contingency approaches to ma nagement

8/13/2019 Contingency Approaches to Ma Nagement

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CONTINGENCY APPROACHESTO

MA NAGEMENT


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IntroductionContingency Approach: sometimes called the situational

approach . An approach that says that organizations aredifferent, face different situations (contingencies) andrequire different ways of management.There is no clear distinction between the systemsapproach and the contingency approach to themanagement of organization.System Approach: highlights the complexity of theinterdependent components of organizations withinequally complex environments.Contingency Approach: builds on the diagnosticqualities of the system approach in order to determinethe most appropriate organizational design and

management style for a given set of circumstances.


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IntroductionContingency approach suggests that issues of designand style depend on choosing what is the bestcombination in the light of prevailing conditions of thefollowing variable:

1. External Environment.2. Technological Factors.3. Human Sills and Motivation.

The label contingency approach was suggested by twoAmerican academics Lawrence and Lorsch in 1967.Writers who have adopted a contingency approach areBritish:Joan Woodward is noted for her important studiesinto the effects of technology on structure andperformance.


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IntroductionBurns and Stalker introduced the concept ofmechanistic and organic types of structure anddiscussed them in relation to; the environment.

Aston Group have made studies into several of thetechnology structure variables in organizations.Contingency approach does not seek to produceuniversal prescriptions or principles of behaviour.Contingency approach deals in relativities notabsolutes.It is a situational approach to management.


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Lawrence & LorschThey were concerned with structure andenvironment as the two key variables in their study.Lawrence & his colleague studied the internalfunctioning of six plastics firms operating in adiverse and dynamic environment .The results in these 6 firms were then comparedwith two standardized container firms operating in

a very stable environment and two firms in thepackaged food industry where the rate of changewas moderate.Major emphasis of their study was on the states ofdifferentiation & integration in organizations.


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Lawrence & Lorsch

Differentiation was defined as more than mere divisionof labour or specialization.It also referred to the differences in attitude andbehaviour of the managers concerned.These differences were looked in terms of :

1. Their orientation towards particular goals e.g. issuesof cost reduction are more important to productionmanagers than to sales or research mangers.

2. Their time orientation e.g. sales & productionmanagers have short term orientations while research

manages have long term orientations.


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Lawrence & Lorsch1. Their interpersonal orientation e.g. production

managers tend to be less relationship oriented thansales managers.

2. The relative formality of the structure of their

functional units e.g. the highly formalized productiondepartments with their many levels, narrow span ofcontrol and routine procedures as contrasted with therelatively informal and flat structures of the research

departments.Integration: was defined as the quality of the stat ofcollaboration that exists among departments.A key interest of the two researchers was to access theway conflict was controlled in organizations.


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Lawrence & LorschLawrence & Lorsch took the view that there wasprobably no one best way to organize.Effective performance was judged in terms of thefollowing criteria:

1. Change in profits over the past five years.2. Change in sales volume over the same period.3. New products introduced over the period as a

percentage of current sales.Firms selected for study encompassed a range ofperformance from high through medium to low

performance when set against chosen criteria.


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Lawrence & LorschThe main conclusions that Lawrence & Lorch arrived at were asfollows:

1. The more dynamic & diverse the environment, the higher thedegree of both differentiation & integration required forsuccessful organization.

2. Less changeable environments require a lesser degree ofdifferentiation but still require a high degree of integration.

3. The more differentiated an organization the more difficult it is toresolve conflict.

4. High performing organizations tend to develop better ways ofresolving conflict than their less effective competitors. Improveways of conflict resolution lead to states of differentiation andintegration that are appropriate for the environment.

5. Where the environment is uncertain he integrating functionstend to be carried out by middle and low level managers; wherethe environment is stable integration tends to be achieved at thetop end of the management hierarchy.


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Lawrence & Lorsch4. High performing organizations tend to develop better

ways of resolving conflict than their less effectivecompetitors. Improve ways of conflict resolution leadto states of differentiation and integration that areappropriate for the environment.

5. Where the environment is uncertain he integratingfunctions tend to be carried out by middle and lowlevel managers; where the environment is stableintegration tends to be achieved at the top end of the

management hierarchy.Critisim: The research was based on a very smallsample of firms, it relied on some rather subjectiveinformation, several of the measures employed havebeen criticized as unreliable by subsequentresearchers.


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Burns & StalkerDuring 1950s in Scotland and England Burns and Stalkerconducted a study of the environment structurerelationship.20 firms in electronics industry were studied from view

of how they adapted themselves to deal with c hangingmarket and technical conditions having been organizedto handle relatively stable conditions.

The finding were written up in The Management ofInnovation published in 1961.Researcher were interested in how managementsystems might change in response to the demands of arapid changing external environment.


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Burns & StalkerThey come up with two distinctive ideal types ofmanagement system as result of their studies:

1. Mechanistic System.2. Organic System.

Mechanistic System: These are appropriate forconditions of stability.

Organic System: These are appropriate for conditionsof change.


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Burns & StalerMechanistic System: Features are: 1. A specialized differentiation of tasks, pursued more or

less in their own right.2. A precise definition of rights, obligations and technical

methods of each functional roles.3. An hierarchical structure of control, authority &

communication.4. A tendency for vertical interaction between members

of the concern.5. A tendency for operations and working behavior to be

dominated by superiors.6. An insistence on loyalty to the concern and obedience

to superiors.


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Burns & StalkerOrganic Systems: Features are:1. Individual tasks, which are relevant to the total

situation of the concern are adjusted & redefinedthrough interaction with others.

2. A network structure of control, authority &communication where knowledge of technical orcommercial aspects of tasks may be located anywherein the network.

3. A lateral rather than vertical direction ofcommunication through the organization.

4. Communications consist of information & advicerather than instruction and decision.

5. Commitment to the organizations tasks seen to bemore important than loyalty and obligation.


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Burns & StalkerBurns & Stalker did not see the 2 systems as beingcomplete opposites but as polar positions betweenwhich intermediate forms could exist.They found firms could well move from one system tothe other as external conditions changed and thatsome concerns could operate with both systems atonce.They stressed they did not favor one or other system.

Mechanistic systems are closely related toconsiderations of states of differentiation.Organic system have much in common with theconcept of integration.


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Burns & StalkerAmericans say: The more dynamic and diverse the

environment the higher the degree of bothdifferentiation and integration.Differentiation involves several of the features of themechanistic systems which Burns and Stalker see as

being ill adapted to conditions of change.Criticism against mechanistic versus organicapproach: It assumes that change can best be effectedby organic types of structure, when this is not all

certain.Large organizations however great their commitmentto delegation, involvement & communication betweengroups have to maintain a high degree of structure &formality, even when confronted by periods of change.


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Joan WoodwardWoodward studies was conducted during the period of1953-1958 by a small research team from the SouthEast Essex College of Technology.They initially aimed at assessing the extent to whichclassical management principles were being put intopractice by manufacturing firms in the area and withwhat success.From 100 firms information on various aspects of

formal organization was collected.About half of the firms had made some consciousattempt to plan their organization but there was littleuniformity.


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Joan WoodwardIn term of structure e.g. the number of levels ofmanagement varied between 2 & 12, span of controlranged from 10 to 90 for 1 st line supervisors.Conclusion drawn was there was little in commonamongst the most successful firms studied & there wascertainly no indication that classical managementprinciples were any more likely to lead to success thanother forms of organization.

Woodwards team turned their attention to thetechnological data they had collected after no positiveconclusion from 1 st part of their studies.The question they posed was: Is there any relationshipbetween organizational characteristics & technology?


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Joan WoodwardTeam made a lasting contribution to the theory of organizations by

establishing the key role of technology as a major variableaffecting organization structure.To find some suitable form of classification to distinguish betweenthe different categories of technology employed by the firmsconcerned three main categories were selected as follows:

1. Unit & Small Batch Production: This included custom madeproducts, the production of prototypes, large fabricationsundertaken in stages & the production of small batches.

2. Large Batch & Mass Production: This encompasses theproduction of large batches, including assembly lineproduction and mass production.

3. Process Production: This included the intermittentproduction of chemicals in multi purpose plant, as well asthe continuous flow production of liquids, gases and

crystalline substances.


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Joan WoodwardFirms in the study were allocated to their appropriatecategories & then compared by their organizational &operations some patterns emerge: e.g. it was seenthat process industries tended to utilize moredelegation & decentralization than large batch & mass

production industries.1. The more complex the process, the greater was thechain of command e.g. There were more levels ofmanagement in the process industries than in theother two categories.

2. The span of control of chief executive increased withtechnical complexity e.g. the number of peopledirectly responsible tot eh chief executive was lowestin unit/ small batch production firm & highest inprocess production.


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Joan Woodward3. The span of middle management decreased with

technical complexity e.g. fewer people reported tomiddle managers in process production than inlarge batch/ mass production firms who in turn

had fewer people than in unit/small batchproduction.There were also some similarities:

1. The average number of workers controlled by 1 st line supervisors was similar for both unit/ smallbatch & process production & these werenoticeably fewer in number than for mass

production situations.


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Joan Woodward2. Both unit/small batch & process production

employed proportionately more skilled workersthan mass production categories.

3. Firms at the extremes of the technical range

tended to adopt organic systems of managementwhereas firms in the middle of the range notablythe large batch/mass production firms tended toadopt mechanistic system.Team turned their attention to the relationship ifany between these two factors & the degree ofbusiness success (profitability, growth, cost

reductions achieved etc).


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Joan WoodwardThey found that the successful firms in eachcategory were those whose organizationalcharacteristics tended to cluster around themedian figures for their particular category. E.g. aprocess production firm would be better served bya taller, narrower structure backed up by anorganic system of management rather than by aflatter, broader structure operated mechanistically.A mass production firm would appear to benefitfrom a flatter broader structure operated inmechanistic way.Firms in either category which did not have theirappropriate characteristics would tend to produceless than a average results.


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Joan WoodwardWoodward concluded that:

Predominance given to the Classical theoristsespecially in respect of the application of their ideasin practice(span of control, unity of command,definition of duties etc) only made sense when seenin terms of large batch/ mass production processes.Classical ideas did not seem appropriate for othercategories of production.Her researches strongly suggested that:Not only was the system of production a keyvariable in determining structure but that also therewas a particular form of organization which was

most suited to each system.


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The Aston GroupIn the late 1960s at the University of Aston,Birmingham Pugh, Hickson and others so calledAston group began a major study into variousaspects of structure, technology and environment.

Aston study attempted to discern the basicelements of technology by gathering data onseveral possible dimensions.These includes features such as operatingvariability, workflow integration and line control ofthe workflow.Many of the results of Aston study did not accordwith those of the Woodward studies.


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The Aston GroupOne explanation was that the Woodward studieswere conducted into mainly smaller firms while theAston study has included several large companies.This was significant because Pugh and hiscolleagues had concluded that the impact oftechnology on organization structure must berelated to size.They said in small organizations technology will becritical to structure but in large organizations othervariables will tend to confine the impact of

technology to the basic operating levels.


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The Aston Group The importance of Aston group is that they haveadopted a multi dimensional approach toorganizational and contextual variables ie they haveattempted to develop an idea of an organizational mix which can be applied to an organization at aparticular point in time in order to achievesuccessful results.


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The Aston Group

Aston study distinguished six primary variables ofstructure and considered them against a number ofcontextual variables .

i. Specialization (of functions and roles).ii. Standardization (of procedures and methods).iii. Standardization of employment practices.

iv. Formalization (extent of written rules, proceduresetc.).v. Centralization (concentration of authority).vi. Configuration (shape of organization).


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The Aston Group

These variables were considered in a number ofdifferent contexts including the following.:

i. Origin and History.

ii. Ownership (owner-managers, shareholders,parent company etc).iii. Sized of Organization.

iv. Charter (number and range of goods/services).v. Technological Features (in several dimensions).vi. Interdependence(balance of dependence between

it and customers, suppliers, trade unions etc).


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The Aston GroupAmong the conclusions reached by the Aston team was therelevance of size to the structural variables.As an organization grows beyond the stage at which it can becontrolled by personal interaction, it has to be more explicitlystructures.Larger size tends to lead to:

a) More Specialization.b) More Standardization.

c) More Formalization.d) Less Centralization.Conclusion of the researchers was that it was possible to predict

fairly closely the structural profile of an organization on the

basis of information obtained abo t the conte t al ariables

contingency approaches to ma nagement

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