The Contingency Theory of Organizations - Literature review Example

Introduction Organizational theory is defined as the application of knowledge on how people act within organizations, either as an individual or as a group. It is also a systematic study of organizational structures, organizational designs, relationships of the organization and the external environment, and the behavior of managers and technocrats in an organization. These theories suggest various ways to cope with the changes in the organization as a result of the interactions between the management and its employees. Keith Grint’s book “The sociology of work” has outlined various concepts, models, and theories that illustrate the dynamics between the management of an organization and its employees. The various contemporary theories of work organization that are discussed in the book include coercion, paternalism, lenin, human relations, neo-human relations, organizational cultures, critical theories, system theories, contingency theory, action theory, population ecology theory, evolutionary biology, rational choice theory, complexity theories, political organizational theories, Foucault and post modernism, actor networks and institutional theory. Fiedler’s contingency theory seems to describe the relationship between the managers and employees better than the other theories. In fact, he attempts to make sense of complexities of human personalities and the situation in which managers must act. According to contingency theory, there is no one best way in which an organization can be managed and a particular organization style may be effective in one situation while in another situation it is not (Donaldson, 2001). Bacher (2007) considers contingency theory as the one that forms the foundation in which ideas of human resource and classical thoughts are combined. The management decisions are based on the contingent demands of the employees and therefore managers should adapt a management style which is more suitable in uncertain and flexible environment. The organizational style used by managers is contingent to both external and internal constraints which may include: how the organization adapts to its environment, its size, technologies used, differences among operational activities and resources, assumptions of managers about their employees, etc. Grint (2005) argues that the contingency theory focuses upon various management problems that involve management structures, organizational bottlenecks, and leadership issues among others. He regards these problems as being contingent to few variables and thus there is no single best way of solving those problems. Managers have the freedom of choosing between various forms of organizational structures that may be appropriate in a given situation. According to the contingency theory, the organizational characteristics must be shaped so as to meet the circumstances of the given situation (Miner, 2007). Good organizational management is achieved when the structural characteristics fits the situational characteristics hence resulting into organizational performance. The internal structure of an organization must be adjusted for flexibility if the product market has some uncertainties. The effectiveness of a manager is determined on the situation that needs to be addressed. Thus, being successful in one situation does not necessarily mean being successful in another situation. Bolden, Gosting, Marturano, and Dennison (2003) adds that different situations calls for different systems of management or require a different manager to use a totally different management style. Scott (1992) considers contingency theory as a dominant, theoretical and open system model when analyzing organizational theories. He asserts that the organizational environment is the one that determines how best an organization is managed. He further says that the nature of the environment determines how best an organization is managed. The contingency theory has two major assumptions: First, there is no single best way to organize. Second, any management style is not equally effective (Betts, 2002). The contingency organization theorist identifies various organizational as well as environmental characteristics through which they define the success of the organization. They try to match the organizational characteristics with the environmental characteristics in determining the performance of the organization. They refer to this match as a fit and thus if the characteristics of the environment best fits those of the organization, then it leads to high performance. This matching is what is referred to as contingency theory. Contingency theory describes the relationship between the management style and the performance of employees in different conditions or situations. This theory bases its argument on the orientation of the manager (the task or relationship) and the situational elements (task structure, the position power and leader-member relationship) and the effective leader orientation ( Zain Books, n.d). Therefore, there are two types of managers: task oriented managers who influences work to be done more effectively in low and moderate control situations while those managers who are relationship oriented work more effectively in moderate control situations. According to Fiedler, the situation in which managers operate is an important variable in management and is characterized by three factors; leader-member relations, task structure and leader position power. Bolden, Gosting, Marturano, and Dennison (2003) argue that these factors dictate the manager’s situational control. Leader-member relations refer to the interactions and the regard to which managers and employees hold to one another. It is the manager’s ability in terms of confidence, respect, and trust that employees have on them. It is the amount of dependability, loyalty and support that managers get from their employees. A manager who is accepted by the majority of the employees is in a favorable situation than the one who is not. Task structure are those factors which determine how a task assignment is done such a demonstration of a decision to be correct, understanding the requirements of a task by everyone, the way in which a task can be completed and the possibility of having more than one correct solution. If a task is structured and there is clear information about it by the manager, then the situation becomes favorable for him. Lastly, leader position power refers to the power position held by the managers. It is basically the level of rewards and punishments that a manager may dispose upon the employees. The position of power of managers depends on increasing the unfavorable or taking away of the favorable power of employees to make decision. The situation becomes more favorable if the manager has more power. Another important variable is considering the manager himself and Fiedler suggests two basic leader orientations; task oriented and relationship oriented. Relationship oriented managers are more interested with personal relationships and are sensitive to other people’s feelings (Bolden, Gosting, Marturano, and Dennison 2003). Their good relationships with employees help in getting the task well done and thus they are able to make good decisions on dealing with complex issues. These managers are not challenged when dealing with high control situations. They usually reorganize their tasks and seek approval from superiors while ignoring the subordinates. As a result the managers become more punishing and inconsiderable to their subordinates. They are more concerned with building up of interpersonal relations and extending them to develop teams in an organization. The relationship oriented managers work at their best when there is a positive image created about the organization or when the organization gains a greater customer satisfaction In dealing with moderate control situations, Daft (2008) says that these managers focus on employee’s relations. The manager then reduces the tension and anxiety which may lead to conflicts among the employees. The managers view the situations as interesting and challenging and thus they perform them well. These managers become more absorbed in obtaining employees’ support at the expense of the organizations tasks when they deal in low control situations. They may fail to direct employee’s work when they are working under extremely stressful situations. The second type of managers is the task oriented managers who get concerned with the task and not the relationship with the employees. Usually, these managers are impatient and eager for the work to get done. Bolden, Gosting, Marturano, and Dennison (2003) say that these managers use task motivated leadership experiences in ensuring that different organizational tasks are accomplished. They organize the tasks quickly and ensure that they are done. In high control situations, the task oriented managers usually relax and develop good relations with their employees. They don’t expect any form of interference, be it from their superiors or employees once the work has been done. In moderate control situations, the task oriented managers become anxious and less effective. In this situation, there are various conflicts among the employees which become more difficult to deal with by some managers. On dealing with low control situations, the task oriented managers devote themselves fully to the challenging tasks. They work hard in organizing employees so that they complete the tasks. They maintain a strict discipline and control the employees tightly. On the other hand, the employees respect the managers for making them achieve their goals and objectives in different situations. Task motivated managers achieve better results when the employees successfully perform the various tasks like better sales or performing better than their competitors (Donaldson, 2001). Contingency theory outlines the significance of the dynamic interaction of managers and employees with the dynamic interaction of managers and employees with the environment and other situational factors that may influence the design of the organization (Morgan, 2007). The key idea in this theory is to seek the determinant situational factors. The situational factors influence the success of an organization. Individuals in an organizational environment interact in a complex state with one another, as well as the organization and the environment. According to contingency theory, there is no single best approach that can be suitable in a given situation. In fact, there is no bad or good management style. Of necessity are the manager’s own preferences in guiding the employees. It assumes that there are various effective ways in which management functions can be performed. A particular approach may yield fruitfully in one situation while in another situation it fails drastically. Bolden, Gosting, Marturano, and Dennison (2003) consider environmental factors as being combined in determining if they create a “favorable” or “unfavorable” situations. For them, that task oriented management style is required in at environments that are extreme i.e. “favorable” and “unfavorable” while the relationship oriented management works better in middle grounds. Therefore, managers reorganize their environmental variables so as to match with their management style. There are no universal principles which can be applied in all situations. Managers need to analyze a given situation and select the most appropriate approach which can be suitable in that situation. The supporters of the contingency theory argue that managers can be able to offer suitable solutions in responding to the situation being faced. Managerial actions therefore depend on the circumstances prevailing in a given situation. Managers first diagnose a given situation and adopt in meeting the present conditions. According to Donaldson (2006), contingency theory emphasizes on two aspects; firstly, it focuses on specific situational factors which may influence the appropriateness of various managerial strategies. Secondly, it shows the significance of developing skills to be used by managers in analyzing their organizations. These skills enable them to discover the important contingency factors that may affect their managing approach. Contingency theory has the following characteristic features. First, the organizational actions depend on the action behavior that is outside the organizational systems. Second, the managerial action is contingent to actions that are outside the system. Thirdly, there are no actions that are universal since there are different organization-environment relationships. The contingency theory focuses on solving situational problems that the managers encounter in their daily activities. They form a conceptual framework in which managers study systematically the various characteristics of organizational components including their interrelationships (Bacher, 2007). Another importance of contingency theory is the linking between theory and practice through which the organizations are studied and analyzed practically. It suggests various alternatives that are applicable for use in a given situation. Contingency theory forms a basis for introducing changes (Morgan, 2007). They explain the dynamic process of changes in an organization. They relay information about the changes occurring in the environment of an organization from time to time, as well as the information that is crucial in maintaining the dynamic equilibrium. Conclusion The contingency theory has been the effective organizational theory illustrating the dynamic interactions between managers and employees in organizations among the organizational theories discussed in Sociology of Work. As discussed above, we realize that this theory offers the most effective managerial style which the managers choose a management style depending on the situation contingencies which determine the certainty of the environment. The employee’s values and expectations should be aligned with the goals that the managers set through an effective communication between the parties involved. Contingency theory is the most effective theory that determines the style of management depending on the characteristics of the situation. It implies that a form of management may be suitable in one particular situation and yet if applied in another situation it does not work. List of References Bacher, C 2007, Contingency theory: what are the strengths and weaknesses of the systems approach as used by contingency writers in analyzing organizations? GRIN Verlag, California. Betts, CS 2002, “Contingency theory: science or technology,” Journal of Business & Economics Research 1(8), 1-44 Bolden, R., Gosting, J., Marturano, A., and Dennison, P 2003, “A review of leadership theory and competency frameworks,” Centre for leadership studies, 1-44 Daft, R 2008, Organization Theory and Design, Cengage, USA Donaldson, L 2001, The contingency theory of organizations, SAGE, New Delhi. Donaldson, L 2006, “The Contingency Theory of Organizational Design: Challenges and Opportunities” in Information and Organization Design Series (6) 1: 19-40, DOI: 10.1007/0-387-34173-0_2 Grint, K 2005, The sociology of work: introduction, Polity Press, Cambridge Miner, J 2007, Organizational behavior: From theory to practice, M.E. Sharpe, New York Morgan, G 2007, Images of organization, SAGE, London Scott, RW 1992, Organizations: rational, natural and open systems, Prentice Hall, Englewood Cliff, NJ Zain Books, n.d, Contingency theories of leadership. 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