Contingency Theory

If you were an employee working in a big corporation, would you rather have full autonomy on a project or have someone telling you from A to Z what to do? What is the best leadership method?

If you believe in contingency theory, the best leadership method depends on the situation; there isn't one best way above all the others to lead an organization and make decisions.

Contingency Theory Definition

Let's have more context first and determine what contingency theory is. Fred Fiedler was the first to popularize the concept in 1964 by creating his contingency theory model in his publication "A Contingency Model of Leadership Effectiveness".¹

In other words, a type of leadership might be appropriate under specific conditions, but another kind of leadership might be preferable for the same organization under different conditions. The idea is that nothing is set in stone and that the leadership has to adapt to individual situations and circumstances.

Although Fiedler was the one who popularized this theory, many others created their models. All those theories have different characteristics and come with their advantages and disadvantages.

Characteristics of Contingency Theory

Although there are many contingency theories, they all share a similarity; they all believe one single type of leadership is inappropriate for every situation. Therefore, the key in every contingency theory is determining the kind of leadership suitable for every situation.

All the contingency theories advocate for a certain flexibility in the management method to achieve the best results for the organization.

Fig. 1 - Leadership

Types of Contingency Theory

Contingency theory is still a recent field of study. The four traditional models dated from the mid to the end of the 20th century are Fiedler's Contingency Theory, Situational Leadership Theory, Path-Goal Theory, and Decision-Making Theory. But there are also more recent theories from the beginning of the 21st century, such as the Structural Contingency Theory.

We will take a closer look at each of these theories in the sections below.

The Situational Leadership

Dr. Paul Hersey and Kenneth Blanchard developed the situational leadership theory in 1969. This theory states that leaders must adapt their leadership style to the situation.³

They argued that there are four types of leadership:

• Telling (S1): leaders give their employees tasks and tell them what to do.

• Selling (S2): leaders sell their employees their ideas to convince and motivate them.

• Participating (S3): leaders give their employees more freedom to participate in the decision process.

• Delegating (S4): leaders delegate tasks to their employees.

According to this theory, choosing the optimal leadership style to adopt will depend on the group's maturity. This model defines four types of maturity:

• Low Maturity (M1): people lack knowledge and skills and are unwilling to work independently.

• Medium Maturity (M2): people lack knowledge and skills but are willing to work independently.

• Medium Maturity (M3): people have the knowledge and skills but lack confidence and don't want to take responsibility.

• High Maturity (M4): people have the knowledge and skills and are willing to take responsibility.

The management must then match the leadership style to the employee's maturity level. For example:

• S1 with M1: Leaders must tell unskilled employees what to do.

• S4 with M4: Leaders can delegate tasks to employees that are skilled and willing to take responsibility.

However, there won't be good results if the management assigns the wrong leadership style to their employee:

S4 with M1: It wouldn't be appropriate to delegate work and give responsibilities to someone who lacks the knowledge and is unwilling to do it.

The Path-Goal Theory

Robert J. House created the path-goal theory in 1971 and published it in the "Administrative Science Quarterly"; he then revised this theory in another publication in 1976.⁴

The idea of this theory is that leaders' behavior will impact their employees. Therefore, they must provide practical guidance and resources to help their subordinates achieve their goals. Leaders must also take action and compensate for their employees' shortcomings.

This theory states that leaders can create four goals for their employees to follow:

• Directive: where leaders create clear guidelines and set specific objectives to reduce ambiguity and help employees through their path. With this leadership style, employees are closely managed.

• Supportive: where leaders help and are proactive with their employees. They are more friendly and approachable to their employee.

• Participative: where leaders consult their employees before making decisions, they give more importance to their employees' thoughts and feedback.

• Achievement: where leaders encourage their employees by setting challenging goals. Employees are motivated to outperform.

Determining which path depends once again on the organization's specificity.

The Decision-Making Theory

This contingency theory, also called the Vroom-Yetton-Jago decision model, was published in 1973. Their model focuses on determining a leadership style by answering questions in a decision tree.

Under this model, there are five different leadership styles:

• Autocratic (A1): leaders make decisions alone based on the information they have on hand.

• Autocratic (A2): leaders make decisions alone based on the information provided by their employees.

• Consultative (C1): leaders share the information with their teams individually, ask for advice and make decisions.

• Consultative (C2): leaders share the information with their teams as a group, ask for advice, then have further discussions and meetings before the leaders finally make decisions.

• Collaborative (G1): where leaders share the information with their teams, have meetings, and finally make decisions as a group.

You can answer the questions in the decision tree below (see Figure 2) to determine which leadership style would be appropriate for your organization:

The Structural Contingency Theory

The last method I would like to share is not always considered part of the four traditional contingency theories as L.Donaldson only recently created it in 2001.⁶

In this theory, the author argues that an organization's effectiveness depends on three contingency factors:

• Size: for example, if the size of a corporation increases, it translates into structural changes in the company, such as more specialized teams, more administration, more standardization, etc.

• Task uncertainty: more uncertainty often means decentralization of power.

• Diversification: more diversification in a corporation can translate into more independence of the company's departments.

The management should adapt its leadership and make decisions by considering these factors.

There isn't one best way to lead an organization or make decisions. The management should constantly adapt their leadership style to their situation, environment, and the people they are working with. The contingency theory can help an organization determine the most appropriate approach to lead and make a decision; to help the management adapt to any situation.

Contingency Theory Examples

Let's have a look at some real-life examples of contingency theories of leadership!