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Workplace: Power Distance, Uncertainty, and Risk Avoidance

MBA graduate Lani has spent the past 10 years researching, discussing, and writing about major concepts related to business and leadership.

Learn more about the culture and sociology of the workplace.

Learn more about the culture and sociology of the workplace.

Geert Hofstede on Workplace Culture

Individualistic and collective ideologies contribute to varying tolerance of power distance, uncertainty, and risk avoidance among employees.

  • Individualistic workplace culture places value on the individual employee and his or her specific needs, emphasizing personal goals, rights, freedoms, self-expression, financial stability, and autonomy.
  • Collectivism encourages mutual dependence between members, placing importance on the group and expecting members to sacrifice and contribute without concern for personal wants, needs, or values.
Power distance

Power distance

Power Distance

Power distance is present in both collective and individualistic cultures and organizations. Power distance acknowledges to what extent members of a society expect and accept unequal power distribution. There are examples of varying degrees of power distance around the world. From the smaller divides of the west to the much wider disparities of the east (Yuan & Zhou, 2015), manifested as nepotism, caste hierarchies, and discriminant wage gaps based on a plethora of available factors.

Power distance within an organization exemplifies the level of hierarchy and communication between top management and subordinate employees (Arikan & Enginoglu, 2016). Asian companies such as those found in Hong Kong and Malaysia are examples of organizational structures more accepting of substantial power distances characteristic of collective cultures. Lines of responsibility are drawn and strictly observed. Employees do not carry themselves as individuals but as group members, with specific roles and expected contributions designed to benefit the collective.

Examples of power distance by country

Examples of power distance by country

In the West, individualism dominates, while collective thinking en masse, interpreted as dangerous, is consistently discouraged in many cases. As a result, power distances and authority within an organization tend to be smaller, leaving areas of responsibility less defined, the polar opposite of Asian and Middle Eastern organizations. Organizations that operate in Canada, Australia, and the United States allow workers to unionize, prompting legislative evolution equipped to level out hierarchies between management and non-management employees.

Western culture and its effects on the workplace are not without its faults. Workforces in western countries struggle with discriminatory wage gaps, unapologetic nepotism, and caste systems not defined by law but solidified and supported by written policy. Women and people of various minority groups, however, are presented with equal opportunities in the workforce in western organizations, unlike their eastern counterparts.

Uncertainty and Risk Avoidance

Uncertainty avoidance is a term used to capture a society's tolerance for ambiguity and uncertainty. In more precise terms, uncertainty avoidance represents the degree to which individuals are inclined to accept risk. As a response to a culture's affinity for risk aversion and uncertainty avoidance, strict rules and security measures are implemented to attempt to avoid unusual and unknown situations (Antonczyk & Salzmann, 2014). While some organizations operate in fields of inherent uncertainty (i.e., commercial fishing and entertainment), other organizations create unpredictability through competitiveness and disproportionate focus on performance.

How much risk can you handle?

How much risk can you handle?

Workplace uncertainty and risk avoidance measure an employee's willingness to accept risk when job security is uncertain and suggest those concerned with longevity will avoid situations presenting unacceptable risk (Arikan & Enginoglu, 2016). Regardless of organizational culture, the theory of uncertainty and risk avoidance proposes that, over time, the risk preference of individuals will match the culture of the organization as employees come and go.

Risk-averse individuals will eventually leave a position posing risks extending beyond an acceptable level. Risk-takers, those individuals less prone to avoid risks, are likely to gravitate towards organizations ripe with challenge and varying risk adversity. Individualistic organizations attract members who welcome uncertainty, obstacles, tension, and stress, while opposite personalities may find necessary comfort in organizations supporting collective and nurturing management practices.

In individualistic cultures, employees are less tolerant of substantial power distances, and risk-taking and individual success are encouraged compared to employees in collective cultures. Risk aversion, however, is higher in collective cultures relative to individualistic counterparts. Additionally, collectivist leadership discounts personal success and promotes sacrifice for the good of the group.

What's Important

Drawing a solid line between theories discussed in this article would be oversimplistic. Cultures and organizations are a blend of these theories and many other contributing factors. These factors persuade members to vary in degrees of interdependence and independence, often receiving substantial influence from situational context. As human beings, our actions, reactions, emotions, and values are fluid and unpredictable. And as we bring human-ness into the workplace, we define and redefine leadership as precisely what it is: fluid and pliable.

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This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

© 2019 Lani Morris