What Is the Contingency Theory of Management?

What do you picture when you hear the word “leader”? How do we know a good leader from a bad one?

Theories on leadership and management are continuously transforming as employees and industries change over time. In the past, people believed that leaders are born, not made.

For instance, Great Man Theory of Leadership and Trait Theory of Leadership posits that people have intrinsic traits that make them a great leader. A good leader is charismatic, confident, sociable, and intelligent.

This view of leadership is well-received in the military. The Great Man Theory, in particular, appeals to the idea that destiny determines leaders.

Fortunately, approaches to management continued to evolve beyond these theories and the idea that leadership is an inherited trait.

A popular theory being applied by more than half of the Fortune 500 companies is the Contingency Theory of Management.

What Is It?

The Contingency Theory of Management states that there’s no universal answer to management problems. Leadership styles should change based on the situation and the different factors that influence it.

These factors may include how big the organization is, how flexible the organization can be, their resources and operations, the technologies available to them, manager assumptions of employees, and many others.

Different sub-theories elaborate on Contingency Theory and provide approaches for different leadership styles.

Fiedler’s Contingency Theory

This theory stresses that a leader’s control over employees determines the effectiveness of the style applied to each situation. Three things affect a leader’s influence over subordinates.

First, leaders must have a good relationship with employees. Second, a leader can exert more influence over employees if their tasks or jobs are more structured and well-defined. Third, a leader must have enough authority within the organization for employees to easily accept their decisions.

This theory also makes use of the Least Preferred Co-Worker (LPC) scale. This is a tool used to measure whether a manager is a task-oriented leader or a relationship-oriented one.

Using the LPC scale, the manager describes the co-worker that they least liked working with. They describe the co-worker on an 8-point scale based on 18-25 adjectives.

The sum of the ratings serves as the manager’s score. A high score on the LPC scale means that the manager is relationship-oriented, while a task-oriented leader is more likely to get a low score.

The LPC scale is often used to assign leaders that fit employees better. For example, a team largely composed of workers who are already experts at their jobs may respond better to a relationship-oriented leader.

Situational Leadership Theory

The Situation Leadership Theory, by Hersey and Blanchard, puts emphasis on employees’ maturity.

In contrast to Fiedler’s Contingency Theory which focuses on the leader, Situational Leadership states that the effectiveness of a leadership style is dependent on employees’ competence and willingness to perform adequately.

An immature employee is one who cannot or would not perform their task. A mature employee, on the other hand, is one who can perform their task and is willing to do it.

According to Situational Leadership Theory, leaders exhibit four main behaviors.

1. Telling

The leader decides on important problems and simply informs the rest of the organization about the decision. The leader works very closely with the problem, to the point that it may be construed as “micromanagement.”

2. Selling

Although the leader still serves as the primary decision-maker, they solicit input from employees before implementing a decision.

Since this type of leadership is still very involved, it’s more closely associated with coaching. This style is perfect for low-skilled workers who are still undergoing training.

3. Participating

This style is effective for managing skilled people with low confidence or motivation. Although leaders still provide direction, employees are responsible for making decisions. Leaders, as a way of guiding followers, provide feedback and praise where needed.

4. Delegating

For this leadership style, employees receive the go-signal to decide on their tasks. This assumes that employees are knowledgeable and can be trusted to work with little supervision.

Path-Goal Theory

The Path-Goal Theory describes an effective leader as one who works to help subordinates achieve their goals. This theory states that leaders are responsible for providing resources that employees can use to improve themselves.

This theory is largely based on Vroom’s Expectancy Theory. Based on Expectancy Theory, people do something because they expect a particular outcome and find this expected outcome to be attractive.

Thus, the Path-Goal Theory states that adjusting the leadership style helps achieve the goal of motivating and empowering employees.

Leaders generally follow these steps when dealing with an employee: First, leaders need to determine how to best approach an employee based on their preferred leadership traits, and then, they assess how hard the obstacles in a task may be for that employee.

Based on what they learn, a leader adjusts their style to best motivate a worker. These are the four main leadership styles that managers can use:

1. Directive

Often used when followers don’t know what to do, directive leaders often provide detailed instructions and are closely involved with processes.

2. Supportive

For more emotionally taxing or psychologically challenging tasks, leaders may take a more friendly and supportive approach.

3. Participative

When working with highly skilled workers, leaders can take a more participative approach in which they consult employees before making or implementing a decision.

4. Achievement

Often used in working environments that demand autonomy, this approach poses challenging goals to employees with the expectation that they will perform well.

Decision-Making Theory

Vroom-Yetton-Jago Decision-Making Model of Leadership, commonly referred to as Decision-Making Theory, provides a structure for a leader to assess a situation and then adjust the amount of support that they offer employees.

Decision-Making Theory is mainly concerned with how employees will react to a decision. This theory uses the following questions to assess such situations:

  • How important is the decision?
  • How much information about the subject is available to the decision-maker and their followers?
  • What is the likelihood that subordinates will accept the decision?

Based on the answers to this question, a leader may adjust their style to increase work motivation. For example, they can share more information than usual if they feel like employees will be more receptive to a decision because of it.

What Should You Watch Out For?

Since Contingency Theory doesn’t offer a step-by-step process for leaders, they may try different approaches to a single problem which results in wasted time and resources.

Naturally, the vague nature of this approach also makes it harder to implement compared to other management styles. It may also be impractical for time-bound problems, as constantly analyzing problems may take too much time.

How Can These Theories Help?

Leaders are important, not only because of their titles but because of their potential impact on a team. Even if a leader decides to be less involved with a task, it still affects employees and how they approach their tasks.

Contingency Theory can help leaders who constantly deal with changing teams or situations that vary in terms of importance and impact. Although it offers less structure compared to other theories, it allows for enough flexibility and helps widen the scope of a leader’s influence.