The ‘Contingency Approach to Management’ is also known as Situational Approach, it is relatively a new

approach to management.

It is an extension of the system approach. The basic idea of the contingency approach is that the
organisation has to come up with different situations in

There is no single best way of managing applicable to all situations.

In order to be effective, the internal functioning of an organisation must be consistent with the demands
of the external environment. The managers must keep the functioning of an organisation in harmony
with the needs of its members and the external forces.

The main characteristics of the Contingency Approach to management are pointed out below:

1. Management is entirely situational. The application and effectiveness of any technique is contingent
on the situation.

2. Management should match its approach to the requirements of the particular situation. To be
effective, management policies and practices must respond to environmental changes. The organisation
structure, the leadership style, the control system—all should be designed to fit the particular situation.

3. As management’s success depends on its ability to cope with its environment, it should sharpen its
diagnostic skills so as to anticipate and comprehend environmental changes.

4. The managers should understand that there is no one best way to manage.
5. Because of the specific organisation-environment relationship, no action can be universal. It varies
from situation to situation.

Contingency approach is pragmatic in nature. It avoids vague judgements and widens the horizons of
practising managers. It guides them to be alert and adaptive to environmental factors while choosing
their techniques and styles. They get the opportunity of becoming innovative and creative.

The contingency approach has a wide-ranging applicability and practical utility in organisation and
management. It advocates comparative analysis of the organisations to bring about matching between
the organisational structure and situational peculiarities. Hence, this approach is also known as
‘Situational Approach to Management’.

The contingency approach focuses attention on specific situational factors that affect the management
strategy. It requires the managers to develop skill in situational analysis. It combines the mechanistic
and humanistic approaches to fit the particular situation.

It is an improvement over the system approach as it not only examines the relationships between the
sub-systems of an organisation but the relationship between the organisation and its environment too.

The contingency approach is the outcome mainly of the research studies conducted by Tom Burns and
G. W. Stalker, Joan Woodward, Paul Lawrence and Jay Lorsch, James Thomson and others. These experts
analysed the relationships between the structure of an organisation and environmental conditions.