33.Dwell upon Contingency theory

A contingency theory is an organizational theory that claims that there is no best way to organize a corporation, to lead a company, or to make decisions. Instead, the optimal course of action is contingent (dependent) upon the internal and external situation. A contingent leader effectively applies his own style of leadership to the right situation. Gareth Morgan in his book Images of Organization describes the main ideas underlying contingency in a nutshell:

• Organizations are open systems that need careful management to satisfy and balance internal needs and to adapt to environmental circumstances

• There is no one best way of organizing. The appropriate form depends on the kind of task or environment one is dealing with.

• Management must be concerned, above all else, with achieving alignments and good fits

• Different types or species of organizations are needed in different types of environments

Fred Fiedler's contingency model focused on a contingency model of leadership in organizations. Situational favorable-ness was described by Fiedler in terms of three empirically derived dimensions:

1. Leader-member relationship – high if the leader is generally accepted and respected by followers

2. Degree of task structure – high if the task is very structured

3. Leader's position power – high if a great deal of authority and power are formally attributed to the leader's position.

Situations are favorable to the leader if all three of these dimensions are high. William Richard Scott describes contingency theory in the following manner: "The best way to organize depends on the nature of the environment to which the organization must relate". 

Contingency theory of leadership

In contingency theory of leadership, the success of the leader is a function of various contingencies in the form of subordinate, task, and/or group variables. The effectiveness of a given pattern of leader behavior is contingent upon the demands imposed by the situation. Some of the theories are:

·	Fiedler’s contingency theory:

Fiedlers theory is the earliest and most extensively researched. Fiedler’s approach departs from trait and behavioral models by asserting that group performance is contingent on the leader’s psychological orientation and on three contextual variables: group atmosphere, task structure, and leader’s power position.

·	Hersey & Blanchard’s situational theory

This theory is an extension of Blake and Mouton’s Managerial Grid Model and Reddin’s 3-D management style theory. With this model came the expansion of the notion of relationship and task dimensions to leadership and adds a readiness dimension.

Contingency theory of decision making

·	Vroom and Yetton’s decision participation contingency theory or the Normative decision theory

According to this model, 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.

Contingency rules theory

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Smith’s contingency rules theory is an example of a rules approach to persuasion. Smith utilizes the idea of cognitive schemas, expectations about the attributes that a given person or policy will have or expectancies about the consequences of behaving in a particular manner. According to Smith’s contingency rules theory, rules are used to create responses to persuasive messages.