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What is the Contingency Theory?

Carrieanne Larmore

Last Modified Date: February 29, 2024

Contingency theory is a class of behavioral theory that says the effectiveness of a manager’s leadership, decisions, and rules depends on the present situation. What worked once may not be successful when applied to a different situation. As a result, management must make decisions or apply leadership styles contingent on internal and external factors to increase their effectiveness in the current situation. This theory is broken down into the theories of leadership, decision-making, and rules.

The contingency theory of leadership explains that a manager's success relies on variables such as the workforce, leadership style, task structure, perceived power of the manager, and corporate culture. Managers should not repeat demands and expect to have the same results each time. A major component of this theory is that different situations call for different leadership styles. Fred Fiedler’s contingency theory, Paul Hersey and Ken Blanchard’s situation theory, and William "Bill" Reddin’s 3-D management style theory have contributed the most to this theory of leadership.

With contingency theory, the effectiveness of a manager's leadership depends on the present situation.

For a decision to be effective, the contingency theory of decision-making asserts, managers must weigh its level of importance, their own qualifications, and acceptance of the decision by employees. A number of aspects of the particular situation affect how the decision will be implemented or carried out. If employees do not trust the manager or disagree with the decision, then employees will become discouraged, making the decision less effective. Major contributors to the contingency theory of decision-making are Victor Vroom and Philip Yetton.

With the contingency theory, the corporate leader's success hinges on factors such as workforce, leadership style and task structure.

The focus of the contingency rules theory is how employees abide by rules when placed in various situations. Rules are a method of providing employees with persuasive messages. Expectations about management or the policy will affect employee behavior toward the persuasive message. Smith’s contingency rules theory suggests that self-evaluative, adaptive, and behavioral rules evoke different responses to persuasive messages. This theory also emphasizes that threats and rewards are meaningless to employees unless they directly relate to their personal goals.

The contingency theory is composed of ideas from multiple contributors over time with no one person credited with its development. It filled the voids of Max Weber’s bureaucracy and Frederick Taylor’s scientific management theories from the late 1960s. Weber and Taylor did not discuss how internal and external forces impact management decisions and their leadership abilities. The contingency theory is similar to situational theory, except that it takes a broader view by including leadership capabilities and situational variables.

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Discussion Comments

hamje32

July 15, 2011

@Bertie68 - It appears that contingency leadership theory puts more emphasis on outside factors, since it stresses that the leadership style must match the situation rather than the other way around. I think it’s quite conceivable, in this context, for an otherwise effective leader to fail.

I remember working for a large corporation that faced serious financial troubles. It was headed for the brink. They hired this “turnaround artist” who had a pretty impressive resume.

Do you know what? She failed, too. She couldn’t keep us from avoiding bankruptcy.

I had heard that she had clashes with some of the other executives. I don’t know if that was the reason she failed, but I certainly believe that you can succeed in one setting and fail in another, because some stuff is outside your control – like whether people like you or not.

Clairdelune

July 14, 2011

While working in a mid-size company, I noticed how my manager handled problems and new projects. Over the years, he never seemed to use the same methods. It seemed to me that he took each problem that came along and found new ways of handling the situation.

He often talked to a group of employees and asked their opinion. Taking those opinions into account, he usually made decisions that were acceptable to most of us. We all came to see that many external circumstances couldn't be predicted, so there was no perfect plan.

He must have been using the contingency theory of management. It really seemed to work.

nony

July 13, 2011

I work for a small business, and I can tell you one management theory that we follow pretty closely. It’s the theory of constraints.

What’s the theory of constraints? Have you ever seen that old TV show, “The Weakest Link,” with that British host who makes contestants take the “walk of shame” when they get the wrong answer?

Well, the theory of constraints is just the idea that an organization is no stronger than its weakest link.

Our boss doesn’t make people take the walk of shame in any literal sense – he just fires them. In the two years I’ve worked for the company, I’ve seen six people hired and fired within the space of six months.

There isn’t much room for beating around the bush. If they hire you thinking that you’re going to add value and you’re not up to snuff, you’re gone in a flash.

Bertie68

July 13, 2011

The contingency theory of management in companies makes a lot of sense to me. In the past there was a lot of contention between managers and employees. How could any manager think that he could make the same kind of decision over and over again, without thinking that a situation today could be a lot different than in the past?

Employee contentment and feeling like they're a part of the manager's decision is so important. Feedback from employees makes a lot of difference in how they accept new decisions. They need to know the "whats, whys, and hows" of a new project.