Definition: Autocracy is a system of government in which one single person has the entire power. The term applies to structures where an individual holds the authority and supremacy to make all decisions without restrictions.
What Does Autocracy Mean?
Although autocracy is primarily a political concept, the word can also be used in other contexts. In business, autocracy exists when top leader’s decisions are not checked and balanced by any other person, committee or institution. The function of monitoring performances and results of all subordinates is entirely centralized in the autocrat leader. The leader does not ask for opinions but simply gives orders and take decisions. Autocracy is the most effective system if employees are very inexperienced or when work must be done in an inflexible time. On the other hand, autocracy restricts the achievement of complex and challenging goals in the long term.
This happens because the system hinders innovation and motivation. All decisions are taken or controlled by the leader and there are no structured mechanisms to propose constructive ideas from the bottom to the top. In this environment, well-trained, capable professionals tend to feel underappreciated. Autocracies face poor organizational climate and high turnover rates since the most talented employees commonly quit.
Laner Corp is a successful company founded by Michael Laner five years ago. The firm produces and innovative line of home furniture that offers easy assembly and low prices. It distributes its popular items to four stores located in Laner’s native city. The founder and only owner is the General Manager and also a natural autocrat that wants everybody to do exactly what he says. His closest team is a group of loyal managers that are not invited to participate neither in relevant analysis nor strategic decisions.
Laner envisioned opportunities in other cities and also in other furniture products but it was impossible for him to do all the required complex work on his own. Laner therefore asked help from an organizational consultant who recommended a change of leadership style. Laner slowly adopted a more decentralized structure and thus managers were able to propose and implement valuable ideas. After four years, the company reached new cities and expanded significantly the product portfolio.