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.
- Technologies being used.
1. Contingency Theory on the organization
- There is no universal way or one best way to manage an organization.
- The design of an organization and its subsystems must 'fit' with the
- Effective organizations not only have a proper 'fit' with the environment,
but also between its subsystems.
- 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.
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
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
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.
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Compare with Contingency Theory:
| Leadership Styles
| Leadership Pipeline
| Ten Schools
of Thought |
Mechanistic and Organic
Six Change Approaches |
Core Group Theory |
Levels of Culture
| Culture Types
Organization Cultures |
| Cultural Intelligence
| Scenario Planning
| EPIC ADVISERS
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