Schools of Management Thought – Approaches/Theories – BBA Notes/MBA Notes

Schools of Management Thought

VI. The Contingency Theory School

Contingency theory has been developed mainly during the 1970a. It builds on the major premises of the systems theory that organizations are organic and open systems, and there is a relationship of interdependence between an organization and its environment, as well as within and between its various subsystems. The contingency theorists aim at integrating theory with practice in systems framework.

Contingency Approach

According to this approach, management values and concepts of various schools have no universal applications. The basic idea of this approach is that there cannot be a particular management action which is suitable for all situations. In a way it is extension of System Approach.

  • It means that methods and techniques which are highly effective in one situation, may not work in other situations. Results differ because situations differ.
  • The given approach suggests that the task of managers is to identify which technique will best suit the situation and help in attaining the management goals.
  • Thus, managers need to employ a sort of situational sensitivity and practical selectivity.
  • Organisational action should be based on the behaviour of action outside the system so that organisation should be integrated with the environment.

When an organization behaves in response to forces in its environment, its behaviour is said to be contingent on these forces. “Hence, a ‘contingency’ approach is an approach where the behaviour of one subunit is dependent on its environmental relationship to other units or subunits that have some control over the consequences…desired by that subunit.” Thus, behaviour within an organization is contingent on situations, and if a manager wants to change the behaviour of any part of the organization, he must attempt to change that part of its environment which is influencing it. Tosi and Hammer point out that organizational system is not a matter of managerial choice, but contingent upon its external environment.
Kast and Rosenzweig offer a broader view of the contingency approach. According to them, “The contingency view seeks to understand the interrelationships within and among subsystems as well as between the organization and its environment and to define patterns of relationships or configurations of variables…Contingency views are ultimately directed toward suggesting organizational designs and managerial actions most appropriate for specific situations.”

Thus, contingency approach rejects the universality of management thesis.

Firstly, It emphasizes that there is no one best way to design organizations and manage them. Management is situational, and managers should design organizations, define objectives, and formulate strategies, policies and plans in accordance with the prevailing environmental conditions.

Secondly, managerial policies and practices, to be effective, must respond to changes in environmental forces.

Third, since management’s success significantly depends on its ability to cope with its environment, it should sharpen its diagnostic skills so as to anticipate and comprehend environmental changes.

Fourth, managers should have adequate human relations skills to accommodate change, and abilities to manage transition, as well as stabilise change.

Finally, it should use the contingency model in designing the organization, developing its information and communication system, adopting effective leadership styles and formulating suitable objectives, strategies, policies and practices. Thus, contingency theory provides a method of analysis as well as a way of integrating organization with its environment.

Some other Approaches:

Behavioural Approach

Behavioral approach considers organizations as groups of individuals with objectives. The realistic model given by behavioral scientists is quit complex and the model suggests that different people react differently to the same situation or react the same way to different situations. The manager should alter and customize his approach to control People according to their individual needs. The behavioural approach to organizational differences and change is quite practical. It says that

i. Conflict is inevitable and sometimes is even desirable and should be faced with understanding and determination.

ii. Every organisational change involves technological and social aspects, also it is generally the social aspect of a change that people resist.

Human relations approach believes organizations to be purely social systems, while Behavioural science approach views organizations as socio-technical systems which are required to accomplish a set of individual, social and corporate (economic) goals.

Quantitative Approach

  • This approach originated during World War-II when strategists tried to apply scientific knowledge and methods to the complex problems of war.
  • George Dantzig developed linear programming, an algebraic method to determine the optimal allocation of scarce resources.
  • The advent of the computer made many management science tools and concepts more practical and applicable for the industry.
  • Management information system made all this more significant to the management practices as it provided information needed to managers in a useful format and at the proper time.
  • Production and operations management came into focus and developed into an identifiable area of management study after World War-II, although it has its roots in scientific management.
  • W Edwards Deming exerted tremendous influence in shaping modern ideas about improving productivity and quality.
  • The areas like capacity planning, facilities location, materials requirement planning, scheduling, purchasing, inventory control and quality control are the important areas to be studied in operations management.



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