Knowing Your Place in International Business

Becky DeStigter | April 22, 2012
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A friend of mine is a technical manager in a multinational computer software company. Last year's company restructuring means that she now directly reports to a director based in India. This has meant many changes for my friend, but the cultural adjustment that has been most challenging is that of "power distance." In the United States, managers and their subordinates have a more equal relationship, while in India businesses are typically structured with greater hierarchy and formality between bosses and their subordinates. As someone doing business internationally, this article explains some ways that power distance may affect your dealings.

 
A friend of mine is a technical manager in a multinational computer software company. Last year's company restructuring means that she now directly reports to a director based in India. This has meant many changes for my friend, but the cultural adjustment that has been most challenging is that of "power distance." In the United States, managers and their subordinates have a more equal relationship, while in India businesses are typically structured with greater hierarchy and formality between bosses and their subordinates.
 
Power Distance is a term first defined by Dutch cultural anthropologist, Geert Hofstede, who studied IBM employees based all over the world to better understand the role of cultural context in business. It is the relative distance between the top and bottom of an organization. Low-power distance cultures include the U.S., Australia and Scandinavia. High-power distance cultures include Japan, Philippines and Korea.
 
As someone doing business internationally, here are some ways that power distance may affect your dealings:
 
Direct Confrontation—Yes or No?
 
One of the most important differences between high- and low-power distance cultures is whether or not a subordinate is allowed to directly confront their boss about an issue. This includes asking questions. In low-power distance countries, employees are expected to ask questions and to confront their superiors when something does not seem to be correct. In a high-power distance culture, employees do not ask questions, and they do not point out obvious errors that a superior has made.
 
My friend with the Indian boss occasionally makes a mistake in her work. The result is a one-way conversation where her superior gives a 20-minute monologue about the mistake. She has learned never to interrupt the monologue with even a clarifying question else the speech lasts much longer. And confrontation must be extremely indirect and never in a stressful moment.
 
Additional or Fewer Approvals May Be Needed
 
In high-power distance cultures, you may not be necessarily talking with the person who can make the final decision. You may need to allow greater time for your contact to get the necessary approvals within the organization to move forward. Conversely, if you are from a high-power distance culture, your counterpart may be in a position to make decisions quickly and independently. Consequently the project may move forward faster than you were expecting.
 
Who Leads and Who Follows?
 
I had the opportunity to work for a Filipino department head for two years. While my boss was quite Americanized after spending 25 years in the United States, I noticed that the Asian employees working for him treated this boss very differently than an American would. Since I was one of the few non-Asian employees, I took note of the level of formality which they used when addressing our boss. I also noticed that while the boss would wait for me to enter a room or step on to the elevator, the Asian employees (male and female alike) would wait until the boss had crossed the threshold first.
 
I take these experiences forward whenever I am doing business with high-power distance cultures. Generally, the person of higher status gets to speak first, set the agenda, enter a room first, and leave first. Conversely, in low-power distance countries it is usually the woman who enters first. And anyone can speak up if they have a valid point to make.
 
I hope this helps you in your international business dealings. For more information, please visit my website.
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