Contingency Approach to Management: Advantage & Disadvantages (2024)

Contingency Approach to Management: Advantage & Disadvantages (1)

Contingency Theory of Management

The contingency theory of management is one of the most important topics that you will study in your management degree. Many times students are given assignments, research papers, and projects related to the contingency approach to management. This article will explain to you the whole concept briefly and will answer some common questions related to the contingency theory.

What is the meaning of contingency theory?

The word contingency means any event or circumstance that is likely to occur in the future but the occurrence of that event is not certain. With this, we can guess that the contingency theory is all about uncertainty. The contingency theory is a class of behavioural theories that help to predict organizational behaviour. The contingency management theory explains the uncertainties involved in leadership, management and decision making. With contingency thinking, one can gain useful insights into leadership practices.

What is a contingency approach to management?

The contingency approach to management suggests that there is no particular best way to manage. The management activities such as planning, controlling, leadership, or organization are completely dependent on the circumstances and the environment. If you need insights into these management activities, our MBA assignment help services can provide you with adequate explanations.

According to the contingency approach, the managers generally pay attention to the current situations and then make strategies based on their knowledge and experience.

This approach is quite advantageous for the organizations as it allows them to learn from specific circumstances and change their policies accordingly in the future if the same situation arises.

The contingency approach to leadership means that the leaders themselves have to adjust their working styles and management strategies based on the needs of their co-workers and the organization.

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Who propounded the contingency theory of management?

The contingency theory of management was proposed by an Austrian psychologist, Fred Edward Fiedler. In 1964, he published an article called “A Contingency Model of Leadership Effectiveness”.

Features or Characteristics of Contingency Approach

  • The contingency approach focuses on the variable nature of businesses and organizations. The managers choose a Framework for finding solutions to a problem rather than sticking to a particular strategy for solving the problems. This allows an organization to work under differentiable environmental conditions and circumstances.
  • The contingency approach to management generally depends upon the complexity of a problem. It depicts that management is circumstantial. There are no Universal principles of management and there is no one best way to manage. Different situations can have different solutions. No one can pre-declare how things will fall into place.
  • It is also called the if-then approach to management. If this happens then we would take this action. The if section represents an independent variable or a particular problem or a situation. The then part represents the action to be taken accordingly or the dependent variable of the problem.
  • The contingency theory definition depends upon both the internal as well as external factors of an organization. For example, the size of the organization, the leadership approaches of different managers of an organization, the number of employees versus the number of managers in the organization, the customers perspective and the competition in the market.

How does Contingency theory work?

First, Fred Edward defines two kinds of leadership – Task Motivated leadership and Relationship Motivated leadership. Task motivated leaders are effective in situations that are most favourable or most unfavourable. The relationship motivated leaders are effective in situations that lie in-between these two extremes.

Then, Fred Edward has used the LPC Scale or the Least Preferred Co-Worker scale toÂmeasure the leadership style that will be most suitable in a situation. The leaders who have low LCP are task motivated and those who have a higher LCP are relationship motivated leaders.

Three Major Contingency Theories of Leadership

There are four contingency theories of leadership. The very first is the theory presented by Fred Edward that we just discussed. Let us have a look at the other three.

Path-Goal Theory

As the name suggests, this theory relates how leaders can help their subordinates to achieve their goals. This theory explains the kind of leadership in which the leaders clear out the obstacles being faced by the subordinates who are willing to achieve their goals.

Situational Leadership Theory (Hersey-Blanchard Situational Leadership Theory)

As per this theory, leaders have four behaviours – Delegating, Selling, Telling and Participating. Then, this theory also considers the maturity levels of subordinates – incompetence, competence, willingness and unwillingness. This theory suggests how leaders can fit-in their leadership behaviours based on the maturity levels of the subordinates.

Decision-Making Theory (Vroom-Yetton-Jago Decision-Making Model of Leadership)

The contingency thinking in this theory suggests that the right decision making is dependent upon how a leader emerges and progresses. Three parameters shape a decision namely, the commitment of the group, quality and time restrictions. This theory describes five kinds of leaderships based on situation namely, Autocratic (A1), Autocratic (A2), Consultative (C1), Consultative (C2) and Collaborative (G2).

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What is an example of contingency theory?

To understand the contingency approach to leadership let us consider the scenario of a newly appointed Clothing Store Manager of a brand like H&M which has a staff of around 50 people. What kind of leader should he be? Well, we must consider the following parameters for that:

  • Low trust factor – Since the manager is appointed, the staff won’t show much trust in them. The manager might not be able to build strong relationships with the staff right now as they are large in number.
  • High task structure – the operating process of the store is clear. The staff already knows how to welcome customers and organize or display clothes.
  • High position power – the manager has the authority to hire more people or to fire someone if required.

So, as per the Fred Edward contingency theory, a relationship motivated leader will be effective in this case.

The Advantages and Disadvantages of Contingency Approach to Management

Contingency Approach to Management Advantages

Because of the profitable features that this theory proposes it has been of great use to the managers. You can find the complete list of advantages and examples of the contingency approach from our management experts. Just avail our online assignment help service and they will provide you with the easiest explanations of this essay topic. Let us look at a few of the advantages here:

  • The approach is adaptive. This means that it allows organizations to stay flexible and transform their policies and strategies according to the changing environment.
  • The managers can consider the entire factors, analyze situations thoroughly and then make the appropriate decision. This means that they can consider every factor variables and circumstances that may affect their solutions in the present and the future as well.
  • Due to this approach the scope of leadership has widened. This approach gives importance to the managers understanding, knowledge, and leadership styles and lets them take different decisions depending upon the different situations.
  • The contingency approach allows an organization to choose different leaders as per their leadership styles in various contexts. The theory does not expect that all the leaders are efficient in dealing with all types of situations in an organization.

Contingency Approach to Management Disadvantages

  • Despite the lucrative features and advantages that the contingency management theory has to offer to the organizations it is not completely liberated from criticism. There is no single optimal solution to a problem which means that managers can iterate as much as they want in search of solutions. This can sometimes lead to wastage of resources, time and money.
  • The contingency approach definition is quite straightforward that not all management situations can be dealt with in a specific manner. But when we apply the same in real-life scenarios things do get a little complex. It requires a thorough analysis and several factors need to be considered for every other problem that arises. Hence in case of stringent time limits managers may not be able to dig deeper into the situation and they might make superficial decisions.
  • It is not always feasible for the managers to consider every factor and determine all the variables involved in their decision-making process. There can be various constraints such as time, cost and resources due to which it can become difficult for the managers to gather all the information and analyze that information completely.
  • The contingency approach might be complex to implement as it is not fixed. It is situational. Hence, it all depended on how the leaders adjust themselves and their perspectives for the betterment of the company. The more time the leaders will spend with their subordinates and understand their issues and problems, the easier the decision-making process will be for them.

The Importance of Contingency Theory

The contingency theory definition offers a dynamic approach to leadership. With the help of such a theory, the management can decide the best way to lead the organization and make the right decisions. It considers the nature of the work of the organization and the approach of the workers. It gives no one path of management. Hence, highlighting the flexibility that is required in every leader.

Do you think that the Contingency Theory of Management must be adopted by every organization? Start the discussion with our Management experts right now.

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The concept that management effectiveness is contingent on or relies upon the interplay between the framework and unique conditions of management actions is based on a contingency approach to management.

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August 2, 2018

Contingency Approach to Management: Advantage & Disadvantages (2024)

FAQs

What is the advantages and disadvantages contingency theory of management? ›

Advantages and Disadvantages of Contingency Theory

It provides a realistic view of management and organization. It discards the universal validity of principles. Managers are situation-oriented and not stereotyped. Lends itself to an innovative and creative management style.

What is the contingency approach to management? ›

The contingency approach to management, also known as the situational approach, holds that there is no single, textbook rule for the best way to manage an organization. In each company's case, the “best” approach will be contingent upon the company's internal and external needs.

Why contingency theory is important? ›

Contingency theory is beneficial to organisations because of the potential for learning from specific situations and using these lessons to influence future management of the same or similar situations. The ability to adapt to external pressures and changes is also an advantage.

Why is contingency approach important to leadership? ›

The contingency theory of leadership tells us that effective leadership depends on the situation. In simple terms, a leader could be highly effective in one situation and ineffective in another. It might be true that leaders respond differently in certain situations.

What are the disadvantages of contingency plan? ›

Time: Contingency planning is time-consuming, especially where the external environment is constantly changing. Risks: The firm will need to assess the range of risks and decide which of these requires plans to be updated. Safety: Breaches of health and safety legislation could have huge financial consequences.

What are the benefits of contingency management? ›

“The purpose of any contingency plan is to allow an organization to return to its daily operations as quickly as possible after an unforeseen event. The contingency plan protects resources, minimizes customer inconvenience and identifies key staff, assigning specific responsibilities in the context of the recovery.”

What is an example of contingency approach? ›

Contingency Theory of Leadership: Examples

If the leader rates the person they would least like to work with favorably, they are considered a relationship-oriented leader. Their strengths would include managing conflict well and developing strong workplace relationships.

What is are the features of contingency approach? ›

Features of Contingency Approach to Management

Management is externally situational: the conditions of the situation will determine which techniques and control system should be designed to fit the particular situation. Management is entirely situational. There is no best way of doing anything.

What are three contingency approaches? ›

Contingency Leadership Models

They include Fiedler's Contingency Theory, the Situational Leadership Theory, the Path-Goal Theory and the Decision-Making Theory. While all of these contingency leadership models are similar on the surface, they each offer their own distinct views on leadership.

How is contingency theory used today? ›

Contingency theory (Fiedler, 1951) is used as a lens to understand leadership qualities and strategies of small retail leaders during the COVID‐19 pandemic.

Where is the contingency theory used? ›

The contingency theory of leadership focuses on how specific situations affect a leader's effectiveness and how a leader's ability to adapt can be their most important tool in the workplace.

How does contingency approach work in decision making? ›

The model is founded in the so-called contingency approach in organization theory, which states that organizational performance is related to or `contingent upon' a proper fit between the decision-making style and the organization and its environment.

What are the disadvantages and disadvantages of planning? ›

There are several limitations of planning.
...
Some of them are inherit in the process of planning like rigidity and other arise due to shortcoming of the techniques of planning and in the planners themselves.
  • Rigidity. ...
  • Misdirected Planning. ...
  • Time consuming. ...
  • Probability in planning. ...
  • False sense of security. ...
  • Expensive.

What is the weakness of contingency theory? ›

Weaknesses of Contingency Theory

The first weakness is that contingency theory doesn't fully explain why some people are more effective leaders in some situations but not in others. Critics often use this to challenge the theory. Another weakness is the LPC scale.

What Is risks and contingencies? ›

What is a risk contingency plan? A risk contingency plan provides guidelines that address what an organization should do if a hypothetical risk becomes a reality. Their intent is to minimize the harm an undesirable sequence of events could do to an organization and its assets.

Who benefits from a contingency? ›

Which party to a purchase and sale agreement usually benefits from a contingency? The buyer benefits from the most common types of contingencies. He receives protection against being obligated to buy a house if it turns out that he is unable to obtain financing.

What are the types of contingency management? ›

Variations of Contingency Management Programs
  • Voucher-based reinforcement (VBR). This involves providing vouchers when a person achieves a target behavior. ...
  • Prize incentives contingency management. This is a similar approach to VBR, but it involves the opportunity to win cash prizes instead of vouchers.

What are three examples of contingency management? ›

Contingency Management
  • Behaviour Therapy.
  • Cocaine.
  • Drug Dependence.
  • Drug Use.
  • Cognitive Behavioral Therapy.
  • Family Therapy.

How many types of contingency are there? ›

There are three different types of group contingencies—interdependent, independent, and dependent.

What are the four types of contingencies? ›

The four contingencies are positive and negative reinforcement, punishment, and extinction. Positive reinforcement occurs when the desired behavior results in positive outcomes.

Who gave contingency approach? ›

The contingency theory of leadership was proposed by the Austrian psychologist Fred Edward Fiedler in his landmark 1964 article, "A Contingency Model of Leadership Effectiveness." The contingency theory emphasizes the importance of both the leader's personality and the situation in which that leader operates.

What are contingency processes? ›

Definition. A Contingency Process captures the key contingency planning considerations and activities in a framework comprising the following steps: Policy, Planning, Achievement, Execution and Assurance, and Promotion.

What is the main theme of contingency theory? ›

Contingency theory states “that a leader's effectiveness is contingent on how well the leader's style matches a specific setting or situation” (Wolinksi, 2010). If leaders were successful in the roles they played, then it was considered a perfect match.

What contingency management tells us? ›

Contingency management refers to a type of behavioural therapy in which individuals are 'reinforced', or rewarded, for evidence of positive behavioural change.

What is the impact of contingency theories in company? ›

Because the contingency theory gives managers a wide range of ways to react to problems, it also gives them significant discretion in their decision-making. Business owners who implement contingency theory must allow their managers to bend policy or even override it if the circumstances demand it.

Why is it called contingency theory? ›

A contingency theory is an organizational 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.

What are contingency factors? ›

A general contingency factor is a provision that the cost estimator makes to cover unforeseeable expenses the project may incur. These expenses may result from unpredictable weather conditions, uncertainties within the project or incomplete design plans.

What are the four 4 major components of a contingency plan? ›

The Inter-Agency Contingency Planning Guidelines for Humanitarian Assistance endorsed by the IASC outlines four key steps in the contingency planning process: preparation, analysis, response planning, and implementing preparedness.

What is a good contingency plan? ›

A good contingency plan should include any event that might disrupt operations. Here are some specific areas to include in the plan: Natural disasters, such as hurricanes, fires, and earthquakes. Crises, such as threatening employees or customers, on-the-job injuries, and worksite accidents.

Why is three term contingency important? ›

The tree-term contingency helps practitioners evaluate the behavior as a member of its environment. It can give insights into what immediately precedes and follows behavior in order to design interventions that address how a behavior is elicited or maintained.

What are the advantages and disadvantages of Great Man theory? ›

Strengths: This theory started the scholarship of which traits and characteristics build great leaders. Weaknesses: This theory lacks scientific validity and only considers men in power. And, as 19th century-sociologist Herbert Spencer argued, great leaders may be shaped by their society, not the other way around.

What are the strengths of the contingency theory? ›

Contingency theory has broadened the scope of leadership understanding from a focus on a single, best type of leadership (e.g., trait approach) to emphasizing the importance of a leader's style and the demands of different situations.

What are advantages theory? ›

Researchers find it easier to make clear, consistent predictions from a consistent theory rather than from inconsistent common sense. Second, theories tend to be more consistent with existing facts than common sense.

What are the disadvantages of man? ›

Drawbacks or disadvantages of MAN

It is difficult to manage the network once it becomes large. ➨It is difficult to make the system secure from hackers and industrial espionage. ➨Network installation requires skilled technicians and network administrators. This increases overall installation and management costs.

What is an example of contingency leadership? ›

For example, if the team is experienced in the project domain and they are intrinsically motivated, then a leader with a task orientation will fit the situation very well.

What is the disadvantages of situational approach? ›

Situational leadership tends to only focus on short-term goals and as a result, may overlook long-term goals . Situational leadership often does not work well when repetitive tasks need to be completed, as this type of leadership is flexible and many task-driven environments are not.

Which of the following is a disadvantage of situation approach? ›

However, textbooks cannot be used in the situational approach of teaching because textbooks are confined to fundamental concepts whereas this approach is beyond classroom teaching by creating real-life situations.

What are the advantage of situational approach? ›

110) highlights four major strengths of the situational approach: It is well known and frequently used for training leaders. It is a practical approach that is easy to understand and apply across a variety of settings. It is prescriptive and shows how leaders should act to achieve leadership effectiveness.

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