It is helpful to think about these questions through the lens of power distance, a concept first described by Dutch psychologist Geert Hofstede. Power distance, one of the several cultural dimensions Hofstede studied, relates to how power is distributed and concentrated within a country’s culture. While it originally described nations, the concept was quickly adapted to organizational cultures as well.
What Is the Difference Between High and Low Power Distance?
In countries and companies with low power distances, the hierarchy is reduced and responsibilities are shared. With high power distances, lower-ranking citizens and employees generally accept and expect that power will not be distributed equally, and politicians and business leaders are distanced or isolated from others.
|Low power distance||High power distance|
Status isn’t important
Employees encouraged to participate
Leaders easily accessible
|Centralization of decision making
Strong command structure
Employees accept status quo
Formal communication chains
Matching Leadership Styles to Power Distance
Since the differences between high and low power distance environments is so stark, each situation requires different leadership characteristics. In general, more autocratic, or authoritarian, leadership exists when power distance is high and democratic leaders thrive when power distance is low.
In autocratic leadership, much of the power is concentrated in the hands of a few leaders or even one person. He or she makes all the decisions and rarely calls on others for input. This style of leadership complements high power distances because senior leadership can isolate itself from others.
Autocracy has advantages and works well when decisions need to be made quickly. However, it has the potential to discourage workers, which can lead to poor performance and high turnover.
With democratic leadership, power is shared more equally and many people have a say in setting goals and making decisions. Democratic leaders often solicit advice and get buy-in from other employees. Decisions can be made at lower levels of the organization.
While democratic leadership is often considered more engaging and employee-friendly than autocracy, it may slow decision-making activities and lack a singular vision for the organization.
Power Distances and International Business
The concept of power distance was originally developed during Hofstede’s research into different national cultures, and this country-based perspective can be extremely helpful when a domestic company prepares to do work overseas. The United States has a low power distance index, but other Western countries have even lower ones. That means that leaders here must be prepared to encounter more autocracy and less cooperative decision making when they do business abroad. The way decisions are made may differ, and the foreign organization may wish to do business only with the American CEO.
Consider the variations in power distance for the following countries:
Power Distance Index
|Country||Power Distance Index|
|United Arab Emirates||90|
The data in the table above says that American business leaders should expect an even more equitable approach to decision making when in the UK, Germany and Canada. The decision-making process might be more centralized in countries like Argentina, Japan, Spain, France and India, and concentrated in the hands of a few people in China, Mexico, the UAE and Russia.