Features of Contingency Theory:
1. Management is situational in nature. The technique of management depends on complexity of the situation.
2. It is the ‘if and ‘then ‘approach to management, ‘If’ represents the independent variable and ‘then’ represents the dependent management variable or the technique to be adopted in that situation. ‘If’ workers have strong physiological needs, ‘then’ financial motivators should be adopted and ‘If’ they have strong higher-order needs, ‘then’ non-financial motivators should be adopted.
3. Management principles are not universal in nature as there is no best style of management. Management is situational and managerial actions depend upon the environmental circumstances.
4. It helps in understanding the complex organisations as it focuses on multivariate nature of organisations. It helps an organisation to operate under different environmental conditions. Rather than having a specific solution to solve problems, it provides a framework where every solution depends upon the environmental conditions. Same problem can have different solutions at different points of time and different problems can have same solution at the same point of time.
5. It provides insight into organisation’s adaptability to both internal and external environment. It is a matter of fitting the internal environment to its external environment.
Evaluation of Contingency Theory:
This theory has proved useful for practicing managers as:
1. It is an integration of different schools of thought; classical, behavioural and systems approach. It integrates the principles of different schools of thought and applies them contingent upon the needs of the situation.
2. It is pragmatic in nature as solution to every problem is found after analysing the situation.
3. It follows the technique of multivariate analysis. It thinks of all possible variables or factors that affect the situation and adopts the best.
4. It is adaptive in nature. It does not presume a pre-designed structure of the organisation but adopts a structure that helps the organisation adapt to the environment.
5. It helps to design the organisation structure and plan the information decision systems. A small-sized organisation may be centralised and a large-sized organisation may be decentralised in structure.
6. It helps to devise motivational and leadership approaches to motivate the workers. Autocratic style may be adopted to deal with unskilled workers and participative style to deal with skilled workers. Contingency approach to management is considered as a leading branch of management thought today.
Limitations of Contingency Theory:
Despite the best that contingency theory offers to the management thought, it is not free from criticism.
The critics assert that:
1. It does not follow the concept of ‘universality of principles’ which often apply to specific management situations.
2. It is argued that what contingency theory asserts was asserted by Fayol also. He also talked of flexibility of management principles. Therefore, the theory has added nothing new to the management thought.
3. As there is no definite solution to a problem, managers think of alternatives to arrive at the right choice. This is costly in terms of time and money. It also does not provide theoretical foundation upon which management principles will be based.
4. It is not possible for managers to determine all the factors relevant to the decision making situation. Because of constraints of time, money and ability, managers can neither collect complete information about the environment nor analyse it completely.
Besides, it is not possible to establish perfect relationship amongst these factors. Application of this theory may, therefore, be a complicated task as decisions are based on limited information. These criticisms are only theoretical in nature. The theory contributes to the development of management thought if applied rationally.