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Contingency Theory

management, contingency, contingency theory, administration, managers, managerial skills, managerial roles

The contingency, or situational, approach to management theory and practice emerged in the early 1960s from organizational research conducted in the United States and England. With the arrival of the sixties came the expansion of markets based not on the introduction of new products but rather on the differentiation of existing products. Consumers were demanding more variety in the products they purchased. The Henry Ford axiom from a previous generation, "You can buy a car of any color as long as it is black," was no longer acceptable. With consumer demand becoming more diversified, so did the types of organizations that were being founded. In addition, the work force was becoming less blue-collar and more white-collar. Many more workers were being employed in activities that did not directly involve the production of a good, but rather the production of a service. Indeed, some scholars began to write about the end of the Industrial Revolution with predictions about the dawning of a new age in American society.

Contingency theory attempts to provide a perspective on organizations and management based on the integration of prior theories. Contingency theory starts with the theme of "it depends," arguing that the solution to any one managerial problem is contingent on the factors that are impinging on the situation. For instance, where little variation in materials exists in the production process, it is appropriate to break down the work into highly routine tasks. However, where variation is high, requiring many judgments concerning which material is appropriate and which is not, managers will want to avoid making tasks routine.

One of the first applications of contingency theory came from research conducted by two British scholars, Thomas Burns and G. M. Stalker. After studying several industrial firms in England, such as textile mills and electronics manufacturers, they concluded that the appropriate managerial techniques were highly dependent on the kind of task the organization was trying to accomplish.

Burns and Stalker identified two organization types: mechanistic, for a task that is routine and unchanging, and organic, for a task that is nonroutine and changing. They discovered that the most successful firms were those that used whichever type was appropriate for a given task. When the task was routine and unchanging (mechanistic), the appropriate managerial approach was to emphasize efficiency, a high degree of specialization, and elaborate procedures for maintaining controls over behavior. On the other hand, when the task was nonroutine and changing (organic), the appropriate approach was to emphasize low job specialization, creativity rather than efficiency, and freedom for workers to control their own behaviors rather than relying on rules and procedures to keep them "in line." It is clear that this represents an integration of the classical and behavioral approaches.

Other theorists, namely Paul Lawrence and Jay Lorsch and John Child, have enlarged on this perspective and identified contingencies, such as environmental conditions, ownership patterns, strategies, and leadership, as important in assessing the appropriate approach to use in a given situation.

One attraction of the contingency approach among theorists and practitioners alike is its situational perspective. Those interested in research issues regarding organization and management can use the contingency perspective to explain why some factors influence situations in one setting but have virtually no influence in another setting. Indeed, one objective of research within the contingency framework is to specify those dimensions and conditions that do affect a situation and those that do not. For the manager, the requirement from the contingency perspective is to identify which technique will, in a particular situation, best contribute to the attainment of organizational goals. For instance, under some circumstances, an authoritarian leadership style may be more appropriate than a leadership style that tries to get workers internally motivated.

While the contingency approach is useful in recognizing that the complexity involved in understanding human and organizational systems makes it difficult to develop universal principles of management, there have been several criticisms of the approach. For one, it has been pointed out that the logical extension of the contingency approach is that all situations are unique. If this is true, then management can be practiced only by intuition and judgment, thereby negating the value of prior knowledge and wisdom.

On a research level, contingency theory has been criticized for being atheoretical. One requirement of theory is the ability to test the validity of assumptions by showing that contradictory assumptions do not disprove the theory. In a contingency framework, if contradictory results are obtained, the contingency response would be that the situation is unique or that important dimensions affecting the situation were not tested. Thus, showing that contradictory assumptions disprove the theory would be difficult at best.

While these limitations are recognized, we will approach the study of management utilizing the assumptions of contingency theory. We believe that management is a highly complex discipline in both research and practice. We build the approach from previous research and practice and extend the findings to develop an understanding of how contextual, organizational, and human dimensions are integrated. Specifically, we draw ideas from classical management theory regarding the structuring of organizations to increase efficiency and productivity. Behavioral management theory provides knowledge about human needs and motivations that can lead not only to increased productivity but also to enhancement of the working environment. Systems theory serves to identify the context in which organizations operate, thus enabling managers to understand the environment and how the parts, or subsystems, of the organization are interrelated. In addition, we will draw from quantitative management theory for the application of specific tools and techniques that are useful for increasing managerial efficiency and effectiveness.

By applying contingency theory to the study of management, you will be able to identify and to solve problems under different situations. You will recognize that the successful application of a technique in one situation does not guarantee success in another. Rather, you will be able to examine each situation in terms of how it is affected by the contextual, organizational, and human dimensions. As a result, your overall ability to correct problems and to become more effective as a manager will increase.

Consider the following situation. A shoe manufacturer is faced with decreasing profits. As a manager, this person may conduct a time study from the belief that the decline in profits is due to lower productivity on the part of the workers (classical management theory).

The manager may attempt to involve workers more fully in decisions concerning the methods to use in producing the shoes based on the premise that this will motivate workers to produce more (behavioral management theory). Or the manager may establish a committee of sales and production personnel to coordinate the production and distribution of goods under the assumption that large inventories are responsible for the decline in profits (systems theory). Application of a contingency perspective will enable the manager to examine the situation and to determine the cause of decreased profits before a new procedure or program is implemented. Perhaps only one program needs to be implemented, or perhaps all three. However, only through an awareness of all possible solutions to the problem is the manager able to arrive at a correct solution. Contingency theory is designed to provide the manager with the capabilities to examine numerous possible solutions to a problem.
Published: 2007-05-12
Author: Martin Hahn

About the author or the publisher
Martin Hahn PhD has received his education and degrees in Europe in organizational/industrial sociology. He grew up in South-East Asia and moved to Europe to get his tertiary education and gain experience in the fields of scientific research, radio journalism, and management consulting.

After living in Europe for 12 years, he moved to South-East again and has worked for the last 12 years as a management consultant, university lecturer, corporate trainer, and international school administrator

www.martin-hahn.net

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