Definition of Situational Approach of Management
A contingency approach to management is based on the theory that management effectiveness is contingent or dependent upon the interplay between the application of management behaviours and specific situations. In other words, the way you manage should change depending upon the circumstances. One size does not fit all. The contingency approach is a method of business management derived from the Contingency theory.
The Contingency theory assumes that there is no “best way” to manage a business because businesses and situations differ to a great extent. A management approach that works for one company may not work for another. Even within the same organization, management methods may vary depending on the situation. This theory recognizes the situational nature of management. According to this theory is based theory, management is absolutely situational. Manager practice depends upon situation. Contingency theory is based upon situation. Contingency theory is based on the nature and condition of situations. Every situation is unique, different situations demand different managerial practice.
Managerial practice appropriate in one situation cannot be generalized in another situation. According to this theory, the technique of problem solving appropriate in one situation may not be applicable in another situation. There is no one best method of doing. There is no one best method of planning, organizing, directing and controlling, before managing the organization and before handling the problem. Manager must analyze, situation or conditions according to situation, he or she must apply managerial practice. This theory does not agree with universal application of management principles.
Different factors affect this theory or there are 6 major contingency variables. They are: -
- Size of organization
- Task technology
- Environmental uncertainty
- Geographical spread of organization
- The type of work being done
- Individual differences.
A Classic Example of Contingency Approach Use
The contingency theory may be applied to human resources and a company’s bank of human capital. Employees may be hired, trained and laid-off depending on the current needs of the organizations. Businesses with fluctuating employee needs may have outsourcing as part of the contingency approach. Contingency approaches maybe used in conjunction with situational leadership theories. Situational leadership theory matches the business leader’s level of involvement and level of delegation to the abilities and attitudes of the employees in the leader’s workforce. When the employees’ abilities and attitudes shift, the leader adapts by changing levels of involvement and delegation.
Difference between Contingencies and Adaptation
- Contingencies - The situational elements that change depending on the business or circumstance are called contingencies. Examples of contingencies include new technologies, new consumer markets and new competitors. To adapt to contingencies, businesses using the contingency approach identify and understand the contingency and then select the management approach that bests fit the situation. Managers may keep a detailed list of contingencies along with matching adaptation plans.
- Adaptation - Adaptation is how business managers respond to contingencies. Managers are likely to choose an adaptation model from existing business management systems. Aspects of a business subject to adaptation include the organization’s culture, the product, the manufacturing process, marketing, finances and business structure. Some contingencies only require small adaptations. For example, a change in requirements for nutritional labels may lead to small manufacturing adaptations. A shift in consumer taste resulting in a massive sales loss could lead to adaptations in several areas including product, manufacturing and marketing.
Practical Insight: Effective management depends on the situation there’s no single best method. Managers must assess key factors like environment, task, technology, and people, then choose a flexible approach that fits those specific conditions to get the best results.
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