Management Theories # 4 - Contingency Theories

Contingency theories are a class of behavioral theory that contend that there is no one best way of organizing / leading and that an organizational / leadership style that is effective in some situations may not be successful in others.

In other words, the optimal organization / leadership style is contingent upon various internal and external constraints.

These constraints may include: the size of the organization, how it adapts to its environment, differences among resources and operations activities, managerial assumptions about employees, strategies, technologies used, etc.

Four important ideas of Contingency Theory are:

1. There is no universal or one best way to manage
2. The design of an organizations 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 and
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.

Contingency theory of leadership:

In contingency theory of leadership, the success of the leader is a function of various contingencies 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. No single contingency theory has been postulated.

Some of the theories are:

Fiedler’s contingency theory: Fiedlers 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.

Hersey & Blanchard’s situational theory: This theory is an extension of Blake and Mouton’s Managerial Grid Model and Reddin’s 3-D management style theory. With this model came the expansion of the notion of relationship and task dimensions to leadership and adds a readiness dimension.


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 cooperate in trying to make a good decision if allowed to participate; the amount of disagreement among subordinates with respect to their preferred alternatives.


Contingency theory is similar to situational theory in that there is an assumption of no simple one right way. The main difference is that situational theory tends to focus more on the behaviors that the leader should adopt, given situational factors (often about follower behavior), whereas contingency theory takes a broader view that includes contingent factors about leader capability and other variables within the situation.