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Contingency Theory

Classical and participative theories are not unrealistic. However, the angers’ choice depends upon:

(a)    His assumptions about human nature.
(b)    His personality and educational background.
(c)    The technological and environmental factors faded by the organization.

Depending on these factors. Managers may choose a theory which consists of features from both to adapt the organization to its surrounding environment. Theory is ,thus, contingent upon the situation faced by managers.

The contingency theory identifies four factors that affect manager’s choice of theory. These are:

1.    Nature  of people:

People who are lazy, lack responsibility, do not wish to work on their own, prefer to be led and guided, with to satisfy their lower-order needs only, prefer to be governed by the classical theory of organizations while people who enjoy their work, wish to seek greater responsibility, exercise self-direction and self-control on their activities and want to satisfy their higher-order needs show better results if managers adopt participative theory to organizing.

2.    Type of task and technology:

Classical form of organization is preferred for producing goods through mass production tech technology while participative theory is more suitable where job-order (small scale) or continuous technology is adopted. If organization is producing goods using different types of technology, it may adopt different structures depending upon the processes used for different parts of the company.

3.    The environment :

Organization differs in structures on account of factors like differentiation, integration and environment for different departments.

Differentiation is the different orientation of functional departments and integration is the unity of efforts of different departments in the light of environmental factors, i . e. all factors that lie outside the organization.

Besides, firms which operate in dynamic environment are more flexible in their operations and, therefore, adopt a participative theory while films operating in a stable environment show better results when they work according  to principles of classical organization.

4.    Degree of change and uncertainty :

Change is a continuous phenomenon. Changes in both internal and external environment cause changes in the organization structures. Change in people’s attitudes, perception and knowledge from simple to complex shifts the organization structure from classical to participative.

Externally, as society moves from underdevelopment  to development, managers become educated, trained and skilled labour is available in abundant supply; the general level of education and specialization increases and, therefore, a shaft form classical to participative organization structure is observer.

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