Paper: 05, Principles of Management

Module: 08, Contingency Theory of Management

Prof. S P Bansal
Principal Investigator Vice Chancellor
Maharaja Agrasen University, Baddi

Prof YoginderVerma
Co-Principal Investigator Pro–Vice Chancellor
Central University of Himachal Pradesh. Kangra. H.P.

Prof. Tejinder Sharma

Paper Coordinator Department of Commerce
Krukshetra University, Kurukshetra

Content Writer Dr. Dimple Khosla

Assistant Professor,
Dyal Singh College, Karnal
Items Description of Module
Subject Name Management
Paper Name Business Management
Module Title Contingency Approach to Management
Module Id Module no.-8
Pre- Requisites Basic knowledge of management concept
Objectives To understand the Contingency Approach
Keywords Contingency, Proactive, Approach
. , Situational

QUADRANT-I

1. Introduction
2. Meaning of Contingency Approach
3. Features of Contingency Approach
4. Limitations of Contingency Approach
5. Relationship between Contingency Approach and Systems Approach
6. Contingency Approach and Leadership Style
7. Conclusion
CONTINGENCY APPROACH
#Introduction
Various approaches have been given by various scholars for management. Each approach
has its own merits and demerits. But none of these approaches is that which, we can say is
suitable in all situations. In an organisation, it is not possible that every time same situation
will come. So a manger has to face different situations and this need of management is to
be fulfilled by contingency approach, which is also known as situational approach. This
approach has overcome the limitations of system approach, behavioural approach and
functional approach of management.

#Meaning of Contingency Approach

The word contingency means possibility and in broad sense it means to be prepared for every
circumstances and situations. This approach says that management principles and practices
cannot be applied universally so as per this approach manager should take decision not
according to the principles but according to the situation. In this approach manager first
analyse all the prevailing situations and circumstances then applies the principle and skill of
management according to situation.

System approach has not fulfilled the condition of establishing a relationship between the
organisation and environment. There are so many factors like environmental change,
uncertainty, technology and size of the company etc., which impact the organisation and all
these factors should be kept in mind by a good manager. So a manager must analyse the
prevailing environment and should take decisions accordingly. For example: MR. X is
running a vegetarian restaurant in a particular area. And he founds that his sale is not good
enough as per his expectation because he was aware of the fact that people in that area are
very fond of restaurant foods and are regular visitors so he tried to find out the reason and
after a survey he comes to know that most of the people living in that area are non-vegetarian
and he is serving only vegetarian food items. He immediately changes his policy and started
offering non-vegetarian items too and with-in few days his sale shoot up with a very good
percentage. It all happened due to the applicability of contingency approach by the manager.

#Features of Contingency Approach

 Based on Situation:
Contingency approach is based on situation. It cannot be applied universally. It is of
the opinion that there is not any single style which can be best suited to every
situation. So every manager have to make a deep analysis regarding the specific
situations and then make his policy and decision.
 Provides Solution:
Contingency approach not only takes into account the situation but also provide the
best solution according to the behavioural pattern of the organisation.
  Inter-Relationship:
Contingency approach establish good interrelationship between situational variables
and managerial actions since management variables are dependent on environment
variables which are independent

 Structural Adaptability:
Under this approach a manager adopts himself according to the changed
circumstances since contingency approach takes into account structural changes in the
organisation according to the changed environment.

 Practical Approach:
This approach is more practical because it changes according to the changed
environment and do not stick to the outdated policies.

 Analytical:
Since this approach tries to analyse the interrelationship between environment and
managerial actions it bridges the gap of existing practiced theories.

 Suggest Alternatives:
This approach not only give quantitative and qualitative suggestions but also provide
with a various alternatives that could be applied to a particular situation.

 Improved Approach:
Contingency approach is considered to be an approved one because it provides a
pragmatic method of recognising and analysing various sub systems of the
organisation, identifies their exact nature and tries to integrate with the exact nature of
environment.

#LIMITATIONS OF CONTINGENCY APPROACH

 Lack of Theoretical Base:
The theoretical base is referred to the available studies on the concept. So many
researches have been done in this regard but no sound base has been provided by
them which can provide with the obvious action that could be taken in a particular
situation.

 Difficulty in Testing:
It is very complicated job to test this approach because this approach is based on
experience and practice. There is no set of principles for this approach.

 Limitation of Pro-activeness:
This approach does something when some situation arises so it means it is reactive but
actually what is desired from a manager is pro-activeness. This means he has to be
aware of the probable changes in the environment and must be able to decide in
advance that if such situation comes then what could be done.
  Tedious:
Only saying that decide according to the situation is not a solution.It requires a
complete analysis of the situation and manager do not necessarily always have time to
go through all what is actually required. Therefore to apply this approach in practice
is very complicated not simple.

# Relationship between Contingency Approach and Systems Approach

 System Approach has failed to establish a relationship between the organisation and
the environment, whereas environment analysis is one of the major parts of the
conceptual framework for contingency approach. It is the foremost duty of the
manager to analyse the environment and take action according to the result of the
analysis.
 Contingency Approach follows the basic ideas and concepts given by the Systems
Approach but followers of contingency approach opines that system approach is not
targeted towards managerial action.
 System Approach is more concentrated towards human behaviour and the various
parts of the organisation i.e. how the various sub-parts are connected to each other,
whereas contingency approach concentrates on structural adaptation of the
organisation with its inside and outside environment.
 It can be said that contingency approach has emerged and built-up over the system
approach. So both the approaches can go together in an organisation. A manager can
decide within the various sub-systems what different strategies should be adopted by
him in different situations.

# Contingency Approach and Leadership Style

Every leader does not suit fit to every situation. This style of leadership deals with
searching for the leader which best suits the situation. When the behavioural theory failed
the researchers were continuously finding the style of leadership that was most effective
in some particular situation. Effective leadership is contingent on matching a leader's
style to the right setting. Contingency theory clearly examines the fit between the leader
and the situation and provides guidelines for managers to achieve this effective fit.
Most of the researchers believe that managers decide about their leadership styles
depending on the leadership situations. Number of factors like nature of employees, type
and complexity level of work, personal interests of the employees, policy of top
management, and organisational structures etc., that prevail in a particular situation helps
managers to decide regarding their orientation towards decision‐making and motivational
approach.
 The situational theory can also be described with the help of the following two leadership
theories: (1) Fiedler’s Contingency Theory (2) Hersey- Blanchard Situational Leadership
Theory

Fiedler's Contingency Theory

Fred E. Fiedler's contingency theory is of the opinion that there is no best way of
leadership style which best suits to every situation. Managers has to apply different
leadership style according to the different situations. Because the style which proves good
in one situation may fail in some other situation.
According to Fiedler, there are three elements that decide leadership style. These
elements are:
1. Task Structure: It refers to the degree to which the managers are able to clarify the
requirements of a task. So everybody who is involved in a particular task must be well
aware of what actually is needed from him and that the accomplishment of the task could
be clearly shown.
2. Leader - Member Relations: Existence of leader is based on its followers. They have to
work as a team. So this relationship refer to the group atmosphere and to the degree of
confidence, loyalty, dependability and support that the leader receives from his followers
If the relationship is positive or favourable, task structure is clearly defined and the
manager will be able to reward or punish employees without any problems. But on the
other hand if the relationship is negative or unfavourable, the task structure is usually not
clear and the leader possesses limited authority.
3. Positioning Power: This refers to the extent of power a leader possesses in an
organisation. No manager enjoys unlimited authority. So this means clearing about
whether a manager has the power of rewarding or punishing his employees. Also has he
the power to appoint any employee or to fire any employee.
Depending upon the above three elements there can be two situational theories.
1. Relationship oriented style
2. Task oriented style
Fiedler rated managers on the basis of relationship and task. He made two categories of
managers one consisting of those who were relationship oriented and other consisting of
those who were task oriented.
1. Relationship- Oriented Style: Managers who are of this type believes in teamwork.
They know the value of task to be accomplished while focusing on the individual
 interests of the employees. These managers perform better even when the task is
unstructured, low position power and a normal leader-member relation.
2. Task- Oriented Style: Task‐oriented managers give more stress on the
accomplishment of the task and know very well how to get the things done from
others. These type of leaders do better in the situations, where the relationship
between leader and the member is good, the task is well structured, and either weak or
strong position power. They also did well when the tasks were unstructured but
position power was strong, as well as when the leader/member relations were
moderate to poor and the tasks were unstructured. Relationship‐oriented managers, on
the other hand, do better in all other situations.

The task‐motivated style leader always tries to accomplish his or her work well in time
with good level of efficiency and feels satisfied only at the completion of the work, while
the relationship‐motivated style leader always try to motivate his employees for team-
work and give more and more stress to build interpersonal relations. It is very difficult to
say which of the two style is better since leadership is more or less based on personal
traits. Task‐motivated leaders proves to be the best when their task is completed by their
team successfully for example they achieved their sales targets or they captured the target
market share. Relationship‐oriented leaders proves to be the best when they are able to
builg a good public image and are having increasing number of satisfied customers.

Hersey- Blanchard Situational Leadership Theory

This theory was propounded by Professor Paul Hersey and Ken Blanchard with regard to
the Contingency Theories. The basic rule followed here is same that no single leadership
style can suit or fit best to each and every situation. A manager has to perform several
tasks in an organisation and according to Hersey and Blanchard different leadership styles
are required for level in different types of tasks. According to them the success of a task
depends upon the two factors:
(1) Style of leadership and
(2) Maturity Level of followers.
They further classify these styles and maturity level of followers in four parts
(1) Style of leadership
o Telling Style
o Selling Style
 o Participating Style
o Delegating Style
(2) Maturity Level of followers

o Incompetent and Unwilling

o Incompetent but willing
o Competent but not sure
o Competent and willing
 (1) Style of leadership
Telling Style: Under this style of leadership, leader just give simple directions in the form
of what is to be done, when and in which manner he requires this to be done. So this style
is also known as directive style. Instructions flow from leader to workers and they work
accordingly.
Selling Style: Under this style the directions are given to the workers with convincing
force. The only difference between telling style and selling style is that the leader walks
hand in hand guiding them what to do at each step. Workers are convinced that why they
need to follow the leader. Flow of information is two-way.
Participative style: In this style leader also participate in the work as a part of the team. He
builds and tries to maintain relationship with his team members. He also takes suggestions
from them and thus this style is not just directive rather collaborative.
Delegating Style: As the name suggest most of the work is done by the staff itself without
even getting directions from their leader. This style works when the team is experienced
enough to take the decision and to justify the responsibilities delegated to them by their
leaders.
 (2) Maturity level of Followers
Based on the above leadership styles, Hersey and Blanchard gave four maturity level of
followers: These levels were given in the form of M1, M2, M3 and M4.

M1: Incompetent and Unwilling: These workers don’t have any experience of work and
they need directions at every level. Since they do not possess sufficient knowledge and are
new to the work, they complete the work as they are directed. Telling style of leadership
matches with this maturity level, as in this style the employees are given directions for each
work to be done.
M2: Incompetent but willing: These workers are a little more knowledgeable and
experienced than those of working at level M1. These are the workers who know that they are
not having the sufficient knowledge for doing the particular task given to them but still they
are very keen and eager to do the job, which is really very important. To this maturity level
the type of leadership style that matches is Selling leadership style.
M3: Competent but not sure: At this level of maturity the employees are knowledgeable
and experienced enough to do most of the work at their own. But side by side they are not
sure about some aspect for which they need the guidance of their leaders. The Participating
style completely matches with this level of workers since they are able to manage most of the
work their selves and need a little help only.
M4: Competent and willing: These employees are independent and are capable of doing
their work without any supervision and guidance. At this stage the style of leadership is very
obvious, that is delegation. Once they are given the authority to accomplish the job, they are
sure about completion of the job with efficiency.
The Hersey Blanchard Situational Leadership Theory matches different motivational level
with different style of leadership. According to them a good manager is always the follower
of contingency approach and keeps himself flexible according to the situation.
Conclusion
Contingency approach of management is more sophisticated as well as complex in nature.
This approach suggests that there is a direct relation between the managerial action and the
environment. According to this approach there is no single way-out for every kind of problem
or situation, so what is to be done completely depends upon what actually is desired
according to the situation.