CONTINGENCY APPROACHES TO MA NAGEMENT

Introduction
Contingency Approach: sometimes called the situational approach. An approach that says that organizations are different, face different situations (contingencies) and require different ways of management. There is no clear distinction between the systems approach and the contingency approach to the management of organization. System Approach: highlights the complexity of the interdependent components of organizations within equally complex environments. Contingency Approach: builds on the diagnostic qualities of the system approach in order to determine the most appropriate organizational design and management style for a given set of circumstances.

Contingency approach suggests that issues of design and style depend on choosing what is the best combination in the light of prevailing conditions of the following variable: 1. External Environment. 2. Technological Factors. 3. Human Sills and Motivation. The label contingency approach was suggested by two American academics Lawrence and Lorsch in 1967. Writers who have adopted a contingency approach are British: Joan Woodward is noted for her important studies into the effects of technology on structure and performance.

Introduction

Burns and Stalker introduced the concept of mechanistic and organic types of structure and discussed them in relation to; the environment. Aston Group have made studies into several of the technology structure variables in organizations. Contingency approach does not seek to produce universal prescriptions or principles of behaviour. Contingency approach deals in relativities not absolutes. It is a situational approach to management.

Introduction

They were concerned with structure and environment as the two key variables in their study. Lawrence & his colleague studied the internal functioning of six plastics firms operating in a diverse and dynamic environment. The results in these 6 firms were then compared with two standardized container firms operating in a very stable environment and two firms in the packaged food industry where the rate of change was moderate. Major emphasis of their study was on the states of differentiation & integration in organizations.

Lawrence & Lorsch

Lawrence & Lorsch

Differentiation was defined as more than mere division of labour or specialization. It also referred to the differences in attitude and behaviour of the managers concerned. These differences were looked in terms of : 1. Their orientation towards particular goals e.g. issues of cost reduction are more important to production managers than to sales or research mangers. 2. Their time orientation e.g. sales & production managers have short term orientations while research manages have long term orientations.

Lawrence & Lorsch

1. Their interpersonal orientation e.g. production managers tend to be less relationship oriented than sales managers. 2. The relative formality of the structure of their functional units e.g. the highly formalized production departments with their many levels, narrow span of control and routine procedures as contrasted with the relatively informal and flat structures of the research departments. Integration: was defined as the quality of the stat of collaboration that exists among departments. A key interest of the two researchers was to access the way conflict was controlled in organizations.

 Lawrence & Lorsch took the view that there was probably no one best way to organize. Effective performance was judged in terms of the following 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 of performance from high through medium to low performance when set against chosen criteria.

Lawrence & Lorsch

 The main conclusions that Lawrence & Lorch arrived at were as follows: 1. The more dynamic & diverse the environment, the higher the degree of both differentiation & integration required for successful organization. 2. Less changeable environments require a lesser degree of differentiation but still require a high degree of integration. 3. The more differentiated an organization the more difficult it is to resolve conflict. 4. High performing organizations tend to develop better ways of resolving conflict than their less effective competitors. Improve ways of conflict resolution lead to states of differentiation and integration that are appropriate for the environment. 5. Where the environment is uncertain he integrating functions tend to be carried out by middle and low level managers; where the environment is stable integration tends to be achieved at the top end of the management hierarchy.

Lawrence & Lorsch

4. High performing organizations tend to develop better ways of resolving conflict than their less effective competitors. Improve ways of conflict resolution lead to states of differentiation and integration that are appropriate for the environment. 5. Where the environment is uncertain he integrating functions tend to be carried out by middle and low level managers; where the environment is stable integration tends to be achieved at the top end of the management hierarchy. Critisim:The research was based on a very small sample of firms, it relied on some rather subjective information, several of the measures employed have been criticized as unreliable by subsequent researchers.

Lawrence & Lorsch

During 1950s in Scotland and England Burns and Stalker conducted a study of the environment structure relationship. 20 firms in electronics industry were studied from view of how they adapted themselves to deal with c hanging market and technical conditions having been organized to handle relatively stable conditions. The finding were written up in The Management of Innovation published in 1961. Researcher were interested in how management systems might change in response to the demands of a rapid changing external environment.

Burns & Stalker

They come up with two distinctive ideal types of management system as result of their studies: 1. Mechanistic System. 2. Organic System. Mechanistic System: These are appropriate for conditions of stability. Organic System: These are appropriate for conditions of change.

Burns & Stalker

Mechanistic 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.

Burns & Staler

Burns & Stalker

Organic Systems: Features are: 1. Individual tasks, which are relevant to the total situation of the concern are adjusted & redefined through interaction with others. 2. A network structure of control, authority & communication where knowledge of technical or commercial aspects of tasks may be located anywhere in the network. 3. A lateral rather than vertical direction of communication through the organization. 4. Communications consist of information & advice rather than instruction and decision. 5. Commitment to the organizations tasks seen to be more important than loyalty and obligation.

Burns & Stalker

Burns & Stalker did not see the 2 systems as being complete opposites but as polar positions between which intermediate forms could exist. They found firms could well move from one system to the other as external conditions changed and that some concerns could operate with both systems at once. They stressed they did not favor one or other system. Mechanistic systems are closely related to considerations of states of differentiation. Organic system have much in common with the concept of integration.

 Americans say: The more dynamic and diverse the environment the higher the degree of both differentiation and integration. Differentiation involves several of the features of the mechanistic systems which Burns and Stalker see as being ill adapted to conditions of change. Criticism against mechanistic versus organic approach: It assumes that change can best be effected by organic types of structure, when this is not all certain. Large organizations however great their commitment to delegation, involvement & communication between groups have to maintain a high degree of structure & formality, even when confronted by periods of change.

Burns & Stalker

Woodward studies was conducted during the period of 1953-1958 by a small research team from the South East Essex College of Technology. They initially aimed at assessing the extent to which classical management principles were being put into practice by manufacturing firms in the area and with what success. From 100 firms information on various aspects of formal organization was collected. About half of the firms had made some conscious attempt to plan their organization but there was little uniformity.

Joan Woodward

In term of structure e.g. the number of levels of management varied between 2 & 12, span of control ranged from 10 to 90 for 1st line supervisors. Conclusion drawn was there was little in common amongst the most successful firms studied & there was certainly no indication that classical management principles were any more likely to lead to success than other forms of organization. Woodwards team turned their attention to the technological data they had collected after no positive conclusion from 1st part of their studies. The question they posed was: Is there any relationship between organizational characteristics & technology?

Joan Woodward

 Team made a lasting contribution to the theory of organizations by establishing the key role of technology as a major variable affecting organization structure. To find some suitable form of classification to distinguish between the different categories of technology employed by the firms concerned three main categories were selected as follows:

Joan Woodward

1. Unit & Small Batch Production: This included custom made products, the production of prototypes, large fabrications undertaken in stages & the production of small batches. 2. Large Batch & Mass Production: This encompasses the production of large batches, including assembly line production and mass production. 3. Process Production: This included the intermittent production of chemicals in multi purpose plant, as well as the continuous flow production of liquids, gases and crystalline substances.

 Firms in the study were allocated to their appropriate categories & then compared by their organizational & operations some patterns emerge: e.g. it was seen that process industries tended to utilize more delegation & decentralization than large batch & mass production industries. 1. The more complex the process, the greater was the chain of command e.g. There were more levels of management in the process industries than in the other two categories. 2. The span of control of chief executive increased with technical complexity e.g. the number of people directly responsible tot eh chief executive was lowest in unit/ small batch production firm & highest in process production.

Joan Woodward

3. The span of middle management decreased with technical complexity e.g. fewer people reported to middle managers in process production than in large batch/ mass production firms who in turn had fewer people than in unit/small batch production. There were also some similarities: 1. The average number of workers controlled by 1st line supervisors was similar for both unit/ small batch & process production & these were noticeably fewer in number than for mass production situations.

Joan Woodward

2. Both unit/small batch & process production employed proportionately more skilled workers than mass production categories. 3. Firms at the extremes of the technical range tended to adopt organic systems of management whereas firms in the middle of the range notably the large batch/mass production firms tended to adopt mechanistic system. Team turned their attention to the relationship if any between these two factors & the degree of business success (profitability, growth, cost reductions achieved etc).

Joan Woodward

 They found that the successful firms in each category were those whose organizational characteristics tended to cluster around the median figures for their particular category. E.g. a process production firm would be better served by a taller, narrower structure backed up by an organic system of management rather than by a flatter, broader structure operated mechanistically. A mass production firm would appear to benefit from a flatter broader structure operated in mechanistic way. Firms in either category which did not have their appropriate characteristics would tend to produce less than a average results.

Joan Woodward

Woodward concluded that:

Joan Woodward

Predominance given to the Classical theorists especially in respect of the application of their ideas in practice(span of control, unity of command, definition of duties etc) only made sense when seen in terms of large batch/ mass production processes. Classical ideas did not seem appropriate for other categories of production.
Her researches strongly suggested that:

Not only was the system of production a key variable in determining structure but that also there was a particular form of organization which was most suited to each system.

This approach is very much in line with Lawrence & Lorsch. Its conclusions also confirm the criticism of the Burns and Stalker study. From its studies its seem that Mass production firms could not cope successfully with change if they adopted an organic system ie. An inappropriate system according to her evidence.

Joan Woodward

In the late 1960s at the University of Aston, Birmingham Pugh, Hickson and others so called Aston group began a major study into various aspects of structure, technology and environment. Aston study attempted to discern the basic elements of technology by gathering data on several possible dimensions. These includes features such as operating variability, workflow integration and line control of the workflow. Many of the results of Aston study did not accord with those of the Woodward studies.

The Aston Group

The Aston Group

One explanation was that the Woodward studies were conducted into mainly smaller firms while the Aston study has included several large companies. This was significant because Pugh and his colleagues had concluded that the impact of technology on organization structure must be related to size. They said in small organizations technology will be critical to structure but in large organizations other variables will tend to confine the impact of technology to the basic operating levels.

The Aston Group

The importance of Aston group is that they have adopted a multi dimensional approach to organizational and contextual variables ie they have attempted to develop an idea of an organizational mix which can be applied to an organization at a particular point in time in order to achieve successful results.

The Aston Group

Aston study distinguished six primary variables of structure and considered them against a number of contextual variables. i. Specialization (of functions and roles). ii. Standardization (of procedures and methods). iii. Standardization of employment practices. iv. Formalization (extent of written rules, procedures etc.). v. Centralization (concentration of authority). vi. Configuration (shape of organization).

The Aston Group

These variables were considered in a number of different 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).

 Among the conclusions reached by the Aston team was the relevance of size to the structural variables. As an organization grows beyond the stage at which it can be controlled by personal interaction, it has to be more explicitly structures. 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 about the contextual variables

The Aston Group