Contingency Approach to Management

Contingency Approach to Management – With Contributions of Contingency

Approach

Contingency approach advocates that managerial actions and organisational design must be
appropriate to the given situation and a particular action is valid only under certain conditions. It
advocates that the managers should develop situation sensitivity and practical selectivity.

In fact, contingency approach has been termed as a common sense approach. Adoption of this
approach can be useful in the formulation of strategies, design of effective organisations,
planning information systems, establishing communication and control systems, shaping
motivational and leadership approaches, resolving conflicts, managing change, etc.

Kast and Rosenzweig have described the contingency views of organisation in the following
words – “The contingency approach suggests that an organisation is a system composed of
subsystems and delineated by identifiable boundaries from its environmental supra system. The
contingency view seeks to understand the interrelationship within and among subsystems as well
as between the organisation and its environment and to define patterns of relationships or
configurations of variable.”

ADVERTISEMENTS:

It emphasises the multivariate nature of organisations and attempts to understand how

organisations operate under varying conditions and in specific circumstances. Contingency views
are ultimately directed toward suggesting organisational designs and managerial actions most
appropriate for specific situations.

Congruence between Organisation and Environment:

An underlying assumption of the contingency view is this there should be a congruence between
the organisation and environment and among the various subsystems. The primary managerial
role is to maximize this congruence. The appropriate fit between the organisation and its
environment and the appropriate internal organisational design will lead to greater effectiveness,
efficiency, and participant satisfaction. Kast and Rosenzweig have analysed the appropriateness
of two kinds of structures under different circumstances.

Firstly, the stable-mechanistic structure is more appropriate when the following conditions
are fulfilled:

ADVERTISEMENTS:

(i) The environment is relatively stable and certain.

(ii) The goals of the organisation are well defined and enduring.
(iii) The technology is relatively uniform and stable.

(iv) There are routine activities; and productivity is the major objective.

(v) Decision making is programmable and coordination and control processes tend to make a
tightly structured, hierarchical system possible.

Secondly, the adaptive-organic structure is more appropriate when the following

conditions are fulfilled:

(i) The environment is relatively uncertain and turbulent.

(ii) The goals are diverse and changing.

(iii) The technology is complex and dynamic.

ADVERTISEMENTS:

(iv) There are many non-routine activities in which creativity and innovation are important.

(v) Heuristic decision-making processes are utilised and coordination and control occur through
reciprocal adjustments. The system is less hierarchical and more flexible.

Contributions of Contingency Approach:

Contingency approach is an extension of the systems approach. The basic theme of contingency
approach is that organisations have to cope with different situations in different ways. There is
no single best way of managing applicable to all situations. In order to be effective, the internal
functioning of an organisation must be consistent with the demands of the external environment.
The managers must keep the functioning of an organisation in harmony with the needs of its
members and the external forces.

Contingency approach highlights the multivariate nature of organisations and explains how
organisations operate under varying conditions. With its help, managers can design structures
which are highly appropriate to the respective situations.

ADVERTISEMENTS:

If an organisation is operating in a stable environment, it can have a mechanistic structure

characterised by high degree of differentiation, centralisation of authority, rigid hierarchical
relationships, rules and regulations, etc.

But if the environment is dynamic, organic structure would be more appropriate. Organic
structure is characterised by decentralised decision-making, collaborative relationships, open
communication, scope for innovative decision-making, etc.
Based on the above discussion, we can highlight the following contributions of contingency
approach:

(i) Contingency approach is action-oriented as it is directed towards the application of systems

concepts and the knowledge gained from other approaches. The contingency approach builds
upon this perspective by following in detail on the nature of relationships existing between these
parts.

ADVERTISEMENTS:

(ii) Contingency theory attempts to determine the predictable relationships between situations,
actions and outcomes.

(iii) Management should match or ‘fit’ its approach to the requirements of the particular
situation.

(iv) Contingency approach provides significant contribution in organisational design. It suggests

that no organisational design may be suitable for all situations, rather, the suitable design is one
determined, keeping in view the requirements of environment, technology, risk and people.

Contingency Approach to Management – With Features and Merits

This approach integrates the various other approaches to the management developed earlier. This
is also called the “Situational” approach. According to it, the major premise is that there is no
one best way to handle any of the management problems. In any situation, the principles and
practices of management should be rather contingent upon the existing circumstances or the
situations. So functional, behavioural, quantitative (management science) and also systems’
approach should all be applied together.

ADVERTISEMENTS:

According to this contingency approach, there can be one best method or style of leadership
which can be fitted into every situation. This approach actually guides the managers to be
adaptive to the particular situations or environment variables. Managers are, therefore, required
to be pragmatic and also open-minded or adaptive. This approach, therefore, is certainly an
improvement over the earlier systems’ approach.

It is based on the detailed examination of the various sub-systems of the organisation and also
the relationship of the organisation and the environment. Actually this contingency approach to
the management is not law. Pigors and Myers had also talked of it in the area of personnel
management as early as 1950. Next to them many more management scientists had advocated
this approach in one way or the other.

The main features of the contingency approach are as follows:

1. Different situations require the application of different management techniques.

2. Management should, therefore, match or ‘fit’ its approach to the requirements of the particular
situations.

3. There is no “best way to manage.” There is no unique technique to solve every problem
because every problem situation is unique in itself.

4. Managers have to devise methods and to learn when and how to apply each one.

5. It emphasizes the need of analysing situation.

Merits or Uses of Contingency Approach:

The contingency approach has great significance. It is helpful to the managers in performing
their functions of planning, organising, direction and control. It helps the managers to broad-base
their approach in solving day-to-day management problems. It widens the manager’s horizons
beyond the theory of management, principles and techniques.

This approach rejects universality of management concept. It requires the ability to analyse and
diagnose a managerial situation correctly. This approach is action oriented as it is directed
towards the application of system concepts and the knowledge gained from other approaches.

Contingency Approach to Management – Important Elements, Implications and

System Theory Vs Contingency Theory

The problem with universal principles of management, as advocated by early theorists, is that
few principles are universal. Research has shown that management methods used in one
circumstance seldom work the same way in others. Parents find this out quickly when they
realise that spanking one child may yield good results while spanking another can be emotionally
disturbing and disastrous.

Some employees are most often motivated by economic gains while others have greater need for
challenging work. Still others care only about protecting their egos. The same individual may be
motivated by different things in a variety of situations.

Approach:

Contingency theory is based on the premise that situations dictate managerial action; that is,
different situations call for different approaches. No single way of solving problems is best for
all situations. Because tasks and people in organisations differ, the contingency theorists
(Selznik, Burns and Stalker, Woodward, Lawrence and Lorsch, James Thompson and others)
argue that the method of managing them must also differ.
The choice of a particular method of managing largely depends on the nature of the job, the
people involved and the situation. According to contingency theory, effective management varies
with the organisation and its environment.

Contingency theory attempts to analyse and understand these interrelationships with a view
towards taking the specific managerial actions necessary to deal with the issue. This approach is
both analytical and situational, with the purpose of developing a practical answer to the question
at hand.

Important Elements of Contingency Theory:

(a) Managerial actions are contingent on certain actions outside the system or sub-system as the
case may be.

(b) Organisational efforts should be based on the behaviour of actions outside the system so that
the organisation gets smoothly integrated with the environment.

(c) Managerial actions and organisational design must be appropriate to the given situation. A
particular action is valid only under certain conditions. There is no one best approach to
management. It varies from situation to situation.

Implications of Contingency Approach:

According to the contingency approach, there are no plans, organisation structures, leadership
styles, or controls that will fit all situations. There are few, if any, universal truths, concepts, and
principles that can be applied under all conditions. Instead, every management situation must be
approached with the ‘it all depends’ attitude.

Managers must find different ways that fit different situations. They must continually address
themselves with the question- which method will work best here? For example, in order to
improve productivity, classical theorist may prescribe work simplification and additional
incentives; the behavioural scientist may recommend job enrichment and democratic
participation of the employees in the decision-making process.

Instead, a manager trained in the contingency approach may offer a solution that is responsive to
the characteristics of the total situation being faced. Organisations characterised by limited
resources, unskilled labour force, limited training opportunities, limited products offered to local
markets— work simplification would be the ideal solution.

Job enrichment programme would work better if the organisation employs skilled labour force.
Managerial action, thus, depends upon circumstances within a given situation. No one best
approach will work in all situations. Applying a contingency/situational approach requires that
managers diagnose a given situation and adapt to meet the conditions present.

According to Robert Albanese, the strength of contingency approach rests on two points:
(i) First, it focuses attention on specific situational factors that influence the appropriateness of
one managerial strategy over another,

(ii) Second, it highlights the importance to managers of developing skills in situational analysis.
Such skills will help managers find out important contingency factors that influence their
approach to managing.

The major implications of contingency theory may be summarized thus: management is entirely
situational; managerial actions are contingent on internal and external factors; managerial actions
must be consistent with the requirements of internal as well as external factors.

Evaluation:

The contingency approach is a useful instructional device in the sense that it compels us to be
aware of the complexity in every situation and forces us to take an active and dynamic role in
trying to determine that would work best in each case. Combining the mechanistic (Taylor) and
humanistic approaches (Mayo) the contingency theory suggests that different conditions and
situations require the application of different management techniques.

It helps in fitting the classical and behavioural theories in a proper framework. It is an

improvement over the systems theory in the sense that it only examines the relationships between
sub-systems of a specific organisation in a given environment, but also offers solutions to
particular organisational problems.

The systems approach takes a general view of organisational variables, i.e., technical, social,
personal, structural and external variables. The contingency theory, on the other hand, is
concerned with achieving a ‘fit’ between organisation and its environment. Practising managers,
however, seem to find this theory tenuous because it does not provide any specific set of
principles to use.

Systems vs. Contingency Theory:

Systems Theory:

(1) Organisation-environment relationship not explained clearly.

(2) Takes a general view of organizational variables (technical, social, personal, structural,
external)

(3) Considers all organisations to be similar.

(4) Vague and complex.

(5) Emphasises the synergistic effect of organisations and recognises the external inputs.

(6) Merely outlines interdependencies among systems and sub-systems.

Contingency Theory:

(1) Spells out the relationship of organisation to its environment clearly.

(2) Takes a specific view of how the organisation adjusts to its environmental demands. Mainly
concerned with structural adaptations of organisation to its task environment.

(3) Each organisation is unique.

(4) More pragmatic and action-oriented.

(5) Relates environments to specific organisation structure and design. It integrates theory with
practise in a systems framework.

(6) Tries to identify nature of inter-dependencies between various parts of an organisation, and
their impact on various other things.

Contingency theory is attacked by several theorists on the following grounds:

I. Paucity of Literature:

Contingency theory suffers from inadequacy of literature. It has not developed to such an extent
where it can offer meaningful solutions to different managerial problems in a specific way. It is
too simplistic to say that ‘managerial actions depend on situations’. Instead, it must offer, in
precise terms, what a manager should do in a given situation.

II. Complex:

Contingency theory is theoretically complex. Even a simple problem involves analysing a

number of organisational components, each of which have innumerable dimensions. Often,
managers may find this to be a difficult and taxing exercise.

III. Defies Empirical Testing:

The precepts advanced by contingency theorists cannot be put to empirical testing in a concrete
way. There are multifarious situational factors to be taken into account while testing the
contingency theory.

For example, a proposition that unless the various parts in an organisation move in close
coordination, the behaviour at various organisational levels would not be effective-seems to be a
sound one. But when put to empirical testing, several problems crop up almost instantaneously.

IV. Reactive Not Proactive:

Contingency theory is also criticised on the ground that it suggests a reactive strategy in coping
with environmental complexity. Instead, a proactive strategy is needed where managers would be
able to steer the organisation through complex environments with their creative and innovative
efforts.

V. Incomplete:

Critics argue that the contingency approach does not incorporate all aspects of systems theory,
and they hold that it has yet not developed to the point at which it can be considered a true
theory.

Further, the goal of integrating functional, quantitative, behavioural, and systems approaches in
the form of a contingency model may prove to be too difficult to realise because of the
incomplete development of the earlier approaches.

Critics also argue that there is really not much that is new about the contingency approach. For
example, they point out that even classical theorists like Fayol cautioned that management
principles require flexible application.

In spite of these valid critical expressions, contingency theory holds good at the micro-level,
where managers are forced to look into internal as well as external requirements while managing
their organisations. It is small wonder, contingency theory is welcomed as a refreshing breeze in
management literature that clears away the humanistic and general systems ‘fog’.

The systems theory takes a general view of organisation variables, i.e., technical, social,
personal, structural and external variables. The contingency theory, on the other hand, is
concerned with achieving a ‘fit’ between organisation and its environment. Kast and Rosenzweig
have, therefore, rightly pointed out that the contingency theory ‘falls somewhere between
simplistic, specific principles and complex, vague notions’.

The contingency theory, like the systems theory recognizes that an organisation is the product of
interactions between its various constituent parts (sub-systems) and the environment. In addition,
as a sort of refinement, it seeks to identify the exact nature of interrelationships and interactions.

In contrast to the vague systems terminology and perspective, the contingency approach allows
us to specifically identify the internal and external variables that typically influence managerial
actions and organisational performance. Accordingly, what constitutes effective management
varies with the organisation’s internal as well as external environment and the make-up of the
organisational sub-systems.

Thus, the contingency approach falls somewhere between simplistic, specific principles
(classical theory) and complex, vague notions (systems theory). This approach provides a long
sought synthesis and brings together the best of all segments of what Prof. Koontz has termed
‘management theory jungle’.

The classical ideas and behavioural modifications are not rejected, but they are viewed as
incomplete and not suited for all organisations. Similarly, the ideas of systems theory that
emphasize the interrelationship between parts also have not been rejected but they are viewed as
vague and unspecific.

As a way of correction, the contingency approach provides a pragmatic method of analysing

organisation sub-systems and tries to integrate these with the environment. Contingency views
are ultimately directed towards—suggesting organisational designs and managerial actions more
suitable for specific situations.

Contingency Approach to Management – Explained!

It was found that behavioural approaches worked in some situation, but not in all. The same was
true for quantitative approaches. Neither of these approaches could claim universal applications
in the real world situations. This was more apparent since 1970. Many management experts now
believe that a systems-based theory could solve the quantitative/behaviour dilemma.

Open and adaptable systems approach is called Contingency Approach. A business organisation
is now regarded as an open and adaptive system which alone can cope with the increasing
complexity and changing environmental influences. Contingency or situational approach seems
better suited to lead management out of the present management theory jungle.

Contingency Theory:

Systems approach emphasizes that all subsystems of an organisation along with the suprasystem
of environment are interconnected and interrelated. Contingency approach analyses and
understands these interrelationships so that managerial actions can be adjusted to demands of
specific situations or circumstances.

Thus contingency approach enables us to evolve practical answers to the problems demanding
solutions. Organisation design and managerial actions most appropriate to specific situations will
have to be adopted in order to achieve best possible result under the given situation. The
performance of each managerial functions is closely connected to an analysis of the total
situation.

For instance appropriate rewards leading to high productivity must be based on the analysis of
the situation. Similarly effective leadership style is expected to match a given set of circum-
stances. Effective motivation and leadership are the best examples of the contingency approach
to management. Management variables such as management process, organisation structure,
organisational behaviour, management style, management control are dependent variables. All
environmental variables are independent variables.

Hence, we cannot have universal principles of organisation and management appropriate to all
situations-and in all environments. In other words, there is no one best way (as advocated by
Taylorism) to organise and manage. Decentralisation as well as centralisation can work under a
given set of situations. Even bureaucracy can work under certain circumstances and it has not
totally outlived its utility.

Similarly, democratic or participative managerial style may not be fit in certain situations and we
may have to adopt tight control under certain circumstances. Leadership style to be adopted
always depends on the situation and not merely on leadership qualities and characteristics of the
followers. Motivation through financial incentives can work wonder if the environment is
favourable. We cannot say that non-financial incentives can work in any situation or
environment.

In short, ‘it all depends’ on a number of interrelated internal and external variable factors. If the
condition is A, the action X may be considered most effective. However, if the condition is B,
then Action Y should be used. Contingency approach should be a realistic view in management
and organisation.

Thus, patterns of management and organisation operating in matured economies may not deliver
rich dividend when adopted in developing countries like India. They will need reorientation in
the light of ‘local circumstances and peculiar local factors. Wholesale import of Western
philosophy and practice of management is not welcome. Management in India should learn this
simple truth.

The Systems Approach in the Future:

Open Man-machine System:

Organisations are open, dynamic, man-machine (socio-technological) systems. They are

constantly interacting with their environment. Business organisations will use systems approach
more and more to co-ordinate and integrate their operations, if they are to survive in a dynamic
environment.

Man and Environment:

Systems approach recognises close interrelations between man, his organisation and his environ-
ment. Man is just a subsystem of the universe and his actions may have adverse effects on his
environment, e.g., problem of pollution and deterioration of natural environment.

Social Costs:

We used to think in terms of closed and static systems. We looked at limited and partial views of
inputs and outputs of our systems. For example, in business we have used profit as an indicator
of economic efficiency of the organisation. We have failed to recognise that many costs, e.g.,
pollution, employee dissatisfaction, consumer disappointment, social frustrations, are social costs
which are not accounted in our balance sheet and profit-and-loss accounts.
The open-systems approach gives us better model to deal with our environmental relationships. It
provides a better way to evaluate organisational and social performance. National social
indicators and a programme of social accounting and auditing will be developed.

Flexible and Generalised Management:

Manager will be a supergeneralist. He will be a problem-solver and not merely a specialist.

Managerial task will be to integrate diverse specialists, professionals, and scientists into an
effective organisation. We will have a flexible managerial system to meet easily changes in
environment. Innovation and creativity will be given special emphasis by managers.

Situational Approach:

Systems approach provides a basic frame of reference for the new situational or contingency
view of management. Management cannot have ready-made universally applicable and patent
principles to be applied in all situations as everlasting truths.

Modern management will have to recognise the nature of technology, the variations in human
participants, and the wide diversity in environmental relationships. Management of each
organisation will be somewhat unique. All managerial actions will depend upon particular
prevailing circumstances and-situational factors.

Management will have to adapt continuously in a changing environment. Systems approach as a

way of thinking will become more popular in the managerial process, i.e., in performing primary
functions of planning, organising, leading and controlling operations. Organisation structures
will be designed not around functional specialisation but around projects and information
decision systems in future.

A mechanistic or bureaucratic approach to management is appropriate when:

(1) Environment is unchanging,

(2) Emphasis is on efficiency,

(3) Emphasis is on routine jobs, many rules and procedures.

An organic or behavioural managerial approach is preferred when:

(1) We have fast changing environment,

(2) We want flexibility,

(3) Emphasis is on less specialised jobs, fewer rules, procedures, etc. and

(4) Employees can exercise self-control and self-discipline.

Contingency Approach to Management

Another milestone in management theory was the development of contingency theory in the
1960s by Tom Burns and G. M. Stalker in the United Kingdom and Paul Lawrence and Jay
Lorsch in the United States. The crucial message of contingency theory is that there is no one
best way to organize. The organisational structures and the control systems that managers choose
depend on—are contingent on—characteristics of the external environment in which the
organisation operates.

According to contingency theory, the characteristics of the environment affect an organisation’s

ability to obtain resources. To maximize the likelihood of gaining access to resources, managers
must allow an organisation’s departments to organize and control their activities in ways most
likely to allow them to obtain resources, given the constraints of the particular environment they
face.

In other words, how managers design-the organisational hierarchy, choose a control system, and
lead and motivate their employees is contingent on the characteristics of the organisational
environment.

An important characteristic of the external environment that affects an organisation’s ability to

obtain resources is the degree to which the environment is changing. Changes in the
organisational environment include – changes in technology, which can lead to the creation of
new products (such as compact discs) and result in the obsolescence of existing products (eight-
track tapes); the entry of new competitors (such as foreign organisations that compete for
available resources); and unstable economic conditions.

In general, the more quickly the organisational environment is changing, the greater are the
problems associated with gaining access to resources and the greater is the manager’s need to
find ways to coordinate the activities of people in different departments in order to respond to the
environment quickly and effectively.

The basic idea behind contingency theory—that there is no one best way to design or lead an
organisation—has been incorporated into other areas of management theory, including
leadership theories.

Mechanistic and Organic Structures:

The two basic ways in which managers can organize and control an organisation’s activities to
respond to characteristics of its external environment – They can use a mechanistic structure or
an organic structure. A mechanistic structure typically rests on Theory X assumptions, and an
organic structure typically rests on Theory Y assumptions.

When the environment surrounding an organisation is stable, managers tend to choose a

mechanistic structure to organize and control activities and make employee behaviour
predictable. In a mechanistic structure, authority is centralized at the top of the managerial
hierarchy, and the vertical hierarchy of authority is the main means used to control subordinates’
behaviour.

Tasks and roles are clearly specified, subordinates are closely supervised, and the emphasis is on
strict discipline and order. Everyone knows his or her place, and there is a place for everyone. A
mechanistic structure provides the most efficient way to operate in a stable environment because
it allows managers to obtain inputs at the lowest cost, giving an organisation the most control
over its conversion processes and enabling the most efficient production of goods and services
with the smallest expenditure of resources.

McDonald’s restaurants operate with a mechanistic structure. Supervisors make all important
decisions; employees are closely supervised and follow well defined rules and standard operating
procedures. In contrast, when the environment is changing rapidly, it is difficult to obtain access
to resources, and managers need to organize their activities in a way that allows them to
cooperate, to act quickly to acquire resources (such as new types of inputs to produce new kinds
of products), and to respond effectively to the unexpected.

In an organic structure, authority is decentralized to middle and first-line managers to encourage

them to take responsibility and act quickly to pursue scarce resources. Departments are
encouraged to take a cross-departmental or functional perspective, and, as in Mary Parker
Follett’s model, authority rests with the individuals and departments best positioned to control
the current problems the organisation is facing.

Managers in an organic structure can react more quickly to a changing environment than can
managers in a mechanistic structure. However, an organic structure is generally more expensive
to operate, so it is used only when needed—when the organisational environment is unstable and
rapidly changing.

Contingency School of Management:

Contingency School of Management is a trend of management thought, which is based on the

premises that there is no single best way to manage because every situation and every manager is
different. Therefore, there are only a few universal management principles, and an appropriate
management style depends on the demands of a particular situation. See also classical school of
management, quantitative school of management, and systems school of management.

The contingency school of management can be summarized as an ‘it all depends’ approach. The
appropriate management actions and approaches depend on the situation. Managers with a
contingency view use a flexible approach, draw on a variety of theories and experiences, and
evaluate many options as they solve problems.

Contingency management recognizes that there is no one best way to manage. In the contingency
perspective, managers are faced with the task of determining which managerial approach is
likely to be most effective in a given situation. For example, the approach used to manage a
group of teenagers working in a fast-food restaurant would be very different from the approach
used to manage a medical research team trying to find a cure for a disease.

Contingency thinking avoids the classical ‘one best way’ arguments and recognizes the need to
understand situational differences and respond appropriately to them. It does not apply certain
management principles to any situation. Contingency theory is a recognition of the extreme
importance of individual manager performance in any given situation. The contingency approach
is highly dependent on the experience and judgment of the manager in a given organisational
environment.

Contingency theory refers to any of a number of management theories. Several contingency

approaches were developed concurrently in the late 1960s. They suggested that previous theories
such as Weber’s bureaucracy and Taylor’s scientific management had failed because they
neglected that management style and organisational structure were influenced by various aspects
of the environment-the contingency factors. There could not be “one best way” for leadership or
organisation.

Historically, contingency theory has sought to formulate broad generalizations about the formal
structures that are typically associated with or best fit the use of different technologies. The
perspective originated with the work of Joan Woodward (1958), who argued that technologies
directly determine differences in such organisational attributes as span of control, centralization
of authority, and the formalization of rules and procedures.

Fred Fiedler’s contingency model focused on individual leadership.

Other researchers including Paul Lawrence, Jay Lorsch, and James D. Thompson were more
interested in the impact of contingency factors on organisational structure. Their structural
contingency theory was the dominant paradigm of organisational structural theories for most of
the 1970s. A major empirical test was furnished by Johannes M. Pennings who examined the
interaction between environmental uncertainty, organisation structure and various aspects of
performance.

Contingency School began in 1960s. The contingency school focused on applying management
principles and processes primarily dictated by each unique situation. In the contingency theory, a
leader’s ability to lead is contingent upon various situational factors. Its application has been on
management issues such as organisational design, job design, motivation, and leadership style.

A few of the major contributors are Fred Fiedler, Joan Woodward, and Paul Lawrence. The
Contingency Theory states that the leader’s ability to lead is contingent upon various situational
factors.

Contingency School of Management made a significant contribution to modern day

management, and these early results provide a blueprint for the current leadership paradigms in
organisations. The contingency school of management is based on the idea that there is no one
best way to manage and that to be effective, planning, organising, leading, and controlling must
be tailored to the particular circumstances faced by an organisation.
Managers have always asked questions such as “What is the right thing to do? Should we have a
mechanistic or an organic structure? A functional or divisional structure? Wide or narrow spans
of management? Tall or flat organisational structures? Simple or complex control and
coordination mechanisms? Should we be centralized or decentralized? Should we use task or
people oriented leadership styles? What motivational approaches and incentive programs should
we use?”

The contingency approach to management (also called the situational approach) assumes that
there is no universal answer to such questions because organisations, people, and situations vary
and change over time. Thus, the right thing to do depends on a complex variety of critical
environmental and internal contingencies.

Contingency Approach to Management – Recognition, Contributions and

Limitations

In the mid-1960s, the contingency view of management or situational approach emerged. The
contingency approach assumes that managerial behaviour is dependent on a wide variety of
elements. It provides a framework for integrating the knowledge of management thought.

According to the contingency approach, the task of managers is to identify which technique will,
in a particular situation, under particular circumstances, and at a particular time, best contribute
to the attainment of management goals. For example- where workers need to be encouraged to
increase productivity, the classical theorist may prescribe a new work simplification scheme.

The behavioural scientist may seek to create a psychologically motivating climate and
recommend the opposite- work enrichment. But the manager trained in the contingency approach
will ask – Which method will work best here? If the workers are unskilled and training
opportunities and resources are limited, work simplification might be the best solution. With
skilled workers driven by pride in their abilities, a job enrichment program might be more
effective.

The contingency view of management lead to – (1) Recognition of situational nature of

management (2) Response to particular characteristics of situation.

Recognition of Situational Nature of Management:

This theory argues that there is no ‘one best way’ of doing things. The management will face a
range of choices when determining how a particular function is to be performed.

For example- the continuing effort to identify the best leadership or management style might
now conclude that the best style depends on the situation. If one is leading troops in the Persian
Gulf, an autocratic style is probably best (of course, many might argue here, too). If one is
leading a hospital or university, a more participative and facilitative leadership style is probably
best.
Response to Particular Characteristics of Situation:

Contingency theory asserts that when managers make a decision, they must take into account all
aspects of the current situation and act on those aspects that are key to the situation at hand.
Basically, it’s the approach that “it depends.” First there would be a need to identify the
situational factors, and then the appropriate management principle would be applied.

For example- if an organisation structure has to be decided, there should be an appropriate

response to a number of variables, or contingencies, which influence both the needs of the
organisation and how it works. These may be-

1. Its size

2. The technology it uses

3. Its operating environment.

Thus, if it is a small organisation, a centralised structure would do, but if it is a big organisation,
a decentralised structure would be more appropriate. Likewise other factors would have their role
in determining the organisation structure.

Contributions:

A contingency approach to management is logical. Since organizations are diverse – in size,

objectives, tasks being done and the like- it would be surprising to find universally applicable
principles that would work in all situations. For this reason, contingency approach is seen as the
leading branch of management thought today. This approach is the long-sought synthesis that
brings together the best of all segments of what Harold Koontz has called the “management
theory jungle.”

Limitations:

In its present state the contingency approach really stands for little more than a loosely organized
set of propositions, which in principle are committed to an open systems view of organization.