Introduction - Unique Features of Contingency Theory

If we look around we will notice that we live in a world in which change is the only certainty. Change in technology, social environment, economic and political environment, globalization and ecological well being are making us rethink the way we are adapting to change. If we fail to understand change, it is difficult to control it. This applies to organization, as organizations are part of our environment. Managing this change requires a new kind of approach and analysis both by individual and the organization.

In a stable competitive environment a relative simple and mechanical organization is enough for success. But in a rapidly changing and unpredictable environment, success requires organization to be flexible, dynamic and have the ability to renew itself and capacity to innovate. The theory of management should visualise and incorporate this reality in its premises. This introduces us to the Contingency Theory of Management.

While all other theories float over the passing currents of fleeting times, each its phase with unique and distinct characteristics and like bubbles on the waters of a pond, tend to vanish after a while to give place to a new setting, , the Contingency Theory of Management alone stands firm like a rock unperturbed by changes in the environment. This is because contingency theory accepts social and environment change in people and their business ventures as its axiomatic value and postulates its canons keeping in its view this pragmatic ground rule, while other theories are inspired by situational ambience that prevails over the particular period in history of management thought and tend to hold this as permanent and universal, true and to remain applicable for all times to come, for application to everyone, and for everywhere.

The Contingency approach is the outcome of research studies conducted by Tom Burns, G.W.Stalker, John Woodward, Lawrence, Lorsch and others. Through their analysis they co-related the structure of an organization to the surrounding environmental conditions. In the Fifties of the last century Burns and Stalker (both from UK) analysed the environments and structures of several British and Scottish firms. In their pioneering work "Management of innovation" (1968) and they identified two types of organizational structures-

• Mechanistic, and

• Organic;

Against two categories of environment -

• Stable, and

• Dynamic.

Their studies revealed that mechanic structure was found to be common in organizations operating in stable environment, while the organizations operating in dynamic environment tended to be organic in structure.

During the Sixties John Woodward (also from UK) analysed the influence of technology on the organization structure of about 100 industrial firms in the UK and observed that the type of technology used like unit or small batches, mass or large batches, and continuous process of production through single/double shifts directly affected the span of control, use of committees, participative decision making and other structural characteristics.

Other researchers like Lawrence and Lorsch (USA) through their studies brought out (1969) that organisations functioning in a complex environment adopted a much higher degree of differentiation and integration than those operating in simple environment. As per these two management thinkers the key issue is environmental uncertainty and information flow. They advocated to Focus on exploring and improving the organization's relationship with the environment, which characterised by along a certainty-uncertainty continuum.

Elaborating this theory in their treatise "Organisation and Management of Health Care"(Main Contributor: Katie Enock, Public Health Specialist, Harrow Primary Care Trust - www.healthknowledge.org.uk) it is stressed that there is no 'one best way' to structure an organisation. An organisation will face a range of choices when determining how it should be structured. Successful organisations adopt structures that are an appropriate response to a number of variables, or contingencies, which influence both the needs of the organisation and how it works.

Overall Contingency theorists have found that three contingencies are particularly important in influencing an organisation's structure. These are:

• its size

• the technology it uses

• its operating environment.

There are two significant implications of contingency theory:

• if there is no 'one best way', then even apparently quite similar organisations, for example, two nearby colleges, may choose significantly different structures and still survive, be reasonably successful in achieving their missions, and so on

• if different parts of the same organisation are influenced in different ways by the contingencies bearing upon them, then it may be appropriate for them to be structured differently, for example, one university department may have a functional structure, whilst another may have a matrix structure

In brief contingency theory as per these authors involves " comprehensive view of people in organisations" with in-built "diagnosis of people/ task/ technology/ environment - then suggest solutions"

The "Business Systems - Contingency Management" of " Business Open Learning Archive " developed and maintained by C Jarvis (URL -http://sol.brunel.ac.uk/~jarvis/bola/systems/contingency.html ) - points out that

"Business people may have little or no control over some boundary events and processes which affect them and which they must respond to. Managers can plan and organise many things with reasonable certainty to achieve results they decide they want to happen. Yet the demands of other internal and external processes may force them to act in ways they had not predicted and involving considerable risk in terms of effects and outcomes. The importance of management information systems becomes apparent.

"Contingency theory and management" is concerned with the processes of risk-minimisation and management decision- making. The alternative to anticipating events, planning and being prepared is fire-fighting - being surprised by random events threatening the organisation's position. Fire- fighting frequently diverts management's attention from basic maintenance tasks which have to be secured by routine day-to- day work which keeps the organisation whole and functioning steadily - on plan. Through marketing activities and involvement in government, industry partnerships and various coalitions and associations, business can actually manipulate/influence environmental conditions. "

Another noted writer on Contingency Theory is Fiedler (Biographical Dictionary of Management. http://www.thoemmes.com/dictionaries/bdm_fiedler.htm of Thoemmes Press)

"Fiedler's contingency model postulates that the leader's effectiveness is based on 'situational contingency', or a match between the leader's style and situational favourableness, later called situational control. More than 400 studies have since investigated this relationship. A key component in Fiedler's contingency theory is the least preferred co-worker (LPC) scale, an instrument for measuring an individual's leadership orientation using eighteen to twenty-five pairs of adjectives and an eight-point bipolar scale between each pair. Respondents are asked to consider the person they liked working with the least, either presently or in the past, and rate that co-worker on each pair of adjectives. High-LPC or relationship-motivated leaders describe their least preferred co-worker in more positive terms and are concerned with maintaining good interpersonal relations. Low-LPC or task-motivated leaders describe their least preferred co-worker in rejecting and negative terms, and give higher priority to the task than to interpersonal relations. According to Fiedler, there is no ideal leader. Both low-LPC (task-oriented) and high-LPC (relationship-oriented) leaders can be effective, if their leadership orientation fits the situation

"The contingency theory allows for predicting the characteristics of the appropriate situations for effectiveness. Three situational components determine the favourableness or situational control: leader-member relations, task structure and position power. Fiedler found that low-LPC leaders are more effective in extremely favourable or unfavourable situations, whereas high-LPC leaders perform best in situations with intermediate favourability. Since personality is relatively stable, the contingency model suggests that improving effectiveness require changing the situation to fit the leader. The organization or the leader may increase or decrease task structure and position power, and training and group development may improve leader-member relations. Leader-Match is a self paced leadership training programme designed to help leaders alter the favourableness of the situation, or situational control."