Contingency Theory

SUBJECT: ECOLOGY OF MANAGEMENT

PROFESSOR: MARNITO MU OZ REPORTED BY: DIONICIO ARMAS DATE: AUGUST 06, 2011

Overview
y Definition y Theories y Principle y Application, Weakness and Strength y References

Trivia!

Science with no formula?

y Management has a systematic body of knowledge but

it is not as exact as that of other physical sciences like biology, physics, and chemistry etc.
y Why? y The main reason for the inexactness of science of

management is that it deals with human beings and it is very difficult to predict their behavior accurately.

Definition
y Contingency Theory y (possibilities!!!) y Is part of situational analysis management and

management science.
y 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.

Theories
Contingency approaches were developed concurrently in the late 1960s. 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 were influenced by various aspects of the environment: the contingency factors

Simplified Contingency Model

Who are they? Theorist

y 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. the main ideas underlying contingency in a nutshell:

y Gareth Morgan in his book Images of Organization describes

   

Organizations are open systems that need careful management to satisfy and balance internal needs and to adapt to environmental circumstances There is no one best way of organizing. The appropriate form depends on the kind of task or environment one is dealing with. Management must be concerned, above all else, with achieving alignments and good fits Different types or species of organizations are needed in different types of environments

Who are they? Theorist

Fred Fiedler's contingency model focused on individual leadership.
y Stress is a key determinant of leader

effectiveness (Fiedler and Garcia 1987; Fiedler et al. 1994), and a distinction is made between stress related to the leaders superior, and stress related to subordinates or the situation itself.

Who are they? Theorist

y William Richard Scott describes contingency theory in the

following manner: "The best way to organize depends on the nature of the environment to which the organization must relate". Thompson believe that structural contingency theory was the dominant paradigm of organizational structural for most of the 1970s. who examined the interaction between environmental uncertainty, organization structure and various aspects of performance.

y Researchers Paul Lawrence, Jay Lorsch, and James D.

y A major empirical test was furnished by Johannes M Pennings

Principles of Contingency Theory

y There is no single best way of management

applicable to all situations.

y In order to be effective, the internal functioning of an

organization should co-relate to the demands of external environment.

y The managers must regulate the organizational

functions in harmony with the needs of the people, i.e. members from within and customers and other externally.

Characteristics of Popular Management System

y Collective decision making with ultimate y y y y y y

responsibility lying with one person. Close personal relationships. Trust Emphasis on interpersonal skills. Respect and value of employees Long-term employment Community feeling at work.

Applications
y Aligning leadership style with situational

favorableness for the most effective results.

y Can be applied in all body of science and studies.
Accounting Information Technology Psychology and Human Behavior Planning Etc

Strength and Weakness

y It treats each organization as a unique entity. y It identifies the exact nature of interdependencies

and their impact on organizational design and managerial style. y It is more pragmatic, down to earth and action oriented. y It firmly rejects blind application of principles regardless of realities of individual situations. y It relates organizational structure and design to the environment

References
y http://en.wikipedia.org/wiki/Contingency_theory y http://www.valuebasedmanagement.net/methods_c

ontingency_theory.html, management summary of contingency

y theoryhttp://changingminds.org/disciplines/leaders

hip/theories/contingency_theory.htm, brief summary of contingency theory

Thank You