Power Distance and Risk

High-risk projects rarely go as planned. Reasons vary. Often cited are unanticipated unknowns, previous plan disruptions, and misconceptions revealed during execution. Changes external to the effort are also important. These include changes in the legal or regulatory environment, changes in organizational objectives, changes in organizational commitments, changes in markets, and more. The result can be volatility of objectives and general chaos.

To execute high-risk projects more effectively we usually try to reduce the chances of identified risks materializing. We also try to reduce the impacts of risks that do materialize. That effort does help. But how can we deal with the risks we haven't identified?

One approach is to reduce the chances of failing to identify risks.

A set of risks that often escape identification are those that flow from the Power Distance of the team culture. As we discussed last time, the Power Distance of a culture is "the extent to which the less powerful members of organizations and institutions…accept and expect that power is distributed unequally." [Hofstede 2011] If you haven't yet read last week's issue, it would be helpful to read it now.

To understand how a large Power Distance makes high-risk projects riskier, consider the following illustrations. In what follows, the term team members refers to people who have relatively little formal organizational power. The terms team lead and manager refer to people who have relatively more formal organizational power.

Team members reject their own misgivings about the plan

Upon learning about the plan, or perhaps while the plan is being executed, team members develop misgivings about the plan. In Large-PD cultures, they tend to reject their own misgivings, because they know that the managers and the team lead have confidence in the plan. In Small-PD cultures, team members are more likely to respect their own assessments of plans, and then raise questions. And those questions can be helpful if managers and team leads have overlooked something, which is more likely in high-risk projects.

In Large-PD cultures, team members are more likely to assume that their own misgivings are unfounded or misplaced. Some feel that the team lead and the managers must know best. In this way, in the minds of some in Large-PD cultures, formal organizational power is a proxy for superior knowledge or talent. In Small-PD cultures, team members who realize they have doubts about a plan can be more alert to further doubts or to the possibility of problems when plan execution begins. This alertness helps the team because it leads to early attention to problems.

Team members defer reporting problems

When team members notice a problem that the plan doesn't anticipate, they must decide whether or not to notify other team members or possibly the team lead. In Large-PD cultures, the default belief is that team leads and managers have things well in hand. In Small-PD cultures, reports of problems are more likely. This helps Small-PD cultures operate more smoothly in high-risk contexts.

In Large-PD A set of risks that often
escape identification are those
that flow from the Power
Distance of the team culturecultures, there is a tendency to defer raising issues, for at least three reasons. One reason is uncertainty as to the reality of the problem: "Maybe it will go away." A second reason is the hope that if the problem is real, another team member might report it. A third reason is a belief in team lead omniscience — the hope that the team lead already knows about the problem. In Large-PD cultures, team members can be endlessly creative in devising reasons for deferring reports of problems.

Team members report that all is well when they believe or suspect otherwise

Convincing oneself that all is well when it is not, or failing to report that all is not well, can be acts of incompetence or negligence. But reporting that all is well when one believes otherwise is another matter altogether. Concealing from the team lead or from management the fact that the plan has run into trouble can deprive leaders and managers of the opportunity to put things right.

In Large-PD cultures, the less powerful might fear the consequences of reporting problems to the more powerful. Team members might fear retaliation if they believe they might have had some role in the problem's genesis. Even if they're certain of their own innocence, they might still fear retaliation if they believe that their report might be seen as a criticism. In Small-PD cultures, where team members view themselves as collaborators of the team lead, reporting problems promptly is viewed as a responsibility. This encourages reports, which makes Small-PD cultures better able to respond to trouble.

Established ideas obstruct innovations

In Large-PD cultures, one thread that winds through all three of the mechanisms above is the tendency of team members to question themselves before they might ever question the plan, let alone team leads or management. If necessary, they're likely to conceal their doubts or even claim they have no doubts. An analogous mechanism affects the likelihood of team members questioning established assumptions, ideas, tools, or techniques, or suggesting innovations that might displace existing assumptions, ideas, tools, or techniques. To do so in a Large-PD culture would be to question anyone who accepts existing assumptions, ideas, tools, or techniques.

The likelihood of a team member questioning established assumptions, ideas, tools, or techniques in a Large-PD culture is smaller than it would be in a Small-PD culture. This is most unfortunate for the Large-PD cultures, because the team members are more likely than the planners to notice opportunities for improvement. For Small-PD cultures, suggesting innovations that might displace existing assumptions, ideas, tools, or techniques is expected. This makes Small-PD cultures better able to improve their processes.

Greater risk of the sunk cost effect

The sunk cost effect is a cognitive bias that leads us to use past investments in a project or position to justify further investment. Because of the sunk cost effect, we're more likely to continue to adhere to a position when we're more keenly aware of what we've already invested in that position. In a Large-PD culture, this effect can be amplified in situations in which people identify the position in question with people who hold power.

For example, if the team lead and the organization's management have often expressed pride and confidence in a particular past position, then the greater the power distance of the culture, the less likely are team members to suggest an alternative or an innovative substitute for that past position. In some cases, team members' reticence can be traced, in part, to their assessment of the sunk cost. In other words, the larger the power distance, the greater the impact of the sunk cost effect.

These five mechanisms illustrate how the power distance of a team culture can affect its ability to respond to risk. If you work in a Large-PD culture, consider these mechanisms and other similar ones when you develop your risk plans.   First issue in this series   Top    Next Issue

Is every other day a tense, anxious, angry misery as you watch people around you, who couldn't even think their way through a game of Jacks, win at workplace politics and steal the credit and glory for just about everyone's best work including yours? Read 303 Secrets of Workplace Politics, filled with tips and techniques for succeeding in workplace politics. More info

Footnotes

Your comments are welcome

About Point Lookout

Thank you for reading this article. I hope you enjoyed it and found it useful, and that you'll consider recommending it to a friend.

This article in its entirety was written by a human being. No machine intelligence was involved in any way.

Point Lookout is a free weekly email newsletter. Browse the archive of past issues. Subscribe for free.

Support Point Lookout by joining the Friends of Point Lookout, as an individual or as an organization.

Do you face a complex interpersonal situation? Send it in, anonymously if you like, and I'll give you my two cents.

Related articles

More articles on Project Management:

The True Costs of Cost-Cutting

The metaphor "trimming the fat" rests on the belief that some parts of the organization are expendable, and we can remove them with little impact on the remainder. Ah, if only things actually worked that way...

On the Risk of Undetected Issues: I

In complex projects, things might have gone wrong long before we notice them. Noticing them as early as possible — and addressing them — is almost always advantageous. How can we reduce the incidence of undetected issues?

The Planning Fallacy and Self-Interest

A well-known cognitive bias, the planning fallacy, accounts for many unrealistic estimates of project cost and schedule. Overruns are common. But another cognitive bias, and organizational politics, combine with the planning fallacy to make a bad situation even worse.

Depth First or Breadth First?

When investigating candidate solutions to a problem, we tend to focus first on what we believe is the "best bet." But a more systematic approach can sometimes yield dramatic advantages by reducing the cost of the investigation and the time it requires.

Lessons Not Learned: I

The planning fallacy is a cognitive bias that causes us to underestimate the cost and effort involved in projects large and small. Mitigating its effects requires understanding how we go wrong when we plan projects by referencing our own past experience.

See also Project Management and Project Management for more related articles.

Forthcoming issues of Point Lookout

Coming June 4: White-Collar Contractor Sabotage

Modern firms in competitive, dynamic markets draw on many types of employer/employee relationships, including contractors. By providing privileges and perks preferentially among these different types, they risk creating a caldron of resentments that can reduce organizational effectiveness. Available here and by RSS on June 4.

And on June 11: More Things I've Learned Along the Way: VI

When I gain an important insight, or when I learn a lesson, I make a note. Example: If you're interested in changing how a social construct operates, knowing how it came to be the way it is can be much less useful than knowing what keeps it the way it is. Available here and by RSS on June 11.

Coaching services

I offer email and telephone coaching at both corporate and individual rates. Contact Rick for details at rbrenubcqSvusyBsQaEDwner@ChacfhuriyFKgDguTpuYoCanyon.com or (650) 787-6475, or toll-free in the continental US at (866) 378-5470.

Get the ebook!

Past issues of Point Lookout are available in six ebooks:

• Get 2001-2 in Geese Don't Land on Twigs (PDF, )
• Get 2003-4 in Why Dogs Wag (PDF, )
• Get 2005-6 in Loopy Things We Do (PDF, )
• Get 2007-8 in Things We Believe That Maybe Aren't So True (PDF, )
• Get 2009-10 in The Questions Not Asked (PDF, )
• Get all of the first twelve years (2001-2012) in The Collected Issues of Point Lookout (PDF, )

Are you a writer, editor or publisher on deadline? Are you looking for an article that will get people talking and get compliments flying your way? You can have 500-1000 words in your inbox in one hour. License any article from this Web site. More info