Contingency/Situational Approach Introduction: Contributions in management have come from the intellectuals with widely different backgrounds and

these contributions have not been suitably and adequately integrated to give a unified theory of management. Rather, with the development of the management thought over the period of time, various approaches for managerial analysis have been developed. These approaches are widely known as approaches or patterns of Managerial analysis or Schools of Management Thought. Contingency Approach This approach is also known as the Situational Approach, which evolved in early 1960s. This is an extension of the systems approach. A View on Systems Approach Evolved in late 1950s It is an integrating approach which considers management in its totality based on empirical data. Basic idea: any object must rely on a method of analysis involving simultaneous variations of mutually dependant variables. This happens when systems approach is applied in management

Basic Features of System Approach are: 1. A system is basically a combination of parts, subsystems and each may have various subsystems/sub parts. 2. Parts & subparts of a system are mutually related to each other, some more, some less, some directly & some indirectly. 3. A system can be identified because it has a boundary Physical system has quite visible boundary & easily Social system environment Open Systems & Closed systems
4. A system transforms inputs outputs which is essential for the survival of the

identified

boundary is not visible, instead it maintains a proper relationship b/w the systems & its

system (input, mediator, output)

Basic idea of Contingency Approach: It relies on the fact that there is no one best way in management process(Planning, organizing, leading & controlling) to solve any tailored circumstances, because organizations, people, & situations vary and change over time. Thus the right thing to do depends on a complexity of critical environment and internal contingencies. i.e. The basic idea is that there cannot be a particular management action which will be suitable for all situation. Rather, an appropriate action is one which is designed on the basis of external environment and internal states needs. Contingency vs. Situational Approach Some researchers of that period distinguished between contingency and situational approaches by suggesting that SA: implies that what a manager will do depends on a given situation CA: on the other hand had an active inter-relationship between variables in a situation and the managerial actions devised. Thus it takes into account not only the given situation but also the influence of given solution on behavioral patterns of organization. Despite all these differences and emphasis on varying factors, themes of both the approaches are the same. Relationship between Systems Approach & Contingency Approach Contingency theorists have accepted the basic tenets of the systems approach. They accepted the basic features of organization-environment relationship and dynamic nature of organization. However they feel that systems approach is too abstract to apply for managerial actions. This can be overcome by modifying systems framework and translating it into operational framework. Model of Human Being Systems Approach usually employs a richer model of human beings than Contingency Approach, i.e it takes into account the full range of human behaviour in the organisation Contingency Approach, by large, is only interested in the structural adaptation of the organisation to its task environment Structural change in an organisation is taken into account in response to the change in the environment. Organizational Variables Systems Approach is very broad and tries to cover personal, social, technical, structural and environmental variables. Managing involves establishing relationship among these variables & considering them in action Contingency Approach, concentrates on the structural adaptation of organisation and it tends to predict the ultimate outcome of a disturbance of the organisational equilibrium by a change in the environment

Evolution Systems Approach is contributed by social psychologists where as the Contingency Approach is contributed by sociologists. Contingency Approach is built over Systems approach; it is possible that there are signs of convergence of the twp approaches Implication of Contingency Approach As said earlier contingency approach is an important addition to the paradigm of the Modern Theory of Management. It is the sophisticated approach to understand the increasing complexity of organizations. It emphasis the multivariate nature of organization and attempts to understand how organization operate under varying conditions. So it is directed towards suggesting operational designs and managerial actions most appropriate to specific situations. 1. Management is entirely situational and there is nothing like universal principles of management or one best way of doing a particular thing, What managers do will depend on the circumstances and environment 2. Suitable alternatives for managerial action which are generally contingent upon external & internal environment such as
Organisational design Strategy Formulation Decision Systems Influence Systems Leadership Organisational Improvement

3. Since the organisation interacts with its environment, neither the organisation nor any of its Subsystems is free to take absolute actions, rather it has to modify & adjust according to the various forces like social, political, technical, and economic Limitations of Contingency Approaches Contingency Approach is not acknowledged as a unified theory as it suffers some limitations 1. It is argued that the contingency approach lacks a theoretical base. 2. Under contingency approach, a manager is supposed to think through all possible alternatives as he has no dried principles to act upon, this brings the need of more resources and time and other such factors. 3. The responsibility of a manager increases as he has to analyze the situation, examine the validity of different principles and techniques to the situation at hand, make right choice by matching the technique to the situation and finally execute his choice

4. Inadequate literature 5. Complex 6. Difficult Empirical Testing No doubt, these limitations are valid, but the situation remains that at micro level, managers have to manage according to contingency approach Conclusion The basic theme of contingency approach is that organizations have to deal with different situations in different ways. There is no single best way of managing, applicable to all situations

Decision Theory Approach This approach looks at the basic problems of management around decision making the selection of a suitable course of action out of the given alternatives The major emphasis of this approach is decision making is the job of every manager ie here Manager becomes the decision maker and the Organisation becomes the decision making unit. Here the basic problem that persists in managing is to make rational decisions Simple decisions usually need a simple decision-making process. But difficult decisions typically involve issues like:
Uncertainty Complexity High-risk consequences Alternatives Interpersonal issues

With these difficulties in mind, the best way to make a complex decision is to use an effective process.

A Systematic Approach to Decision Making A logical and systematic decision-making process helps you address the critical elements that result in a good decision. By taking an organized approach, it will be less likely to miss important factors, and you can build on the approach to make your decisions better and better. 5 steps to making an effective decision:
Create a constructive environment. Generate good alternatives & explore those alternatives. Choose the best alternative. Check your decision.

Communicate your decision, and take action.

Features of Decision Theory Approach Management is essentially decision making. The members of the organisation will be decision makers and problem solvers.

 Organisation can be treated as a combination of various decision centers. The level & importance of organisational members are determined on the basis of importance of decision which they make. Quality of the decision affects the organisational effectiveness. All factors affecting the decision-making are subjected to matter of study.

Uses & Limitations As far as the uses of this approach is considered It contributes to sharpening of managerial tools specially for making suitable decisions in the organisations. Also it demonstrates how managers can discharge their functions effectively & for this purpose various tools are provided. So far the approach has widened its interest and influence - because of detailed diagnosis pertaining to a situation and the resulting prescription for improving communication, incentives and reactions of individual groups and the analysis of human values with stated objectives. The limitations of this approach Scope of this approach is very limited considering the requirements of management process Decision making in every school of management is vital and the vital aspect cant be considered always as the management is not mere decision making. Conclusion The ability of organization to manage change effectively has become more important because of the rapid advances in technology and the increasing uncertainty and risk associated with business environment. By considering the factors in systematic approach and effective implementation will help individuals/group to select the suitable decisions.

Prepared by Sachin Mankad