Contingency management theory is one of many contemporary management theories that have come into widespread use since the 1970s. The basis for it is Fiedler's contingency theory, which combines ideas about uncertainty in the environment and external factors influencing work with context-specific features of leadership and decision-making.

One important feature to keep in mind when using contingency management theory is the idea that all activities and actions are based within a certain context. Contingency management theory helps businesses take into account the contexts of their work in order to understand their company environments and increase effectiveness.

Learn how to best implement contingency theory in your organization using the following steps:

1. Investigate Vroom's contingency theory models and software for discovering leadership type;
2. Use Fiedler's LPC scale to assess leadership behaviors using contingency theory;
3. Implement contingency theory through project and contingency planning models.
   

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Use Vroom's contingency theory software to understand leadership and decision-making

Vroom's contingency theory of leadership is easy to use in the workplace because Victor Vroom developed a number of user-friendly decision-making models available for use as contingency software programs. Vroom's contingency theories will help you use leadership decisions to map out leadership styles based on responses to contingency situations.

I recommend: Download Vroom Contingency Theory Software online at KuduCroc, or just view a diagram of how Vroom's model works. View the Vroom-Yetton-Jago Normative Decision Model, which uses contingency theories to map out leadership type based on how leaders make decisions.

Use Fiedlers' contingency theory instruments to assess leadership qualities

Fred Fiedler developed several instruments for using the contingency theory of management with leaders. The most famous instrument is the LPC scale, or Least Preferred Co-Worker scale, which asks leaders to think of their least preferred co-worker and respond to questions about his/her characteristics. Responses are used to assess leadership qualities.

I recommend: Read more about what the LPC scale is and how it is used in contingency theory at the University of St. Francis or Changing Minds. Access an online version of the actual LPC scale for use in your business or organization at Wiley.

Implement contingency theory for effective planning

Contingency theory in management is widely used to create a more effective planning process that accounts for and adapts to a wide range of external factors. While you can't eliminate surprises or uncertainty from the environment, learning to plan for contingency situations is useful for any organization or individual.

I recommend: Learn how to implement a project planning model based on contingency theory from Business Balls. Get comprehensive tips and instructions for developing contingency procedures for emergency situations from Contingency Planning and Management.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Educate or debrief all of your employees about the basic principles of contingency theory before using contingency management theory in the office. While many of the tools for using a contingency model seem straightforward, you will have much better results implementing a new way of thinking about planning and decision-making if everyone is on board and understands the basics.

The basic premise of Contingency Theory is that there is no one best way to lead an organization. There are too many external and internal constraints that will alter what really is the best way to lead is in a given situation. In other words, it all depends upon the situation at hand as to what will be the best course of action.

Fred Fiedler is a theorist whose Contingency Trait Theory was the precursor to his Contingency Management Theory. Fiedler believed there was a direct correlation to the traits of a leader and the effectiveness of a leader. According to Fiedler, certain leadership traits helped in a certain crisis and so the leadership would need to change given the new set of circumstances. Fiedler's Contingency Theory proposes the following concepts:

1. Fiedler's Contingency Theory says there is no one best way to manage an organization.

2. Fiedler's Contingency Theory of leadership says that a leader must be able to identify which management style will help. achieve the organization's goals in a particular situation

3. The main component of Fiedler's Contingency Theory is the least preferred co-worker (LPC) scale which measures a manager's leadership orientation.

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Classify your organization by the 3 variables in Fiedler's Contingency Theory

The 3 variables to consider are: how well the employees accept the leader; the extent that the employees jobs are described in detail; and the authority your leader possesses through his/her position in your organization. Contingency theories state that leaders will be able to exert more influence if they are able to have good relationships with the employees. In addition, contingency theory management maintains that in organizations where the tasks are spelled out in detail, the leader has more influence over the employees than in those organizations that do not have structured tasks.

I recommend: Check out these sites from McGraw-Hill and Mind Tools for determining how you can classify your organization.

Understand the internal and external factors contained in Fiedler's Contingency Theory

Fiedler's Contingency Theory says that there are many internal and external factors that can influence the optimum organizational structure. These factors include the size of the organization, technology that is in use, leadership style, and how the organization can adapt to changes in strategy.

I recommend: Look at Fiedler's LPC and e-COACH to learn more about Fiedler's Contingency Theory and other situational leadership styles.

Evaluate your managers with Fiedler's Contingency Theory measurement tool

Fiedler devised a least preferred co-worker (LPC) scale that can be used to measure whether your managers are task-oriented or relationship- oriented. The test is given to each manager and they simply rate a co-worker that they enjoyed working with the least, either in the past or in their current position. The manager rates that co-worker and chooses between 18 to 25 sets of adjectives on an 8 point scale between each set of values.

I recommend: John Wiley & Sons has an online version of the contingency management test that scores the responses automatically so you can get an instant assessment for free. Check out some other leadership quizzes from Your Leadership Legacy, Test Cafe and Ramsay Corporation.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Spending some time each day getting to know your subordinates helps strengthen your position in a Contingency Theory of Leadership model because you will be able to exert more influence on the employees.

Contingency theory was developed by a number of key contributors to management thinking, including Fred Fiedler, Victor Vroom and Johannes Pennings, many of whom are still developing their theories today. Fiedler's contingency theory is a model that focuses on individual leadership behaviors and decision-making practices within an organization, while Vroom's models address leadership style. Pennings has developed a theory of interaction between external uncertainty, organizational structure and performance.

Contingency management theory asserts that there is no one best way to manage an organization because external factors, known as contingencies, are always influencing the activities and outcomes. The structural contingency theories that emerged in the 1970s have had a major impact on many other contemporary management theories.

Get to know the contingency management theory basics by investigating the following:

1. Learn how contingency theory fits into other management theories currently in use;
2. Use contingency management theory to evaluate and understand decision-making;
3. Discover how contingency theory is used to understand individual leadership.
   

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Get to know the factors for contingency management theory basics

Several main factors of organizations inform contingency management theory and should be considered when using a contingency model. The size of the organization, differences in resource allocation, how the firm adapts itself to the environment, managers' assumptions about their employees and corporate strategies and technologies are all contingencies that affect the activities of a given organization.

I recommend: Use the Free Management Library to get a brief definition of contingency theory and place it in context with other contemporary theories of management. You can also find basic information on systems theory in management at 12Manage.

Understand how decision-making is viewed in contingency theory

Contingency theory has specific ways of addressing the decision-making process at all levels of a business or organization. The contingency decision making process targets the creation of a consensus about goals and the use of technical knowledge to inform goal-setting. Contingency decision-making is usually evaluated using a grid of goal consensus and technical knowledge.

I recommend: Read more about contingency theory decision-making at Value Based Management. You can also read more about the features of decisions made with high or low goal consensus and technical knowledge at Decide-Guide.

Use contingency theory to understand individual leadership models

Fiedler's contingency theory of leadership is also a main component of broader contingency theory of management, and suggests that there is no best way for leaders to work in an organization with contingencies, that successful organizations and leaders should fit the environment and that management styles should be appropriate to the tasks and nature of the group. Fiedler also asserts that leadership combines with the contingencies of group atmosphere, task structure and a leader's power position to shape group performance.

I recommend: Read about the LPC scale used to measure leadership development on the University of Wisconsin Eau Claire website. You can also learn how situational theories of leadership relate to other leadership theories, such as trait and behavioral theories that place more importance on individual characteristics and actions, at Infed.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  If you are concerned with having a company that is able to meet changing demands and work dynamically in the global economy, consider adopting some level of contingency management theory in your management style. Contingencies of all types are becoming increasingly important for organizations to take into account as they are asked to constantly adapt their goals and activities to meet diverse demands.

Contingency management theory states that there is no one right way to manage employees. Everything depends on the unique situation. Whether you are looking to use contingency management theory when managing your employees or you are an employee whose manager uses contingency theory, a good knowledge of the key terms associated with the field will help you to adjust. Fred Fiedler is a major player in contingency theory and many companies employ the least preferred co-worker scale.

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Fred Fiedler

Fred Fiedler is the main theorist who developed the idea of contingency management. His theories focus on the leader and the way that the leader relates to the employees that he or she manages.

I recommend: You can learn more about Fred Fiedler and his theories in the book Great Writers on Organizations by Derek Salman Pugh and David J. Hickson.

Least preferred co-worker scale (LPC)

The least preferred co-worker scale, or LPC, asks leaders to rate people with whom they do not enjoy working. The results of this 'test' show what type of leader he or she is. Those with a high LPC score focus on relationships when leading; those with a low LPC score focus on tasks when leading.

I recommend: ChangingMinds.org describes the least preferred co-worker scale.

Vroom-Yetton-Jago Normative Decision Model

The Vroom-Yetton-Jago Normative Decision Model allows leaders to ask a series of questions about a project, which in turn shows them the best way to manage a particular project. For example, some projects require a higher level of participation from the leader.

I recommend: Learn more about the Vroom-Yetton-Jago Normative Decision Model, including a diagram, from College of St. Scholastica.

Garbage can model

The garbage can model states that an organization is similar to a garbage can in that people dump many different types of problems and solutions into it.

I recommend: 12 Manage gives a more thorough description of the garbage can model.

Situational control

Situational control is how a leader maintains control over a particular situation. Different types of situations require different methods and levels of control, and the leader's style should be suited to the project.

I recommend: Learn more about situational control from Situational Control and a Dynamic Theory of Leadership.

Leader-member relations

Leader-member relations are the ways that leaders and employees interact with each other. Good interactions are an important part of an organization's success.

I recommend: The article Leader-Member Relations as a Function of Rapport Management discusses leader-member relations. Download the entire article to learn more.