Contingency Approach of Management: Definition & Example

Definition
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 behaviors and specific situations. In other words, the way you manage should change depending on the circumstances. One size does not fit all.

Theory
The contingency approach to management finds its foundation in the contingency theory of leadership effectiveness developed by management psychologist Fred Fielder. The theory states that leadership effectiveness, as it relates to group effectiveness, is a component of two factors: task motivation, or relation motivation, and circumstances. You measure task motivation, or relation motivation, by the least preferred co-worker (LPC) scale.

The LPC scale asks the manager to think of the person they least like working with and then rate that person on a set of questions, each involving an 8-point scale. For example, a score of one would be uncooperative, and a score of eight would be cooperative. Fielder believed that people with a higher LPC score try to maintain harmony in their work relationships, while people with a lower LPC score are motivated to focus on task accomplishment.

The theory states that task or relations motivations are contingent upon whether the manager is able to both control and affect the group's situational favorability, or outcome. According to the theory, you can assess situational favorability by three factors:

Leader-member relations - This factor addresses the manager's perception of his cooperative relations with his subordinates. In other words, is the cooperation between you and your employees good or bad?
Task structure - This factor relates to whether the structure of the work task is highly structured, subject to standard procedures, and subject to adequate measures of assessment. Certain tasks are easy to structure, standardize and assess, such as the operation of an assembly line.
Position power - This factor asks if the manager's level of authority is based on punishing or rewarding behavior. For example, does the manger derive his authority from providing bonuses for meeting sales goals or terminating employees for failure to meet the goals?
The combination of leader-member relations, task structure and position power create different situations that have been coined octants one through eight. You can divide these eight situations into three broad categories: favorable situations, intermediate situations and unfavorable situations. According to the theory, each situation is handled the best by either high or low LPC managers. The theory argues that high LPC managers are most effective at influencing employee group behavior in intermediate situations, while low LPC managers are most effective in favorable or unfavorable situations.