Name :- Tibelch Wolderuphael ID No.

Question 1

Fred Fiedler (July 13, 1922 – June 8, 2017) was of Austrian descent, Emeritus
Professor and one of the leading researchers in the field of leadership
and organizational performance. Fred Fiedler was the founder of the contingency
theory that shows the relationship (contingency) between leadership
effectiveness and situational circumstances. In 1938, at the age of 16, Fiedler
emigrated from Austria (Vienna) to the United States. He studied at the University
of Chicago. Fiedler first obtained his Master’s Degree (MSc.) in psychology and
later he obtained his doctorate (Ph.D.) within the field of clinical psychology.
At the end of the 1940s Fiedler embarked on a study into leadership and he
studied behaviour and personal characteristics in particular. He began with a
study of the leadership of high school basketball teams. This led to his
development of the Least Preferred Co-worker (LPC) score.

Fiedler continued to study various areas of activity in the field of effective

leadership. The results of these years of study can be found in the ground
breaking book Theory of Leadership Effectiveness, which was published in 1967.
This was the first leadership theory to predict and measure the interaction
between a leader’s personality and their situational control as a predictor of their
leadership performance. Fiedler established that this success was dependent on
the effective interaction of the leader’s characteristics and the situational
circumstances that needed to be managed. This theory is still used today in
studies into effective leadership.

1
Joan Woodward was born in 1916. She was originally a classicist, but changed
direction and got her first academic post in the Department of Social Sciences, at
Liverpool University, where she worked from 1948-1953. She stayed there until
1957, when she secured a post at the far more prestigious Imperial college. She
remained there until her untimely death, from breast cancer, in
1971. Woodward became the second female professor at the College when she
was appointed Professor of Industrial Sociology in 1970. Woodward summarised
her research in her 1970 book, ‘Industrial Organization: Theory and Practice‘.
Today, the idea that there is no ‘best’ organisational structure, but that the right
one ‘depends’ on many factors is taken as so obvious as needing no explanation.

Her analysis led her to categorise the organisational structures and discover they
were driven by the production methods and technology in use. These in turn,
were driven by the products the manufacturer created, and the demands of their
markets.

Paul R. Lawrence was one of the earliest and most influential figures in the
emergence of organizational behavior as a field of study. He was a pioneer in
creating a body of work on organization design, leadership, and change in both
the private and public sectors. Lawrence’s professional work was rooted in an
aspiration to do work that was rigorous, relevant to practicing managers and of
service to society. Beyond his research, Lawrence was committed to building the
field of organizational behavior at HBS and more broadly in our profession. He
had a lifelong passion for participant-centred learning and for the training of
doctoral students.

2
Jay William Lorsch (born 1932) is an American organizational theorist and
the Louis Kirstein Professor of Human Relations at the Harvard Business School,
known for his contribution of contingency theory to the field of organizational
behavior. Born in St. Joseph, Missouri, Lorsch grew up in Kansas City, Missouri,
where he graduated from the Pembroke Country-Day School in 1950. He received
his Bachelor of Arts from Antioch College in 1955, his Doctor of Business
Administration from the Harvard Business School in 1964, and started his
academic career at the Harvard Business School in 1965.

Question 2 & 3

The primary contributors to contingency theory include:

 Fred Fiedler, an organizational psychologist who taught at the University of

Illinois. Fiedler developed the Contingency Theory of Leadership, which
suggested that a leader’s effectiveness depends on the interaction between
their leadership style and the situation. According to this theory, leadership
styles can be characterized by the Least Preferred Co-Worker (LPC) scale,
which Fiedler believed to be fixed and unchanging.

The LPC scale asked leaders to think about the person they least enjoyed
working with, and rate how they felt about that person for a variety of
factors (such as how friendly, interesting, or open they were).2 Leaders
who rated their LPCs more negatively received a low score and were
determined to be task-oriented leaders (known as low “LPCs”). Leaders
who rated their LPCs more positively received a high LPC score and were

3
 determined to be relationship-oriented leaders (known as high “LPCs”). The
model held that low LPCs are most effective at completing tasks and
organizing groups, while high LPCs focus more on building relationships,
and avoiding or managing conflict. Since Fiedler thought leadership styles
are relatively stable, he believed the effectiveness of management was
determined by situational favourableness, which consists of three factors

Leader-member relations: The amount of trust and confidence that team

members have in their leader. More trustworthy leaders have more
influence, so they are in a more favorable position.

Task structure: Is the task clear and structured, or vague and confusing?
Unstructured tasks are unfavorable.

Leader’s position power: How much power a leader has to direct the

group, as indicated by providing rewards or punishments. Having more
power is more favorable.

 Burns and Stalker - In their work "Management of innovation" (1968), they

identified two types of organizational structures (Mechanistic and Organic)
production, and two categories of the environment (Stable and Dynamic).

 John Woodward - She analyzed the influence of technology on the

organization structure and observed that the type of technology used for
production, such as unit, small batches, large batches, mass and continuous
process of production. She also examined how production shifts directly
affected the span of control, use of committees, participative decision
making, and other structural characteristics.

4
  J.W. Lorsch and P.R. Lawrence - In studies beginning in 1969, they
proposed that organizations functioning in a complex environment adopted
a much higher degree of differentiation and integration than those
operating in a simple environment. They identified as key issues:
environmental uncertainty and information flow. They advocated to Focus
on exploring and improving the organization's relationship with the
environment, which characterized by along a certainty-uncertainty
continuum.

Question 4

Contingency Approach to Management

The contingency approach to management is based on the idea that there is no

single best way to manage. Contingency refers to the immediate contingent
circumstances. Effective organizations must tailor their planning, organizing,
leading, and controlling to their particular circumstances. In other words,
managers should identify the conditions of a task, the requirements of the
management job, and people involved as parts of a complete management
situation. The leaders must then work to integrate all these facets into a solution
that is most appropriate for a specific circumstance.

The contingency approach to management assumes that there is no universal

answer to many questions because organizations, people, and situations vary and
change over time. Often there is no one right answer when managers ask: “What
is the right thing to do? Should we have a mechanistic or an organic structure? A
functional or divisional structure? Wide or narrow spans of management? Tall or
flat organizational structures? Simple or complex control and coordination

5
mechanisms? Should we be centralized or decentralized? Should we use task or
people oriented leadership styles? What motivational approaches and incentive
programs should we use?” Thus, the answer depends on a complex variety of
critical environmental and internal contingencies.

The contingency theory is similar to situation theory in that there is an

assumption that no simple way is always right. Situation theory, however, focuses
more on the behaviors that the leader should use. The contingency theory takes a
broader view that includes contingent factors about leader capability and also
includes other variables within the situation.

The primary characteristics of contingency theory include:

 Non-universality of management theory - There is no one best way of

doing things.

 Contingency - Management decision making is contingent upon the

situation.

 Environment - Managerial policies and practices to be effective, must

adjust to changes in the environment.

 Diagnostics - Managers must possess and continue to improve diagnostic

skills so as to anticipate and ready for environmental changes.

 Human Relations - Managers should have sufficient human relations skills

to accommodate and stabilize change.

 Information and Communication - Managers must develop a

communication system adequate to deal with environmental changes.

6
Factors that influence the contingency theory are numerous. These include the
following:

 Organizational Size: As size increases, so do the problems of

coordination. For instance, the type of organizational structure
appropriate for an organization of 50,000 employees is likely to be
inefficient for an organization of 50 employees.
 Routineness of Task Technology: To achieve its purpose, an organization
uses technology. Routine technologies require organizational structure,
leadership styles and control systems that differ from those required by
customized or non-routine technologies.
 Environmental Uncertainty: The degree of uncertainty caused by
environmental changes influences the management process. What works
best in a stable and predictable environment may be totally inappropriate
in a rapidly changing and unpredictable environment.
 Individual Differences: Individual differences in terms of their desire for
growth, autonomy, tolerance of ambiguity, and expectations. These and
other individual differences are particularly important when managers
select motivation techniques, leadership styles, and job designs.

7
Question 6

Weakness of contingency approach is as follows: - In-spite of the various

contributions, contingency approach has not been acknowledged as a unified
theory of management because it suffers from some limitations.

1. Inadequate Literature: Contingency approach suffers from inadequately of

literature. Therefore, it has not adequately spelled out various types of actions
which can be taken under different situations. It is not sufficient to say that ‘a
managerial action depends on the situation. ‘The approach should provide ‘if this
is the situation, this action can be taken.’ Unless, this is done, the approach
cannot offer much assistance to the practice of management. No doubt,
researches have been conducted in this direction but, by and large, they have not
satisfied the needs of managers.
2. Complex: - The suggestion of the approach is very simple, that is, managers
should do according to the needs of the situation. However, when put into
practice, this becomes very complex. Determination of situation in which
managerial action is to be taken involves analysis of a large number of variables
with multifarious dimensions. Therefore, there is a possibility that managers, who
are always short of time, may ignore the thorough analysis of all these variables
and may resort to short-cut and easier way.

8
3. Difficult Empirical Testing: - Contingency approach being complex, presents
problems in testing the precepts of the theory. For empirical testing of the theory,
it is necessary that some methodology is available. No doubt, methodology is
available but because of the involvement of too many factors, testing becomes
difficult.
4. Reactive not proactive:-Contingency approach is basically reactive in nature. If
nearly suggests what managers can do in a given situation. For a given
organisation, super system constitutes environment and management can be
applied to supra-system also. Therefore, managers are responsible to manage the
environment in such a way that they avoid the undesirable aspects of
environment.
Strength of contingency approach is as follows: -

1. Contingency approach is dynamic in nature. So, it changes according to the

situations. It allows managers to change the policies according to the situation.
2. Contingency approach helps the manager to enhance their leadership and
decision-making skills.
3. Contingency approach provides options to the employees that help them to
grow and share their ideas to the business.
4. It helps to design the organizational structure and plan the information decision
systems.

9
Example: Consider a project manager named Doug. Doug finds it much easier to communicate in writing
rather than in person, so he usually encourages his team by sending them thoughtful emails at the end
of every week. However, there is a new employee in the office who is not very receptive to written
communication. To connect with this employee, Doug will need to either make an effort to change his
method and encourage this employee in person or he will have to assign this task to the assistant
manager. 

In this example, Doug is not a chronically-ineffective leader. He is a good leader who is facing an
unexpected challenge. If Doug accepts the fact that he will need to adapt to his situation instead of
trying to force his usual methods, he can still be a highly-productive leader who encourages his team
effectively. 

The contingency theory of leadership is impacted by a range of specific factors in the average workplace,
including:

Maturity level of the employees

Relationships between coworkers

Work pace

Management style

Typical work schedule

Goals and objectives

Standards for behavior

Company policies

Employees’ work styles

Employees’ morale

Part II
10
Neoclassical Management Theories

Neoclassical theory of management is an extended version of the classical

management theory. It arose out of the critique of classical theory. Theorists
worked on a new approach by using classical theory as the bedrock by focusing
more on human relations and behavioral science. People also refer to neoclassical
theory as ‘behavioral theory of organization‘ or ‘human relations’ or ‘new classical
theory of management.’  Due to its new approach, neoclassical organizational
theory is the working principle behind most modern theories of organizations.

Definition of Neoclassical Theory:- As the name suggests, neoclassical consists of

two parts: neo and classical. Neo means new and classical refers to the work done
by a group of economists in the 18th and 19th centuries. In the classical theory,
management focus was on job content and physical resources. Classical
management theorists considered humans as an appendage to a machine.
However, critics were of the view that this theory lacks compassion toward
people. The organizations working on this principle are keeping emotional beings
in the same category as machines. With neoclassical organizational theory,
theorists put forward incorporating behavioral sciences into management to
address the shortcomings of classical theory.

The essential features of the neoclassical approach of management are:-

1. The Business Organization Is A Social System

2. The Human Factor Is The Most Critical Element In This Social System

11
3. Social And Psychological Factors Play A Crucial Role In Determining Productivity

And Employee Satisfaction

4. The Management Should Also Develop Social And Leadership Skills Apart From

Technical Skills. They Should Think More About The Welfare Of Workers

5. Productivity In An Organization Is Directly Related To Employee Morale.

Contributors of neoclassical approach theory: - Elton Mayo, Chester Barnard and

Herbert Simon are some of the famous neoclassical theorists. They are

responsible for introducing and experimenting with the neoclassical approach.

Their experiments underline that there are various motivational factors for a

person to meet specific requirements. Three theorists worked on the new

classical theory of management as follows:-

Elton Mayo

In 1927, the Western Electric Company invited a group of researchers led by Elton

Mayo to join their Hawthorne plant in Chicago. The researchers carried out

experiments at the plant that later became popular as the ‘Hawthorne

Experiment.’ The objective of the experiment was to study if workers would be

more productive depending upon different levels of illumination in the factory.

Based on the findings in the initial three years of this experiment, researchers saw

increased worker productivity when lighting conditions improved. They claimed

12
that workers’ motivation increased due to interest shown by the company in

them and their well-being. It indicates the importance of using a neoclassical

approach of management.

Also, the solidarity among workers increased satisfaction in the work. Mayo and

his team revealed that managers should also focus on social factors such as

employee relationships. Else, they would have to deal with resistance and lower

performance.

Chester Barnard

Chester Barnard published his famous book ‘The Functions of the Executive in

1938. The book provided a base for the formation and development of various

management theories. In his book, Chester explains a comprehensive theory of

behavior in formal organizations that pivots around cooperation. He underlines

that people in executive roles must foster a sense of purpose, moral codes,

ethical visions and create formal and informal communication systems.

According to Chester, people should cooperate. There is no place for conflicts

among workers. In both classical and neoclassical organization theory, conflict has

no place in an organization. 

13
Herbert Simon

Herbert Simon found out that classical organizational theories are inapplicable to

several administrative situations facing managers. Herbert tried to apply classical

theories to current situations of his time, but they didn’t fit. He also contradicted

Henri Fayol’s work in management, proving them to be mere proverbs of

administrations rather than principles. 

Sources of the Neoclassical Theory Of Management:- The neoclassical

organizational theory talks about ways and ideas that focus on the emotional

beings of the organization. There are two primary sources of the neoclassical

theory of organization: the human relations movement and the behavioral

science approach. The human relations movement regarded organization as a

social system. Social physiologists and sociologists put focus on group dynamics

and promoted people-management skills in addition to technical skills.

The behavioral science approach considers human behavior in organizations and

promotes the development of human beings and its benefits at the individual and

organizational levels.

Human Relations Movement

This resulted from Elton Mayo and Fritz J. Roethlisberger’s Hawthorne studies.

According to them, social and psychological factors are important in determining

14
worker productivity and satisfaction. The movement shows that efficient leaders

are employee-centric, democratic and follow a participative style.

Behavioral Movement

This had contributions from various sociologists and psychologists such as A.H.

Maslow, Douglas McGregor, Argyris, F. Herzberg, Rensis Likert, J.G. Likert, Kurt

Lewin and Keith Davis. It is a more mature version of human relation theory. The

theory proposes ideas about how managers should behave to motivate the

employees. And the aim is to encourage employees to perform at the highest

level and achieve organizational goals.

Elements Of Neoclassical Theory Of Management:- There are three elements of

neo-classical theory:

1. The Individual: - The Neoclassical Theory Of Organization Emphasized

Individual Differences Ignored Earlier In The Classical Theory. Every Individual

Has Emotions, Feelings, Hopes, Aspirations, And Expectations. They Have Got

Their Own Merit.

2. Work Groups: - Workers Are Not Isolated But Part Of Certain Groups, Which

Are Informal Organizations. Management Must Integrate These Informal

Organizations With The Formal Ones.

15
3. Participative Management:- The Neoclassical Approach Of

Management Suggests The Participation Of Workers In Management. As The

Neoclassical Theory Is Employee-Oriented, Workers’ Participation In Planning

Job Contents And Operations Will Improve Productivity.

Criticism Of Neoclassical Theory Of Management:- The following are the main

criticisms of this theory:

 The Theory Is Merely An Extension Of Classical Theory With Human Insights

Attached To It

 The Theory Is Out-dated As The Situational And Contingency Theories Address

Its Loopholes

 It Assumes Every Organization Runs By A Single Method Irrespective Of The

Environment

16