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A Guide to Contingency Approach in Management

Aug 2,18

Contingency Theory of Management

The contingency theory of management is one of the most important topics that you will study in your management degree. Many times students are given assignments, research papers, and projects related to the contingency approach to management. This article will explain to you the whole concept briefly and will answer some common questions related to the contingency theory.

What is the meaning of contingency theory?

The word ‘contingency’ means any event or circumstance that is likely to occur in the future but the occurrence of that event is not certain. With this, we can guess that the contingency theory is all about ‘uncertainty’. The contingency theory is a class of behavioural theories that help to predict organizational behaviour. The contingency management theory explains the uncertainties involved in leadership, management and decision making. With contingency thinking, one can gain useful insights into leadership practices.

What is a contingency approach to management?

The contingency approach to management suggests that there is no particular best way to manage. The management activities such as planning, controlling, leadership, or organization are completely dependent on the circumstances and the environment. If you need insights into these management activities, our MBA assignment help services can provide you with adequate explanations.

According to the contingency approach, the managers generally pay attention to the current situations and then make strategies based on their knowledge and experience.

This approach is quite advantageous for the organizations as it allows them to learn from specific circumstances and change their policies accordingly in the future if the same situation arises.

The contingency approach to leadership means that the leaders themselves have to adjust their working styles and management strategies based on the needs of their co-workers and the organization.

Who propounded the contingency theory of management?

The contingency theory of management was proposed by an Austrian psychologist, Fred Edward Fiedler. In 1964, he published an article called “A Contingency Model of Leadership Effectiveness”.

Features or Characteristics of Contingency Approach

  • The contingency approach focuses on the variable nature of businesses and organizations. The managers choose a Framework for finding solutions to a problem rather than sticking to a particular strategy for solving the problems. This allows an organization to work under differentiable environmental conditions and circumstances.
  • The contingency approach to management generally depends upon the complexity of a problem. It depicts that management is circumstantial. There are no Universal principles of management and there is no one best way to manage. Different situations can have different solutions. No one can pre-declare how things will fall into place.
  • It is also called the ‘if-then’ approach to management. If ‘this’ happens then we would take ‘this action’. The ‘if section’ represents an independent variable or a particular problem or a situation. The ‘then part’ represents the action to be taken accordingly or the dependent variable of the problem.
  • The contingency theory definition depends upon both the internal as well as external factors of an organization. For example, the size of the organization, the leadership approaches of different managers of an organization, the number of employees versus the number of managers in the organization, the customers’ perspective and the competition in the market.

How does Contingency theory work?

First, Fred Edward defines two kinds of leadership – Task Motivated leadership and Relationship Motivated leadership. Task motivated leaders are effective in situations that are most favourable or most unfavourable. The relationship motivated leaders are effective in situations that lie in-between these two extremes.

Then, Fred Edward has used the LPC Scale or the Least Preferred Co-Worker scale to measure the leadership style that will be most suitable in a situation. The leaders who have low LCP are task motivated and those who have a higher LCP are relationship motivated leaders.

Three Major Contingency Theories of Leadership

There are four contingency theories of leadership. The very first is the theory presented by Fred Edward that we just discussed. Let us have a look at the other three.

Path-Goal Theory

As the name suggests, this theory relates how leaders can help their subordinates to achieve their goals. This theory explains the kind of leadership in which the leaders clear out the obstacles being faced by the subordinates who are willing to achieve their goals.

Situational Leadership Theory (Hersey-Blanchard Situational Leadership Theory)

As per this theory, leaders have four behaviours – Delegating, Selling, Telling and Participating. Then, this theory also considers the maturity levels of subordinates – incompetence, competence, willingness and unwillingness. This theory suggests how leaders can fit-in their leadership behaviours based on the maturity levels of the subordinates.

Decision-Making Theory (Vroom-Yetton-Jago Decision-Making Model of Leadership)

The contingency thinking in this theory suggests that the right decision making is dependent upon how a leader emerges and progresses. Three parameters shape a decision namely, the commitment of the group, quality and time restrictions. This theory describes five kinds of leaderships based on situation namely, Autocratic (A1), Autocratic (A2), Consultative (C1), Consultative (C2) and Collaborative (G2).

What is an example of contingency theory?

To understand the contingency approach to leadership let us consider the scenario of a newly appointed Clothing Store Manager of a brand like H&M which has a staff of around 50 people. What kind of leader should he be? Well, we must consider the following parameters for that:

  • Low trust factor – Since the manager is appointed, the staff won’t show much trust in them. The manager might not be able to build strong relationships with the staff right now as they are large in number.
  • High task structure – the operating process of the store is clear. The staff already knows how to welcome customers and organize or display clothes.
  • High position power – the manager has the authority to hire more people or to fire someone if required.

So, as per the Fred Edward contingency theory, a relationship motivated leader will be effective in this case.

The Advantages and Disadvantages of Contingency Approach to Management

Contingency Approach to Management – Advantages

Because of the profitable features that this theory proposes it has been of great use to the managers. You can find the complete list of advantages and examples of the contingency approach from our management experts. Just avail our online assignment help service and they will provide you with the easiest explanations of this essay topic. Let us look at a few of the advantages here:

  • The approach is adaptive. This means that it allows organizations to stay flexible and transform their policies and strategies according to the changing environment.
  • The managers can consider the entire factors, analyze situations thoroughly and then make the appropriate decision. This means that they can consider every factor variables and circumstances that may affect their solutions in the present and the future as well.
  • Due to this approach the scope of leadership has widened. This approach gives importance to the managers’ understanding, knowledge, and leadership styles and lets them take different decisions depending upon the different situations.
  • The contingency approach allows an organization to choose different leaders as per their leadership styles in various contexts. The theory does not expect that all the leaders are efficient in dealing with all types of situations in an organization.

Contingency Approach to Management – Disadvantages

  • Despite the lucrative features and advantages that the contingency management theory has to offer to the organizations it is not completely liberated from criticism. There is no single optimal solution to a problem which means that managers can iterate as much as they want in search of solutions. This can sometimes lead to wastage of resources, time and money.
  • The contingency approach definition is quite straightforward that not all management situations can be dealt with in a specific manner. But when we apply the same in real-life scenarios things do get a little complex. It requires a thorough analysis and several factors need to be considered for every other problem that arises. Hence in case of stringent time limits managers may not be able to dig deeper into the situation and they might make superficial decisions.
  • It is not always feasible for the managers to consider every factor and determine all the variables involved in their decision-making process. There can be various constraints such as time, cost and resources due to which it can become difficult for the managers to gather all the information and analyze that information completely.
  • The contingency approach might be complex to implement as it is not fixed. It is situational. Hence, it all depended on how the leaders adjust themselves and their perspectives for the betterment of the company. The more time the leaders will spend with their subordinates and understand their issues and problems, the easier the decision-making process will be for them.

The Importance of Contingency Theory

The contingency theory definition offers a dynamic approach to leadership. With the help of such a theory, the management can decide the best way to lead the organization and make the right decisions. It considers the nature of the work of the organization and the approach of the workers. It gives no one path of management. Hence, highlighting the flexibility that is required in every leader.

Do you think that the Contingency Theory of Management must be adopted by every organization? Start the discussion with our Management experts right now.

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August 2, 2018

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