Contingency Theory

What is the Contingency Theory?

The Contingency Theory is a theory of leadership that suggests that a leader can be effective in one situation but ineffective in another. It states that effective leadership depends on the situation and that leaders should be aware of their own strengths, weaknesses, and styles of leadership. This theory has been supported by a wealth of empirical research and is advantageous due to its ability to widen our understanding of leadership, its predictive nature, and its ability to provide concrete data on leadership styles. The contingency theory is also beneficial because it helps us recognize that leaders don't have to be effective in all situations and that there are certain scenarios in which a leader might not be the perfect fit. In real-world situations, this theory can be applied by leaders to assess their own strengths and weaknesses and build self-awareness, as well as to understand the various impacts of situations on them and their teams. This can help leaders create more effective teams, increase agility, team engagement, innovation, performance, and resilience, and lead to more successful organizations.

The contingency theory helps leaders to better understand and manage organizations by providing a realistic view of management and organization, discarding the universal validity of principles, encouraging a situation-oriented approach to management rather than a stereotyped one, and providing an innovative and creative management style. This theory widens our understanding of leadership by persuading individuals to consider the various impacts of situations on leaders and has the support of empirical research to prove its reliability. It is also beneficial as it has a predictive nature that provides an understanding of the types of leaders that will be most effective in specific situations, and provides concrete data on leadership styles that can be applied to organizations in developing their own leadership profiles.

Contingency theory states “that a leader's effectiveness is contingent on how well the leader's style matches a specific setting or situation” (Wolinksi, 2010).

There are several contributors to the formation of the contingency theory, each of whom helped shape the theory as a whole.

  • Burns and Stalker: identified two types of organizational structures (organic and mechanistic) and two environmental categories (stable and dynamic)
  • John Woodward: analyzed different types of technology and how they can influence an organization
  • Lorsch and Lawrence: proposed that organizations function in either simple or complex environments and that more complex environments adopt higher degrees of differentiation and integration
  • Fred Fiedler: proposed that matching a leader's style to situations that give the leader control and influence leads to effective leadership and improvement in the work environment

History of Contingency Theory[1]

The contingency approach to leadership was influenced by two earlier research programs endeavoring to pinpoint effective leadership behavior. During the 1950s, researchers at Ohio State University administered extensive questionnaires measuring a range of possible leader behaviors in various organizational contexts. Although multiple sets of leadership behaviors were originally identified based on these questionnaires, two types of behaviors proved to be especially typical of effective leaders: (1) consideration leader behaviors that include building good rapport and interpersonal relationships and showing support and concern for subordinates and (2) initiating structure leader behaviors that provided structure (e.g., role assignment, planning, scheduling) to ensure task completion and goal attainment.

At the same time, investigators from the University of Michigan's Survey Research Center conducted interviews and distributed questionnaires in organizations, and collected measures of group productivity to assess effective leadership behaviors. The leadership behavior categories that emerged from the University of Chicago were similar to the consideration and initiating structure behaviors identified by the Ohio State studies. The University of Michigan investigators, however, termed these leadership behaviors relation-oriented behavior and task-oriented behavior. This line of research was later extended by Robert Blake and Jane Mouton in 1964 to suggest that effective leaders score high on both these behaviors.

They suggested that previous theories such as Weber's bureaucracy and, Taylor's scientific management had failed because they neglected that management style and organizational structure were influenced by various aspects of the environment: the contingency factors. There could not be "one best way" for leadership or organization.

Historically, contingency theory has sought to formulate broad generalizations about the formal structures that are typically associated with or best fit the use of different technologies. The perspective originated with the work of Joan Woodward (1958), who argued that technologies directly determine differences in such organizational attributes as the span of control, centralization of authority, and the formalization of rules and procedures.

Contingency Theory Variables[2]

Within the contingency theory, there are two contingency variables that affect an organizational structure: dependent and independent. In an organization, changes to dependent variables are the result of independent variables. In other words, independent variables are the cause of the change in the dependent variable.

  • Dependent Variable: Dependent variables in an organization are the effects, sometimes negative, that a work environment has on its employees. Some examples of organizational dependent variables include turnover, absenteeism, and productivity.
  • Independent Variable: Independent variables in an organization are the circumstances of the work environment that can create change in employee behavior, causing the dependent variables to shift. Examples of organizational independent variables are motivation and leadership.

Features of Contingency Theory[3]

  1. Management is situational in nature. The technique of management depends on the complexity of the situation.
  2. It is the ‘if and ‘then ‘approach to management, ‘If’ represents the independent variable, and ‘then’ represents the dependent management variable or the technique to be adopted in that situation. ‘If’ workers have strong physiological needs, ‘then’ financial motivators should be adopted, and ‘If’ they have strong higher-order needs, ‘then’ non-financial motivators should be adopted.
  3. Management principles are not universal in nature as there is no best style of management. Management is situational and managerial actions depend upon the environmental circumstance
  4. It helps in understanding complex organizations as it focuses on the multivariate nature of organizations. It helps an organization to operate under different environmental conditions. Rather than having a specific solution to solve problems, it provides a framework where every solution depends upon environmental conditions. The same problem can have different solutions at different points in time and different problems can have the same solution at the same point in time.
  5. It provides insight into the organization’s adaptability to both internal and external environments. It is a matter of fitting the internal environment to its external environment.

Contingency Leadership Models[4]

There are several different models of contingency leadership that fall under the general contingency theory umbrella. They include Fiedler’s Contingency Theory, the Situational Leadership Theory, the Path-Goal Theory, and the Decision-Making Theory. While all of these contingency leadership models are similar on the surface, they each offer their own distinct views on leadership.

  • Fiedler’s Contingency Model: Fiedler’s Contingency Model puts forth the idea that effective leadership hinges not only on the style used by the leader but also on the control held over the situation. In order to succeed, there must be strong leader-member relations. Leaders must also present tasks clearly and with goals and procedures outlined. They need to possess the ability to hand out punishments and rewards, as well. Fiedler’s Contingency Theory only fits situations where groups are closely supervised and not team-based. It also uses a least preferred co-worker (LPC) scale to help determine the type of worker the leader least likes working with. This contingency model emphasizes the leader’s disposition as the main trait that defines the ability to lead. To implement Fiedler’s model, leaders must then evaluate the situation at hand to determine how well their leadership style befits the challenge:
    • Leader-member relations refer to the strength of a leader’s relationship with their team and employees. Relationship strength can be determined by the level of trust and respect shared between a team and its leader. The stronger the leader-member relations, the more favorable the situation
    • Task structure refers to how clearly defined and organized a project's tasks are. Well-structured tasks have high task structure and vice versa. The higher the task structure, the more favorable the situation
    • Leader position power refers to the level of authority a leader has over their team. The higher up on a company's hierarchy or organizational structure, the more power a leader has. The higher the position of power, the more favorable the situation
  • Situational Leadership: More formally called Hersey and Blanchard’s Situational Leadership Theory, this contingency model focuses on leadership style and the maturity of those being led. Situational leadership theory puts forth the idea that leadership styles hinge on four behaviors: telling, selling, participating, and delegating. The maturity levels range from incompetence or unwillingness to perform the task, to a willingness and ability to perform. The idea is that a successful leader will adapt leadership techniques to fit the maturity level of the group in question on a situational basis. The Situational Leadership model presents four different leadership types for all maturity levels:
    • The Delegating Style of leadership is best suited for leaders who delegate goals, projects, and tasks to high-maturity employees. This leadership style also requires a healthy amount of trust between leaders and their teams. (Consider the low LPC leader in the Fiedler model.)
    • The Participating Style of leadership involves a give-and-take between leaders and their teams. Leaders share ideas to motivate their moderate-maturity team members and help them build the confidence to move into a high-maturity mindset.
    • The Selling Style of leadership refers to when leaders must "sell" their instructions to moderate-maturity employees. This type of leader often surfaces when employees lack motivation or aren't self-starters.
    • The Telling Style of leadership works best for teams of low-maturity employees who lack the experience or foresight to determine their projects and tasks. Leaders in this style must delegate and supervise their team members, at least until they move up in maturity level.
  • Path-Goal Theory: Path-Goal Theory combines two popular theories – goal-setting and expectancy – into one. It puts forth the idea that effective leaders help those in their direction attain their goals. Under this contingency model, leaders have the responsibility of making sure their subordinates have the support and information required to achieve the goals set forth. Essentially, this theory holds that effective leaders create clear paths to help their subordinates achieve goals and that they work to remove obstacles that stand in the way. This model has four primary leadership styles:
    • The Supportive Leader takes into account their employees' personal preferences and treats their well-being as important as their productivity. Leaders in stressful work environments may implement this approach.
    • The Participative Leader works alongside their team and often asks for input or feedback before making decisions. Leaders at startups, in small teams, or whose team members are personally invested in the outcome may implement this approach.
    • The Directive Clarifying Leader gives explicit tasks and explains how tasks should be done. Leaders of teams with ambiguous roles or unstructured tasks may implement this approach.
    • The Achievement-Oriented Leader sets high expectations and goals for their team and often encourages autonomy and independence at work. Leaders who manage distributed leaders or high-achieving teams may implement this approach.
  • Decision-Making Theory: Also known as the Vroom-Yetton-Jago Decision-Making Model of Leadership, this contingency leadership model puts forth the idea that effective leaders size up situations, assess them, and then determine how much support the group will give toward the effort, adjusting their preferred leadership style to fit. This model presents five leadership styles:
    • The Autocratic (A1) leader makes decisions independently and doesn't consult others before doing so.
    • The Autocratic (A2) leader makes decisions independently but passively consults with team members to gather information before doing so.
    • The Consultative (C1) leader makes decisions independently but consults with team members individually to understand everyone’s opinions before doing so.
    • The Consultative (C2) leader makes decisions independently but consults with team members often, perhaps through a group discussion to gather suggestions, before doing so.
    • The Collaborative (G2) leader makes decisions through a democratic leadership process, often organizing a group discussion to discuss suggestions before voting for the final decision.

All four models present different ways to approach and apply the contingency theory of leadership.

Examples of Leaders Who have Used the Contingency Approach

Steve Jobs – used the autocratic (A1) and consultative (C1) leadership approaches
The difference between autocratic and consultative leadership approaches is that autocratic leadership is more extreme, with the leader making all the decisions without consulting their team, while consultative leadership involves consulting with the team as a group to gather information and then making the final decision alone. Steve Jobs' leadership style was a great example of consultative leadership as he was able to motivate his team to follow his ideas even when they were skeptical and could delegate responsibility in areas he was unfamiliar with.
Mark Zuckerberg – used the participative and collaborative (G2) leadership approaches
Mark Zuckerberg's leadership approach was largely collaborative in nature, making decisions through a democratic leadership process and regularly consulting with team members through group discussions to gather suggestions before voting for the final decision. His focus on sharing ideas and decisions, combined with his ability to mentor and motivate his team members, likely contributed to his success.
Richard Branson – used the directive clarifying and supportive leadership approaches
Examples of successful leaders who have used the Directive Clarifying leader approach include Jeff Bezos, who provided clear direction to his team and held them accountable, and Bill Gates, who established clear goals and expectations while also providing his team with ample support. Examples of successful leaders who have used the Supportive Leader approach include Mark Zuckerberg, who focused on creating a culture of openness and trust, and Steve Jobs, who encouraged his team and treated them with respect.
Elon Musk – used the achievement-oriented and path-goal model approaches
Elon Musk is known to have used the achievement-oriented and path-goal model approaches to motivate and drive his teams to success. He set high expectations and ambitious goals for them and provided clear guidance on how to achieve those goals. He also encouraged and fostered autonomy, independence, and creativity in his teams, and supported them in achieving their goals. Musk also provided support, feedback, and guidance to his teams, taking into account their individual preferences and situations, in order to help them reach their targets.
Jack Welch – used the decision-making model approach
Jack Welch used the decision-making model approach to determine what kind of people would be better suited for different types of business. He suggested that those suited for commodity businesses are hard-driving, meticulous and detail-oriented, while those better suited for highly differentiated products or services are dreamers. Furthermore, he proposed that there are task-oriented leaders and relationship-oriented leaders, and these styles can be used to reach a goal or complete a task or develop close interpersonal relationships with followers.
Jeff Bezos – used the situational leadership theory example approach
Jeff Bezos is a great example of how situational leadership theory can be used effectively. Bezos is known for his ability to quickly identify the best approach for any given situation. He utilizes his team's skills to the fullest potential and delegates responsibility where needed. He is also very adept at motivating his employees and inspiring them to follow his ideas, even when they are skeptical. Bezos has used a combination of the Decision-Making Model and LMX theory to determine the best leadership style for a task or team. He also pays attention to worker characteristics such as motivation levels and degree of skill, which helps him choose the most effective style for the situation. By doing this, Bezos is able to lead effectively and ensure his team is performing at its best.
Tim Cook – used the contingency management approach
The Contingency Approach to Management is a theory that suggests there is no one-size-fits-all approach to management and that different approaches should be tailored to the specific context of the organization. This approach was originally developed by Robert Blake and Jane Mouton in 1964, who suggested that leaders should score high in both relation-oriented behaviors (such as building good rapport, showing support, and concern for subordinates) and task-oriented behaviors (such as providing structure to ensure task completion and goal attainment). This theory suggests that the formal structures of an organization should be tailored to the specific context and technology of the organization. Tim Cook is a great example of someone who employed the Contingency Approach to Management. As CEO of Apple, Cook has employed a variety of approaches to ensure his company’s success. For example, he has focused on the development of new products, streamlined processes to minimize costs, and fostered an inclusive and diverse workplace. All of these approaches are tailored to the specific context of Apple, and all of them have contributed to the company's success.

Applying the Contingency Theory at Work[5]

The contingency theory of leadership can help bring levels of awareness and education to how leadership styles manifest in the workplace. However, it's not necessarily a model that will unlock the full potential of your workforce.

  1. Identify where you see the contingency theory of leadership showing up in your own behaviors and mindset: Pay attention to how you react to specific challenges or situations at work. Take stock of your reactions—internally and externally—and how you adapt based on whom you're working with, what you're working on, and other variables in the situation.
  2. Figure out what leadership style you're leveraging for specific situations: Using the models above, determine your leadership style—or styles, as different situations may surface different responses. Consider doing this early in your leadership role instead of waiting until a situation or challenge arises, and reevaluate your style regularly as you gain more experience, change your team or employer, or even invest in coaching.
  3. Identify your ideal outcome. What skills do you need to achieve that outcome?: What kind of leader do you aspire to be? What outcomes do you hope to achieve or even expect from your team? If your team is struggling to achieve those outcomes, it may be a reflection of how effective you are as a leader. Leadership is all about adapting and growing into the skills you may be lacking to lead effectively. A coach can help you do this.
  4. Work with your coach to develop and grow: Learning the skills needed to adapt and improve your leadership style can be tough, and you don't have to do it alone. Coaching is a surefire way to shape your leadership skills and work towards the ideal outcomes you identified above. A leadership coach can help you become more self-aware and acknowledge the inherent complexity of leadership.
  5. Commit to growing and learning: As we've discussed in this article, there's no single right approach or the right set of leadership characteristics for every workplace circumstance. Instead, adopt a growth mindset and allow yourself to learn from and thrive in difficult situations. Commit to developing skills that make you an adaptable, open-minded leader—the best kind of leader there is.

Advantages and Disadvantages of Contingency Theory[6]

The primary advantages of contingency theory include:

  • It provides a realistic view of management and organization.
  • It discards the universal validity of principles.
  • Managers are situation-oriented and not stereotyped.
  • Lends itself to an innovative and creative management style.

The negatives of contingency theory include:

  • It does not have a theoretical base.
  • Executive is expected to know all the alternative courses of action before taking action in a situation that is not always feasible.
  • It does not prescribe a course of action.
  • A situation can be influenced by many factors. It is difficult to analyze all these factors.

See Also