assignment 2 _contingency theory_

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					                             CONTINGENCY THEORY
Contingency theory A strand of organization theory (sometimes also known as the rational
systems perspective), the leading practitioners of which were Tom Burns, Joan Woodward, Paul
Lawrence, and Jay Lorsch.

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 organizational attributes as span of control, centralization
of authority, and the formalization of rules and procedures.

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. Instead, the optimal course of
action is contingent (dependent) upon the internal and external situation. Several contingency
approaches were developed concurrently in the late 1960s.

"Contingency theory is guided by the general orienting hypothesis that organizations whose
internal features best match the demands of their environments will achieve the best adaptation"
(Scott p. 89). The termed was invented by Lawrence and Lorsch in 1967 who argued that the
amount of uncertainty and rate of change in an environment impacts the development of internal
features in organizations.

A Contingency is a relationship between two phenomenons. If one phenomenon exists, then a
conclusion can be drawn about another phenomenon.

Contingency Theory Basic concept: "The best way to organize depends on the nature of the
environment to which the organization relates." (Scott, 1992: 89)

Contingency theory has two basic underlying assumptions:
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First - There is no one best way to organize.
Second - Any way of organizing is not equally effective. (Galbraith, 1973).

The researchers try to identify a match between the characteristics of the environment and those
of the organization that lead to high performance. This match is called 'fit', the better the fit the
higher the performance. Such a match is called a 'contingency theory'.

They suggested that previous theories such as Weber's bureaucracy and Taylor's scientific
management had failed because they neglected that management style and organizational
structure that influenced by various features of the environment.

Morgan in his book, "Images of Organization" describes the main ideas underlying contingency
in a nutshell:

The essence of contingency theory is that best practices depend on the contingencies of the
situation. Contingency theory is often called “it all depends” theory, because when you ask a
contingency theorist for an answer, the typical response is that it all depends. Contingency
theorists try to identify and measure the conditions under which things will likely occur.

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, but may be not successful in other
situations. In other words: The optimal organization / leadership / decision-making style depend
upon various internal and external constraints (factors).

                                                                      | Contingency theory   2
                "Rachel Barker and George Angelopoulos in their book Integrated Organizational
                Communication propose that "a contingency theory gives top priority to
                considerations of the organizational context. The main aim is adapting to its
                environments". This then requires recognition of organizations as open systems whose
                information inputs will be recognized according to the prevailing circumstances that
                include the organizations internal and external factors."

Contingency Theory 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. Etc…

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 environment.
Effective organizations not only have a proper 'fit' with the environment, but also between its
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.

                                                                             | Contingency theory      3
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
concept of relationship and task dimensions to leadership, and a readiness dimension was added.
Leadership Pipeline (Drotter)

3).     Contingency Theory of decision making:
There are also contingency theories that relate to decision making. According to these models,
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 cooperate in trying to make a good decision if allowed to participate; the amount of
disagreement among subordinates with respect to their preferred alternatives.

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Vroom and Yetton's Decision Participation Contingency Theory or the Normative Decision
Theory; the effectiveness of a decision procedure depends upon a number of aspects of the

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 Approach:

Contingency theory suggests that management principles and practices are dependent on
situational suitability. Luthans (1976) notes that “The traditional approaches to management
were not necessarily wrong, but today they are no longer sufficient. The needed breakthrough
for management theory and practice can be found in a contingency approach.”                  Different
situations are unique and require a managerial response that is based on specific considerations
and variables. The appropriate use of a management concept or theory is thus contingent or
dependent on a set of variables that allow the user to fit the theory to the situation and particular
problems. It also allows for management theory to be applied to an intercultural context where
customs and culture must be taken into consideration (Shetty 1974).

For management and emergency management alike, the successful application of any theory or
concept is greatly influenced by the situation. For example, a functional organization structure
with many layers of management functions best in stable environmental conditions and routine
operations. For emergency management, the operating environment is ever changing and must
be flexible to accommodate the many different hazards that a community or business faces.
Emergency managers must build an organizational culture and structure that make up and
acknowledges that each disaster is unique.

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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.

Application of Contingency Theory to Human Services Management:

Contingency theory attempts to relate research on many management variables, for example,
research on professionalism and centralized decision making or worker education and task
complexity. It allows you to analyze a situation and determine what variables influence the
decision with which you are concerned. A management contingency model is below.                  The
center circle represents the agency. Notice that the primary internal contingency on which
management depends is the agency’s purpose or goals.

The people hired, technology used, tasks performed, and organizational structures are all heavily
influenced by an agency’s goals. This contingency model is based on Carlisle, H.M. (1976)
Management Concepts and Situations, Science Research Associates Inc.

                                                                      | Contingency theory   6
 Political                                                                 Political
 Forces and                                                                Forces and
 Institutions                                                              Institutions

                                        Purpose/            People/
                                          Goal              Manager

Socio Cultural
                                                                            Forces and
Forces and

                  Contingency Theory Science or Technology?
                 Stephen C. Betts, William Paterson University

Contingency theory is considered a dominant, theoretical, rational, open system model at the
structural level of analysis in organization theory (Scott, 1992). The basic statement of
contingency theory is that the environment in which an organization operates determines the
best way for it to organize. The research question, 'Is Contingency Theory Science or
Technology?' asks whether these matching’s of organizational and environmental characteristics
are scientific theories or a technology for managers to aid them in making decisions.

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        Contingency Theory Is Addressed First 

The general concept is presented along with a brief history and explanation of each of the major
types of contingency theories. Contingency theory has elements of both science and technology
and is used by scientist, engineer and manager. The research question, 'Is Contingency Theory
Science or Technology?' is addressed in the next section. Justifications are given on each point
of view, science and technology.

              Science is concerned with increasing knowledge; technology is
                           concerned with design (Grove, 1989).
            The scientist seeks to find new knowledge; the engineer tries to put
                     knowledge to work. (Furnas & McCarthy, 1971).

         Contingency Theory as Science:

Contingency theory clearly is science. Science can be considered as either a process of inquiry
or an organized body of knowledge.

Contingency theory involves both. The problems addressed by the science of organizational
theory are variants of "How can we improve the productivity of organizations?" For contingency
theory, the version of the question is "What combination of factors are associated with superior
performance?" Development of contingency theory involves a line of inquiry to find the
effectiveness of various combinations of characteristics and factors. The product of the inquiry
process is a body of knowledge. Individual contingency theories are the product of a process of
scientific inquiry. Contingency theory in general can be considered a body of knowledge.

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          Contingency as Technology:

Technology was referred to as the "set of solutions developed by a human group to satisfy its
needs, as it defines them" (Rabey, 1989: 168).

Contingency theory is knowledge, when applied it makes the organization have a more efficient
transformation process. Organizations are a human group and the application of contingency
theory helps to satisfy its needs. In this respect it fits the definition of technology.

"Red sky at night, sailors delight. Red sky at morning, sailors take warning." This old rule was
passed on from generation to generation. It told sailors what weather to prepare for. Sailors
made preparations consistent with an accepted proper fit between readiness and weather
conditions. The best preparation was contingent on the sky conditions.

This example shows how some technologies developed by early craftsmen were much like the
modern contingency approach. A contingency theory prescribes to managers the fit between
variables that will result in optimal effectiveness. The theory is developed by observation and
evaluation of various combinations. The craftsmen developed rules as to what combination of
materials, designs and methods would best accomplish a task. These rules were developed by
observing how well different combinations work. The difference is that the individual craftsman
was taught rules by his mentor, developed his own rules and passed them down. Those that
formulated the rules applied the rules. Contingency theories are proposed by managers or by
researchers. They are then developed by organizational researchers and used by managers. This
difference can be attributed to the change in division of labor and to the scale of the projects.
When the craftsman was the dominant form of production there was little or no division of labor
and the craftsman was the manager. Modern organizations have highly specialized jobs and
managers. The division of the jobs done by different people in a modern organization is much
like the division of tasks done by one individual craftsman. The skills required to develop
contingency theories are different from those required to manage an organization, therefore it
makes sense to separate this task from managers and give it to research scientists with the
appropriate skills. The scale of the problem of organizational design is very large. Because

                                                                         | Contingency theory   9
development of contingency theories requires observing more than one organization, it seems
natural that this function is not only separated from management, but from the organization.

Contingency theory appears to be a potentially powerful tool for improving performance in
organizations. The relationships are often much simpler, easier to understand and more graceful
than those of many other types of theories.

Managers might choose not to apply contingency theories because of a perceived is risk.
Managers might choose to copy other organizations rather than apply rules derived from
contingency theories. They might be unwilling to take the risk that the rules might be
inadequate, especially in changing conditions. Applying theories instead of copying what others
do might seem like trial and error, and as such is considered too risky, time consuming and

Indeed, many contingency theories might reflect nothing more than the fashion of the industry.
The leading companies might be copying each other and as luckily would have the superior
performance unrelated to what they are copying. Some contingency theories might be
impossible to apply. Superior firm performance sometimes is revealed to be associated with
certain combinations of organization age, size, structure, environment and industry
characteristics. These findings might have some value in making predictions or provide some
approaching into the relationships between variables.

Research emphasizing multiple contingencies would lead to theories that better represent the
real world where factors are not held constant. Understanding the dynamics of multiple

                                                                   | Contingency theory   10
   contingencies would also help in analyzing new situations with previously unencountered
   combinations of contingency factors.

   Experimentation to test the theories is largely infeasible, close contact with decision-makers in
   organizations could yield useful information. The value of a theory is often measured in terms of
   its predictive power. In contingency theory this has meant how well a theory predicts what will
   be found when the past or present is examined. Coordination with organizations will allow some
   limited testing of predictions of what will happen, with an emphasis on the future not the past.
   Coordination with organizations can also help steer researchers towards the areas where
   managers are most likely to use the theories.

   If researchers consider the potential applications when developing contingency theories, they
   may develop theories that can be more effectively applied. When applied, the resulting
   performance increases will lead to greater managerial acceptance of such theories.

   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 domain. Contingency theory, situational
   theory or any such theory can be viewed in the modern perspective as a 'part time theory'.
   However part time theory can still be used and found true in some situations in some of the time.
   In today’s changing world, it remains a challenge and we must ensure that theory is valid and
   true for some longer time, in a longer perspective with changing time. Otherwise, instead of
   calling it theory, we must use these it as assumptions or hypthesis.

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