C O N T I N G E N C Y  T H E O R Y

Theory Name

Contingency Theory

Acronym N/A

Alternate name(s)

N/A

Main dependent construct(s)/factor(s)

Efficiency, organizational performance

Main independent construct(s)/factor(s)

Strategy, technology, task, organizational size, structure, and culture

Concise description of theory

There are many forms of contingency theory. In a general sense, contingency theories are a class of behavioral theory that contend that there is no one best way of organizing / leading and that an organizational / leadership style that is effective in some situations may not be successful in others (Fiedler, 1964). In other words: The optimal organization / leadership style is contingent upon various internal and external constraints.

Four important ideas of Contingency Theory are:1. There is no universal or one best way to manage 2. The design of an organization and its subsystems must 'fit' with the environment 3. Effective organizations not only have a proper 'fit' with the environment but also between its subsystems4. The needs of an organization are better satisfied when it is properly designed and the management style is appropriate both to the tasks undertaken and the nature of the work group.

There are also contingency theories that relate to decision making (Vroom and Yetton, 1973). According to these models, the effectiveness of a decision procedure depends upon a number of aspects of the situation: the importance of the decision quality and acceptance; the amount of relevant information possessed by the leader and subordinates; the likelihood that subordinates will accept an autocratic decision or cooperate in trying to make a good decision if allowed to participate; the amount of disagreement among subordinates with respect to their preferred alternatives.

Sources: http://www.valuebasedmanagement.net/methods_contingency_theory.html and http://www.tcw.utwente.nl/theorieenoverzicht/Theory%20clusters/Organizational%20Communication/Contingency_Theories.doc/

Diagram/schematic of theory

Source: Weill, Peter; Olson, Marorethe H. (1989). An Assessment of the Contingency Theory of Management Information Systems. Journal of Management Information Systems, 6(1), 63.

Originating author(s)

Fred Fiedler (contingency theory of leadership)

Fiedler's Contingency Theory of Leadership

by Patrich Antoine

Managerial leadership has influenced organizational activities in many ways. These influences include motivating subordinates, budgeting scarce resources, and serving as a source of communication. Over the years researchers have emphasized the influences of leadership on the activities of subordinates. These emphasis by researchers led to theories about leadership. "The first and perhaps most popular, situational theory to be advanced was the �Contingency Theory of Leadership Effectiveness' developed by Fred E. Fiedler" (Bedeian, Glueck 504). This theory explains that group performance is a result of interaction of two factors. These factors are known as leadership style and situational favorableness. These two factors will be discussed along with other aspects of Fiedler's theory. "In Fiedler's model, leadership effectiveness is the result of interaction between the style of the leader and the characteristics of the environment in which the leader works" (Gray, Starke 264).

The first major factor in Fiedler's theory is known as the leadership style. This is the consistent system of interaction that takes place between a leader and work group. "According to Fiedler, an individual's leadership style depends upon his or her personality and is, thus, fixed" (Bedeian, Gleuck 504). In order to classify leadership styles, Fiedlers has developed an index called the least-preferred coworker (LPC) scale.

The LPC scale asks a leader to think of all the persons with whom he or she has ever worked, and then to describe the one person with whom he or she worked the least well with. This person can be someone form the past or someone he or she is currently working with. From a scale of 1 through 8, leader are asked to describe this person on a series of bipolar scales such as those shown below:

Unfriendly 1 2 3 4 5 6 7 8 FriendlyUncooperative 1 2 3 4 5 6 7 8 Cooperative

Hostile 1 2 3 4 5 6 7 8 SupportiveGuarded 1 2 3 4 5 6 7 8 Open

The responses to these scales (usually sixteen in total) are summed and averaged: a high LPC score suggests that the leader has a human relations orientation, while a low LPC score indicates a task orientation. Fiedler's logic is that individuals who rate their least preferred coworker in relatively favorable light on these scales derive satisfaction out of interpersonal relationship; those who rate the coworker in a relatively unfavorable light get satisfaction out of successful task performance" (Gray, Starke 264). This method reveals an individual's emotional reaction to people with whom he or she cannot work. It is also stressed that is not always an accurate measurement.

"According to Fiedler, the effectiveness of a leader is determined by the degree of match between a dominant trait of the leader and the favorableness of the situation for the leader.... The

dominant trait is a personality factor causing the leader to either relationship-oriented or task-orientated" (Dunham 365). Leaders who describe their preferred coworker in favorable terms, with a high LPC, are purported to derive major satisfaction from establishing close relationships with felow workers. High LPC leaders are said to be relationship-orientated. These leaders see that good interpersonal relations as a requirement for task accomplishment.

Leaders who describe their least preferred coworker unfavorable terms, with a low LPC, are derived major satisfaction by successfully completing a task. These leaders are said to be task-orientated. They are more concerned with successful task accomplishment and worry about interpersonal relations later.

The second major factor in Fiedler's theory is known as situational favorableness or environmental variable. This basically is defined as the degree a situation enables a leader to exert influence over a group. Fiedler then extends his analysis by focusing on three key situational factors, which are leader-member, task structure and position power.

Each factor is defined in the following:

1. Leader-member relations: the degree to which the employees accept the leader.

2. Task structure: the degree to which the subordinates jobs are described in detail.

3. Position power: the amount of formal authority the leader possesses by virtue of his or her position in the organization. (Gannon 360)

For leader-member relations, Fiedler maintains that the leader will has more influence if they maintain good relationships with group members who like, respect, and trust them, than if they do not. Fiedler explains that task structure is the second most important factor in determining structural favorableness. He contends that highly structured tasks, which specify how a job is to be done in detail provide a leader with more influences over group actions than do unstructured tasks. Finally, as for position power, leads who have the power to hire and fire, discipline and reward, have more power than those who do not. For example, the head of a department has more power than a file clerk.

By classifying a group according to three variables, it is possible to identify eight different group situations or leadership style. These eight different possible combinations were then classified as either task orientation or relationship orientated. In the following diagram, it shows that task-orientated leadership was successful in five situations, and relationship-orientated in three.

Fiedler's Contingency Theory of Leadership

Leader-Member Task Position Power Successful Leadership

Relations Structure Of Leader Style

Good -- Structured -- Strong -- Task Orientation

Good -- Structured -- Weak -- Task Orientation

Good -- Unstructured -- Strong -- Task Orientation

Good -- Unstructured -- Weak -- Consideration

Poor -- Structured -- Strong -- Consideration

Poor -- Structured -- Weak -- Consideration

Poor -- Unstructured -- Strong -- Task Orientation

Poor -- Unstructured -- Weak -- Task Orientation

(Gannon 360)

"According to Fiedler, a task-orientated style of leadership is more effective than a considerate (relationship-orientated) style under extreme situations, that is, when the situations, is either very favorable (certain) or very unfavorable ( uncertain)" (Gannon 361). Task-orientated leadership would be advisable in natural disaster, like a flood or fire. In and uncertain situation the leader-member relations are usually poor, the task is unstructured, and the position power is weak. The one who emerges as a leader to direct the group's activity usually does not know any of his or her subordinates personally. The task-orientated leader who gets things accomplished proves to be the most successful. If the leader is considerate (relationship-orientated), he or she may waste so much time in the disaster, which may lead things to get out of control and lives might get lost.

Blue-collar workers generally want to know exactly what they are supposed to do. Therefore it is usually highly structured. The leader's position power is strong if management backs his or her decision. Finally, even though the leader may not be relationship-orientated, leader-member relations may be extremely strong if he or she is able to gain promotions and salary increases for subordinates. Under these situations is the task-orientated style of leadership is preferred over the (considerate) relationship-orientated style.

"The considerate style of leadership seems to be appropriate when the environmental or certain situation is moderately favorable or certain, for example, when (1) leader-member relations are good, (2) the task is unstructured, and (3) position power is weak" (Gannon 362). For example, research scientists do not like superiors to structure the task for them. They prefer to follow their own creative leads in order to solve problems. Now under a situation like this is when a considerate style of leadership is preferred over the task-orientated style.

Fiedler's theory has some very interesting implications for the management of leaders in organizations:

1. The favorableness of leadership situations should be assessed using the instruments developed by Fiedler (or, at the very least, by a subjective evaluation).

2. Candidates for leadership positions should be evaluated using the LPC scale.

3. If a leader is being sought for a particular leadership position, a leader with the appropriate LPC profile should be chosen (task-orientated for very favorable or very unfavorable situations and relationship-orientated for intermediate favorableness).

4. If a leadership situation is being chosen for a particular candidate, a situation (work team, department, etc.) should be chosen which matches his/her LPC profile (very favorable or unfavorable for task-orientated leaders and intermediate favorableness for relationship-orientated leader). (Dunham 360).

Several other implications can be derived from Fiedler's findings. First, it is not accurate to speak of effective and ineffective leaders. Fiedler goes on by suggesting that there are only leader who perform better in some situations, but not all situations. Second, almost anyone can be a leader by carefully selecting those situations that match his or her leadership style. Lastly, the effectiveness of a leader can be improved by designing the job to fit the manager. For instance, by increasing or decreasing a leader's position power, changing the structure of a task, or influencing leader-member relations, an organization can alter a situation to better fit a leader's style.

In conclusion, the Fiedler's Contingency Theory of Leadership, has been cautious of accepting all conclusions. Fiedler's work is not without problems or critics. Evidence suggests that other situational variables, like training and experience have an impact in a leader's effectiveness. There are also some uncertainties about Fiedler's measurement of different variables. For instance, there is some doubt whether the LPC is a true measure of leadership style. "Despite these and other criticisms, Fiedler's contingency theory represents an important addition to our understanding of effective leadership" (Bedeian, Gleuck 508). Fred Fiedler's theory became an important discovery in the study of leadership. His theory made a major conrtibution to knowledge in the leadership area.

BIBLIOGRAPHY

Bedeian, Arthur G., and William F. Gleuck. Management: Third Edition. Chicago: Dreyden Press, 1983.

Dunham, Randall B. Organizational Behavior. Homewood, Illinois: Richard D. Irwin, 1984.

Gannon, Martin J. Management: An Integrated Framework. Boston: Little, Brown, 1982.

Gray, Jerry L., and Frederick A. Starke. Organizational Behavior: Concepts and Applications. Columbus, Ohio: Merril, 1988. By Patrick Antoine

Fiedler's Contingency Theory

Proposed by the Austrian psychologist Fred Edward Fiedler (1922- ). The contingency model emphasizes the importance of both the leader's personality and the situation in which that leader operates. A leader is the individual who is given the task of directing and coordinating task-relevant activities, or the one who carries the responsibility for performing these functions when there is no appointed leader.

Fiedler relates the effectiveness of the leader to aspects of the group situation. Fred Fiedler's Contingency Model also predicts that the effectiveness of the leader will depend on both the characteristics of the leader and the favourableness of the situation.

Additional Resources

When business management students first learn about Fiedler's Contingency Theory, they generally think of the more readily used form of the word "contingency". Essentially, they think that a contingency is an something which is dependent upon or caused by some other event. Groups of people, leadership, or relationships seldom come to mind. And yet, as its very root, the base-word contingent means a group of people in contact with each other, with connection or dependence among the followers and their leader.

In the late 1950s and early 1960s, industrial and business psychologists such as Fiedler and Woodward started to study the leadership and behavior styles of managers. Before Fiedler's study, industrial psychologists focused on the personal traits of successful leaders and believed in an ideal science of organization. They felt there was a best way to run a company or group which produced the best decisions and most effective business practices. The importance of Fiedler's contingency theory is that it has influenced almost all modern management theories by denying the existence of a singular ideal organizational approach.

The basis of Fiedler's contingency model involved assessing a potential leader with a scale of work style ranging from task-oriented at one end, to relationship-oriented at the other. Then contingent on factors such as stress level in the organization, type of work, flexibility of the group to change, and use of technology, a customized coordination of resources, people, tasks and the correct style of management could be implemented.

Leadership as a wide spectrum of possible effective styles was a ground-breaking idea. It is still central in modern management theories which reject rigid assumptions about ideal management.

The key to leadership effectiveness is viewed by most variants of Contingency Theory as choosing the correct style of leader. This style is dependent on the interaction of internal and external factors with the organization. For example, the ability to leaders is dependent upon the perception of subordinates of and by the leader, the leader's relationship with them, and the degree of consensus on the scope of a given task.

Situational contingency theory agreed with Contingency theories on the basic idea of there being no single correct solution to organization. This and other similarities led to its main tenets merging into mainstream Contingency Theories. Situational contingency theorists such as

Aldorry, Tooth, Vroom and Jajo held that group effectiveness requires a match between a leader's style and situational demands. Similarly, the concept which Fiedler names "situational control" is the means by which a leader can effectively influence the group's actions and behavior.

Fiedler's theory further posits that most situations will have three hierarchical aspects that will structure the leader's role. The first aspect is atmosphere - the confidence, and loyalty a group feels towards the leader. The second variable is the ambiguity or clarity of the structure of the group's task. Lastly the inherent authority or power of the leader plays an important role in group performance.

Normative Decision Theory, sometimes called Game Theory, attempts to model the process leading to an optimal business decision. Normative decision making rarely happens in the real world, where perfect rationality does not match actual behavior. The more descriptive approach of how people actually make decisions is known as Decision Analysis. Theorists study the cooperation of workers with leaders, and among each other, and how closely the final decision correlates with a normative or optimal decision.

In summary, modern business and industrial management are indebted, and in fact, based upon, Fiedler's pioneering work on Contingency Theory for their theoretical core of flexibility and adaptation.

(http://www.envisionsoftware.com/articles/Fiedlers_Contingency_Theory.html)

Fred Fiedler’s Contingency Theory

Situational (no ideal leader)

Three main principles (Fiedler):1. Relationships2. Situation3. Authority

Evaluated aspects are marked on a scale of 1-8 (favorable and not favorable)

In order to be successful, the leader’s personality has to match the situation, THEREFORE anybody can be a leader.If the leader follow all principles, the objective tends to be success.

Four Important points of Contingency theory:1. There is no universal way to manage.

2. The design of an organization and its subsystems must fit with the environment.3. Effective organizations not only have a proper fit with its environment but also with its subsystems.4. The needs of an organization are better satisfied when it is properly designed and the management style is appropriate to both the tasks undertaken and the nature of the work group.

The least preferred co-worker (LPC) scale, shown below, is used to analyze an individuals leadership orientation. A high LPC score generally means that the individual has a human relations orientation, and a low one means he/she has more of a task orientaion.

The strength of Fiedler's theory is its ability to predict leadership effectiveness as individual and organizational variables are introduced.

Since Fiedler believed that there isn’t anybody that is the perfect leader or the best type of leader, the theory is very flexible in determining who is a leader for which situation.

Ignores some factors that affect leadership such as experience and level of training achieved

Experience: Make better decision depends on how long he works.

Training: Theory of leadership might helps to be better leader.-Ways of communicate-Personality-Create relationship with workers

Since personality is relatively stable, the theory requires the situation to change to fit the leader if needed, which could be difficult since trying to change others can evoke conflict.

Contingency Approach to Management

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The contingency approach to management is based on the idea that there is no one best way to manage and that to be effective, planning, organizing, leading, and controlling must be tailored to the particular circumstances faced by an organization. Managers have always asked questions

such as "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 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?" The contingency approach to management (also called the situational approach) assumes that there is no universal answer to such questions because organizations, people, and situations vary and change over time. Thus, the right thing to do depends on a complex variety of critical environmental and internal contingencies.

HISTORICAL OVERVIEW

Classical management theorists such as Henri Fayol and Frederick Taylor identified and emphasized management principles that they believed would make companies more successful. However, the classicists came under fire in the 1950s and 1960s from management thinkers who believed that their approach was inflexible and did not consider environmental contingencies. Although the criticisms were largely invalid (both Fayol and Taylor, for example, recognized that situational factors were relevant), they spawned what has come to be called the contingency school of management. Research conducted in the 1960s and 1970s focused on situational factors that affected the appropriate structure of organizations and the appropriate leadership styles for different situations. Although the contingency perspective purports to apply to all aspects of management, and not just organizing and leading, there has been little development of contingency approaches outside organization theory and leadership theory. The following sections provide brief overviews of the contingency perspective as relevant to organization theory and leadership.

CONTINGENCY PERSPECTIVE AND ORGANIZATION THEORY

Environmental change and uncertainty, work technology, and the size of a company are all identified as environmental factors impacting the effectiveness of different organizational forms. According to the contingency perspective, stable environments suggest mechanistic structures that emphasize centralization, formalization, standardization, and specialization to achieve efficiency and consistency. Certainty and predictability permit the use of policies, rules, and procedures to guide decision making for routine tasks and problems. Unstable environments suggest organic structures which emphasize decentralization to achieve flexibility and adaptability. Uncertainty and unpredictability require general problem solving methods for nonroutine tasks and problems. Paul Lawrence and Jay Lorsch suggest that organizational units operating in differing environments develop different internal unit characteristics, and that the greater the internal differences, the greater the need for coordination between units.

Joan Woodward found that financially successful manufacturing organizations with different types of work technologies (such as unit or small batch; large-batch or mass-production; or continuous-process) differed in the number of management levels, span of management, and the degree of worker specialization. She linked differences in organization to firm performance and suggested that certain organizational forms were appropriate for certain types of work technologies.

Organizational size is another contingency variable thought to impact the effectiveness of different organizational forms. Small organizations can behave informally while larger organizations tend to become more formalized. The owner of a small organization may directly control most things, but large organizations require more complex and indirect control mechanisms. Large organizations can have more specialized staff, units, and jobs. Hence, a divisional structure is not appropriate for a small organization but may be for a large organization.

In addition to the contingencies identified above, customer diversity and the globalization of business may require product or service diversity, employee diversity, and even the creation of special units or divisions. Organizations operating within the United States may have to adapt to variations in local, state, and federal laws and regulations. Organizations operating internationally may have to adapt their organizational structures, managerial practices, and products or services to differing cultural values, expectations, and preferences. The availability of support institutions and the availability and cost of financial resources may influence an organization's decision to produce or purchase new products. Economic conditions can affect an organization's hiring and layoff practices as well as wage, salary, and incentive structures. Technological change can significantly affect an organization. The use of robotics affects the level and types of skills needed in employees. Modern information technology both permits and requires changes in communication and interaction patterns within and between organizations.

CONTINGENCY PERSPECTIVE AND LEADERSHIP

Dissatisfaction with trait-based theories of leadership effectiveness led to the development of contingency leadership theories. Fred Fiedler, in the 1960s and 1970s, was an early pioneer in this area. Various aspects of the situation have been identified as impacting the effectiveness of different leadership styles. For example, Fiedler suggests that the degree to which subordinates like or trust the leader, the degree to which the task is structured, and the formal authority possessed by the leader are key determinants of the leadership situation. Task-oriented or relationship oriented leadership should would each work if they fit the characteristics of the situation.

Other contingency leadership theories were developed as well. However, empirical research has been mixed as to the validity of these theories.

SEE ALSO: Decision Making; Leadership Styles and Bases of Power; Management Styles; Organizational Structure

Durward Hofler

Revised by Tim Barnett

FURTHER READING:

Burns, Tom, and G.M. Stalker. The Management of Innovation. London: Tavistock, 1961.

Fiedler, Fred E. A Theory of Leadership Effectiveness. New York: McGraw-Hill, 1967.

Gresov, Christopher, and Robert Drazin. "Equifinality: Functional Equivalence in Organizational Design." Academy of Management Review, April 1997.

Lawrence, Paul R., and Jay Lorsch. Organizations and Environment: Managing Differentiation and Integration. Homewood: Irwin, 1967.

Winfrey, Frank L., and James L. Budd. "Reframing Strategic Risk." SAM Advanced Management Journal, Autumn 1997.

Woodward, Joan. Industrial Organization: Theory and Practice. London: Oxford University Press, 1965.

Wren, Daniel A. The Evolution of Management Thought. 4th ed. New York: Wiley & Sons, 1994.

Situational Approaches to Leadership

The theme in early approaches to understanding leadership was the desire to identify

traits or behaviors that effective leaders had in common. A common set of

characteristics proved to be elusive, however. Researchers were continually frustrated

by the lack of consistent support for their findings and conclusions. As a result, research

began to focus on what style of leadership was most effective in a particular situation.

Contingency or situational theories examine the fit between the leader and the

situation and provide guidelines for managers to achieve this effective fit.

The theorists in this section believe that managers choose leadership styles based on

leadership situations. Managers adjust their decision-making, orientation, and

motivational approaches based upon a unique combination of factors in their situations:

characteristics of employees, types of work, organizational structures, personal

preferences, and upper-level management's influences.

The following sections describe the three most well-known situational theories.

Fiedler's contingency theory

Fred E. Fiedler's contingency theory centers on the belief that there is no best way for

managers to lead. Different situations create different leadership style requirements for

managers. The style that works in one environment may not work in another.

Fiedler looked at three elements that dictate a leader's situational control. These

elements are:

Task structure. Is the job highly structured, fairly unstructured, or somewhere in

between? The spelling out in detail (favorable) of what is required of subordinates

affects task structure.

Leader/member relations. This element applies to the amount of loyalty,

dependability, and support that a leader receives from his or her employees. In a

favorable relationship, a manager has a highly formed task structure and is able to

reward and/or punish employees without any problems. In an unfavorable

relationship, the task structure is usually poorly formed, and the leader possesses

limited authority.

Positioning power. Positioning power measures the amount of power or

authority a manager perceives the organization has given him or her for the

purpose of directing, rewarding, and punishing subordinates. Positioning powers of

managers depends on the taking away (favorable) or increasing (unfavorable) of

the decision-making power of employees.

Fiedler then rated managers as to whether they were relationship oriented or task

oriented. Task-oriented managers tended to do better in situations with good

leader/member relationships, structured tasks, and either weak or strong position

power. They also did well when the tasks were unstructured but position power was

strong, as well as when the leader/member relations were moderate to poor and the

tasks were unstructured. Relationship-oriented managers, on the other hand, do better

in all other situations.

The task-motivated style leader experiences pride and satisfaction in task

accomplishment for his or her organization, while the relationship-motivated style

leader seeks to build interpersonal relations and extend extra help for team

development in his or her organization.

Judging whether a leadership style is good or bad can be difficult. Each manager has his

or her own preferences for leadership. Task-motivated leaders are at their best when

their teams perform successfully—such as achieving new sales records or outperforming

major competitors. Relationship-oriented leaders are at their best when greater

customer satisfaction is gained and positive company images are established.