million speakers, Dutch has historically made up 1% of the world’s GDP. That is to say, about 1% of the world’s Purchasing Power Parity (PPP) is held by Dutch speakers, even though they represent 0.3% of the world’s population. This means that for those few speakers, there is a premium for their skills since the language is still in demand.
Meanwhile in Europe, learning English is still a must for many. In 2014, schools in Sweden reported that 100% of their students were learning English, and a majority of schools in Europe saw more than 90% of their students studying the language. However, learning a second language in addition to English is necessary in Europe. In over 20 countries, students must take two foreign language classes, with French, German, Spanish and Russian being favorites behind English.
In an effort to celebrate the diversity of European languages, the Council of Europe dedicates every September 26 to languages, promoting different events across the continent. Called the European Day of Languages, the intent is to recognize that “linguistic diversity is a tool for achieving greater intercultural understanding.”
But what are the exact benefits of hiring employees who speak multiple languages? A study from the Cardiff Business School calculated that monolingual Britons lose 48 billion pounds a year in today’s global economy, simply due to a language skills shortage. Imagine how much more efficient and effective a business would be if employees could communicate to their international clients in foreign languages. Or how much more insight into a different market an employee would have if they spoke the language and understood the culture of that marketplace.
Unless a business is confined to a very specific geographic region—a rarity in today’s globalized world—there comes a time when you must expand operations elsewhere. That’s when the need for language skills is felt most keenly. Robert Lane Greene of the Economist points out that a list of the world’s richest economies are dominated by countries that are famously multilingual, including Luxembourg, Switzerland, Singapore and Scandinavian countries where English is spoken widely.
Though there are other factors at hand on the reason behind the economic boost, it’s not farfetched to say that communication is an important part of the equation. For instance, if Swedes only spoke Swedish and lacked significant English language skills, would they be as successful?
Greater intercultural understanding between businesses results in far less friction and faster results. Employees who are able to communicate in a variety of languages bring in higher revenue for their companies and tend to earn more themselves as well. That means a strong language training program is beneficial for everyone involved.
Photo: GaudiLab / Shutterstock.com
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