Contingency approach

Contingency approach
See also
Strategic fit Force field analysis Managerialism Strategic agility Management theory Management system Subsystem Planning process Emergent strategy

The contingency approach is a management approach which suggests that management practices should be adjusted based on the individual circumstances of the organization. This approach views management as something that is not a one-size-fits-all solution, and instead takes into account the unique constraints and capabilities of each organization. To ensure that management practices are aligned with the organization’s specific context, the contingency approach relies on four main components: the environment, the organization, the leader, and the technology.

• Environment: The environment in which the organization operates has a huge impact on the management practices that will be most effective. For example, a company operating in a highly competitive environment will need to implement different strategies than a company operating in a more relaxed environment.
• Organization: The organizational structure of a company can also affect the type of management that will be most effective. Companies with a hierarchical structure will require different management strategies than companies with a decentralized structure.
• Leader: The leader of the organization is also an important factor in determining which management strategies will be most effective. Leaders have a unique perspective on the organization, and their style of leadership can have a major impact on the management strategies that are used.
• Technology: Technology can also play a role in determining the best management strategies. Companies that use more advanced technology may require different management practices than companies that use more basic technology.

In summary, the contingency approach to management suggests that management practices should be tailored to the individual circumstances of the organization. This approach takes into account the environment in which the organization operates, the organizational structure, the leader, and the technology used, in order to determine the best management practices for the organization.

Example of Contingency approach

The contingency approach suggests that management practices should be tailored to the specific needs of the organization. For example, a manufacturing company operating in a highly competitive environment may need to implement aggressive cost-cutting strategies in order to remain competitive. However, a non-profit organization operating in a less competitive environment may be able to focus more on long-term goals and strategies and may not need to focus on cost-cutting as much. By taking into account the environment, organizational structure, leader, and technology, the contingency approach allows organizations to develop management practices that are most appropriate for their individual context. In summary, the contingency approach is an approach to management which views management as something that is not a one-size-fits-all solution, and instead takes into account the unique constraints and capabilities of each organization.

When to use Contingency approach

The contingency approach can be used in a variety of situations where the organization needs to adjust its management practices. It is especially useful when an organization is faced with a changing external environment, such as the introduction of new technology or changes in the competitive landscape. It can also be used when an organization needs to adapt to a new organizational structure, such as a merger or acquisition. In addition, it can be used when a new leader is appointed, since their style of leadership can have a major impact on the management strategies that are used.

Types of Contingency approach

There are three main types of contingency approach to management, which are: situational, process, and relational.

• Situational: The situational approach focuses on the external environment in which the organization operates. It takes into account the unique characteristics of the environment, such as industry competition, economic conditions, and legal regulations, in order to determine the most effective management practices for the organization.
• Process: The process approach focuses on the internal processes of the organization. It takes into account the organization’s processes, such as decision-making, scheduling, and resource allocation, in order to determine the most effective management practices for the organization.
• Relational: The relational approach takes into account the relationships between the different components of the organization. It looks at the relationships between the organization’s employees, as well as the relationships between the organization and its customers, in order to determine the most effective management practices for the organization.

Steps of Contingency approach

The contingency approach to management is a process that consists of four main steps. These steps are: analyzing the environment, identifying the organization’s constraints and capabilities, developing a plan of action, and implementing the plan.

• Analyzing the environment: The first step in the contingency approach is to analyze the environment in which the organization operates. This includes looking at the industry, the competition, the political climate, and any other relevant factors.
• Identifying the organization’s constraints and capabilities: The second step is to identify the organization’s constraints and capabilities. This includes looking at the organization’s resources, personnel, and technology.
• Developing a plan of action: Once the organization’s constraints and capabilities have been identified, the third step is to develop a plan of action based on these factors. This plan should take into account the organization’s specific context, and should be tailored to meet the organization’s goals.
• Implementing the plan: The fourth and final step is to implement the plan. This includes making sure all the necessary steps are taken to put the plan into action.

Advantages of Contingency approach

The contingency approach to management offers a number of advantages. First, it allows managers to tailor their management practices to the unique circumstances of their organization. This means that managers are able to adjust their practices to take into account the environment, organizational structure, leader, and technology that their organization operates within. Second, the contingency approach also encourages managers to think critically about the management strategies they use. By taking into account each of the four components mentioned, managers are able to more accurately assess which strategies will be most effective for their organization. Finally, this approach also provides more flexibility to managers as they can adjust their management practices over time as the organization’s circumstances change.

Limitations of Contingency approach

The contingency approach can be a valuable tool for organizations, but it also has a few limitations. Firstly, this approach is heavily reliant on the leader’s judgement and can be affected by their personal biases. Secondly, it can be difficult to accurately assess the environment, organizational structure, and technology of an organization, which can lead to inaccurate management decisions. Lastly, the contingency approach can be time-consuming and expensive to implement, as it requires a significant amount of research and analysis.

Other approaches related to Contingency approach

The contingency approach to management is related to several other management approaches, including systems theory, resource-based view, and situational leadership.

• Systems Theory: Systems theory is an approach to management which suggests that organizations are complex systems, composed of multiple interconnected parts. This approach suggests that management should be focused on understanding and managing the relationships between the different parts of the organization, in order to create a cohesive whole.
• Resource-Based View: The resource-based view suggests that organizations should focus on developing and utilizing their internal resources in order to create competitive advantage. This approach suggests that organizations should focus on managing their human resources, financial resources, physical resources, and organizational structure in order to create an environment where all resources are utilized to the fullest potential.
• Situational Leadership: Situational leadership is an approach to management which suggests that managers should adjust their leadership style based on the needs of the situation. This approach suggests that managers should be flexible and adaptable, and be willing to change their leadership style depending on the circumstances.

In summary, the contingency approach to management is related to several other management approaches, including systems theory, resource-based view, and situational leadership. These approaches all suggest that management should be tailored to the individual context of the organization, in order to create the most effective strategies.

Suggested literature

• Zeithaml, V. A., “Rajan” Varadarajan, P., & Zeithaml, C. P. (1988). The contingency approach: its foundations and relevance to theory building and research in marketing. European Journal of Marketing, 22(7), 37-64.
• Markides, C., & Charitou, C. D. (2004). Competing with dual business models: A contingency approach. Academy of Management Perspectives, 18(3), 22-36.
• Govindarajan, V. (1988). A contingency approach to strategy implementation at the business-unit level: integrating administrative mechanisms with strategy. Academy of management Journal, 31(4), 828-853.