Contingency Theory

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The optimal organization / leadership / decision-making style is dependent (contingent) upon various internal and external constraints (factors). Explanation of Contingency Theory.


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Contingency Theory?

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Contingency Theory is a class of behavioral theory that claims that there is no best way to organize a corporation, to lead a company, or to make decisions. An organizational / leadership / decision making style that is effective in some situations, may be not successful in other situations. In other words: The optimal organization / leadership / decision-making style depends upon various internal and external constraints (factors).

Contingency Theory factors

Some examples of such constraints (factors) include:

  • The size of the organization.
  • How the firm adapts itself to its environment.
  • Differences among resources and operations activities.
  • Assumptions of managers about employees.
  • Strategies.
  • Technologies being used.
  • etc.

1. Contingency Theory on the organization

  1. There is no universal way or one best way to manage an organization.
  2. The design of an organization and its subsystems must 'fit' with the environment.
  3. Effective organizations not only have a proper 'fit' with the environment, but also between its subsystems.
  4. The needs of an organization are better satisfied when it is properly designed and the management style is appropriate both to the tasks undertaken and the nature of the work group.

2. Contingency Theory of leadership

In the Contingency Theory of leadership, the success of the leader is a function of various factors in the form of subordinate, task, and/or group variables. The effectiveness of a given pattern of leader behavior is contingent upon the demands imposed by the situation. These theories stress using different styles of leadership appropriate to the needs created by different organizational situations. Some of these theories are:

  • Contingency Theory (Fiedler): Fiedler's theory is the earliest and most extensively researched. Fiedler's approach departs from trait and behavioral models by asserting that group performance is contingent on the leader's psychological orientation and on three contextual variables: group atmosphere, task structure, and leader's power position. This theory explains that group performance is a result of interaction of two factors. These factors are known as leadership style and situational favorableness. In Fiedler's model, leadership effectiveness is the result of interaction between the style of the leader and the characteristics of the environment in which the leader works.
  • Situational Theory (Hersey & Blanchard). This theory is an extension of Blake and Mouton's Managerial Grid Model, and Reddin's 3-D management style theory. This model expanded the notion of relationship and task dimensions to leadership, and a readiness dimension was added.
  • Leadership Pipeline (Drotter)

3. Contingency Theory of decision-making

Vroom and Yetton's Decision Participation Contingency Theory or the Normative Decision Theory: According to this model, the effectiveness of a decision procedure depends upon a number of aspects of the situation:

  • The importance of the decision quality and acceptance.
  • The amount of relevant information possessed by the leader and subordinates.
  • The likelihood that subordinates will accept an autocratic decision, or the likelihood that subordinates will cooperate to make a good decision if they may participate.
  • The amount of disagreement among subordinates with respect to their alternatives.

Contingency Theory and Situational theory

Contingency Theory is similar to situational theory in that there is an assumption of no simple way that is always right. The main difference is that situational theory focuses more on the behaviors which the leader should use. Given situational factors (often about follower behavior). Whereas Contingency Theory takes a broader view, which includes contingent factors about leader capability, but also includes other variables within the situation.

Contingency Theory Forum (15 topics) Help
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  How to Apply / Implement Contingency Theories in a Context
I would like to know how can I apply contingency theory in an organisational context? And using this theories, how can I identify management and leadership requirement in a given situation?...

Contingency Theory versus Situational Theory

I'm finding it really interesting how confusing and cross defined this subject is.
I think that situational and contingency could almost be band under the same group; to be honest they are very similar.
Dou you agree? If not, what differenc...

Effects of Contigency Variables

In what ways may the variables in the contingency approach affect management approaches in organisations?...

History of Contingency Theory

I would like to know more about the origin and the development of contingency theory. Who can share an overview? Thanks....

Contingency Theory in 2 Countries

I am writing on how contingency theory may be applied to leaders who share one culture, but reside in two different countires. Any thoughts?...

Contingency Theory Strengths

What are the strengths of contingency theory when applied to a company's organization?...

Why Fiedler's Contingency Theory?

Justify why you would recommend Fiedler's Contingency Theory to any organisation......

Major Weeknesses of Contigency Leadership Approach

What are the weaknesses of the Contigency Leadership Approach?...

Contingencies Affecting Management Development

I would like to know the challenges of the environment that can affect management development. Are there any thought of schools on it....

Individual Unit of Analysis

Hi, is there any conceptual framework of contingency theory for individual unit of analysis? Thank you....

Mission and Objectives > Leadership

I would say the leadership styles / theories would be dependent on a company's level of understanding of its mission and objectives. A clear leadership theory/style would, I believe, be developed through a clear mission and objectives of the company...

Discuss Contingency Theory

The contingency theory accepts that no one leadership style can be effective in all situations and thus the style used will be directed by a number of factors. Please discuss......

Donaldson's Neocontingency Model

In his 1995 book "American anti-management theories of organization: A critique of paradigm proliferation", L. Donaldson developed his "Neocontingency Model". Donaldson argues that when a fit exists between (internal or external) contingencies and or...

Right Way In Information Age

It was easy to develop a theory in the last century and to ensure that it is valid in a particular environment. However, as information started flooding this world in the digital era, the validity of many theories lost its significance in the larger ...

The Cynefin Framework

A recent application of contingency thinking on decision-making is the Cynefin framework described by David J. Snowden and Mary E. Boone in the HBR of Nov 2007. They distinguish between 5 decision-making contexts, each requiring its own decisi...
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Compare with Contingency Theory:  Situational Leadership  |  Leadership Styles  |  Leadership Pipeline  |  Ten Schools of Thought  |  Mechanistic and Organic Systems  |  Six Change Approaches  |  Core Group Theory  |  Groupthink  |  Levels of Culture  |  Culture Types  |  Changing Organization Cultures  |  Leadership Continuum  |  Cultural Intelligence  |  Scenario Planning  |  Results-Based Leadership  |  Moral Purpose  |  EPIC ADVISERS

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