Contingency theory

• Bedrijfseconomie
• WO
• Studiejaar 1

Contingency theory

By Julia Kloeze, Mats Molenberg en Gerieke Nijboer

Introduction to the contingency theory

- No 'one best way'

- 3 unifying themes:

1.  Organisations are open systems
2. Structure and therefore performance, is dependent upon the particular circumstances, faced by each organisation.
3. There is no best way for all organisations, there is one best way for each organisation.

Main contingencies

• Environmental uncertainty and dependence
  
• Technology
  
• Size
  

Why people are attracted to one best way models

Difficulties according to Burnes

• Relating structure to performance
• No agreed definition of the 3 contingencies
• Managers have significant degree of choice and influence

True/false statements related to the contingency theory

Contingency Theory suggests that there is a single, best way to manage organizational change.

True

False

The success of a change initiative is entirely dependent on external factors like market conditions and industry competition.

True

False

Contingency Theory encourages flexibility in how organizations are structured and how change is managed.

True

False

An organization's size has a significant impact on how change should be managed, according to Contingency Theory.

True

False

The use of advanced technology can complicate organizational change, according to Contingency Theory.

True

False

Debate statements

"There is no 'one best way' to manage organizational change."

"Contingency Theory leads to a reactive rather than a proactive approach to managing change."

"The external environment is the most important factor in determining a successful change strategy."

“There is no such thing as a stable environment, which means that Contingency Theory merely advocates that all organisations should have organic structures.”

Contingency theory in practise 

Case studies

Background case 1

HealthCo and MedWell, two mid-sized healthcare organizations, have recently merged to create a larger, more efficient entity. The newly formed organization wants to streamline its operations across various departments, including patient services, administration, and IT. HealthCo had a more hierarchical structure with top-down decision-making, while MedWell operated with a decentralized, team-based approach. A change management consultant has been brought in to help manage this complex merger and suggests a contingency approach to managing the change.

How can you recognize that the consultant is using the Contingency Theory approach?

1. The consultant insists on implementing a single, company-wide change management framework.
2. The consultant relies on gut feeling to implement changes as issues arise.
3. The consultant analyzes each department's structure and environment, then tailors change strategies to fit the specific needs of each department.

What models or frameworks might the consultant use that are consistent with Contingency Theory?

1. Kotter’s 8-Step Model applied universally across all departments.
2. A combination of models like the 7S model and ADKAR, customized to different departments based on their structure, culture, and needs.
3. Only one framework that has worked well in other organizations in the healthcare industry.

What is a potential benefit of using a contingency approach in this merger?

1. It ensures that the same process is followed across all departments for simplicity.
2. It allows for a flexible, customized approach to fit the unique environments of different departments, reducing resistance to change.
3. It reduces the complexity of managing change by following a rigid set of steps

What could be a disadvantage of using the contingency approach in this case?

1. It could take longer to implement because each department requires a tailored strategy.
2. It may lead to confusion as different departments follow different processes.
3. It prevents the leadership from maintaining strict control over the change process.

Background case 2: Revamping Customer Service Procedures

Scenario:

Your company, ServiceExcellence, is revamping its customer service procedures. The company has a mix of high-tech support channels (e.g., chatbots and automated systems) and traditional methods (e.g., phone support). Some customer service teams are enthusiastic about using new technologies, while others prefer maintaining traditional methods due to their familiarity.

Case 2: Revamping Customer Service Procedures

What would you do?

a) Implement the new procedures across all teams uniformly to ensure a consistent customer experience.

b) Develop a hybrid approach that integrates new technologies while retaining some traditional methods, and tailor this approach based on each team's comfort with the new tools.

c) Transition all teams to high-tech support channels to align with the company's innovation goals, providing training for traditional teams.

d) Allow each team to choose their preferred support method without imposing a company-wide standard.

What would you do?

1. Implement the new procedures across all teams uniformly to ensure a consistent customer experience.
2. Develop a hybrid approach that integrates new technologies while retaining some traditional methods, and tailor this approach based on each team's comfort with the new tools.
3. Transition all teams to high-tech support channels to align with the company's innovation goals, providing training for traditional teams.
4. Allow each team to choose their preferred support method without imposing a company-wide standard.

Reflect

What do you think is the biggest strength of Contigency Theory?

What do you think is the biggest weakness of Contingency Theory?

Thank you for participating!