Rationale for Use of Contingency Management Approach - Coursework Example

Rational for use of Contingency Management Approach By (Student) (Course) Instructor: Institution: Date: Introduction The contingent management approach is founded on the assertion that there is no single best style of management in an environment where there are unpredictable internal and external factors impacting an organization [Col04]. As argued by Harte (2014), hugely successful businesses such as Apple, Toyota, Microsoft, Samsung, Coca-Cola, IBM and Nokia owe their success to strong and effective leadership. Notably, it is only fair to contend that such businesses do not follow a standard blueprint that guides their strategic focus or leadership. It is generally held that the contingency management approach is the best method in business operations in today’s dynamic and rapidly changing environment [Zei88]. New competitors enter an industry with disruptive products, governments change regulations, consumers change preferences, and technologies become obsolete. Therefore, every business has to apply a unique strategy and adapt a particular style of leadership in response to challenges and opportunities within its internal and external environments [Jay141]. Clearly, it is valid to argue that the dynamic and unpredictable nature of the external and internal organizational environments calls for a contingent management approach to enhance effectiveness. Through respective subheadings, this paper will critically analyse the rational for and against the adoption of a contingent management approach in business with a view of supporting the relevance of the concept in organisational strategy planning. Arguments for use of contingency approach in management The contingency management approach gained strong relevance from 1950s up to the 21st century due to the socio-political, technological and economic changes that impacted businesses at this particular period. For instance, the 1950s were characterized by sustained industrial agitations for better working conditions. Businesses were also exposed to increased competition as global trade grew. Disruptive technologies also improved communication, production methodologies and commerce. This meant that businesses had to employ situational strategies to be successful in uncertain and unpredictable environments [Zei88]. According to Zeithaml, et al (1988), the contingency approach is a highly pragmatic approach to solving problems as they emerge. New regulations, competition and natural factors often affect the operations of a business or the ability of the business to fulfil the needs of its clientele. A contingent approach demands that organizational people at various levels must quickly analyse the situation and come up with an appropriate decision. This means that the organization does not have a rigid structure where decisions are made from the top while the subordinates wait for instructions [Rob08]. Such an approach may have a negative effect on the competitiveness of a firm at the business level. For instance, a new competitor to a multinational may be offering products in small quantities to sell at a lower price, the management at the top must respond quickly to the threat on its market share by adopting a packaging and pricing strategy that appeals to the specific market. Contingency approach integrates various schools of thought on management including the systems and classical ideas [Per10]. This means that management and practitioners can explore various approaches that are suitable for a business in different situations. In support of Pertusa-Ortega, et al (2010), Jayaram, (2014) further observe that the principles of the different schools can be integrated and applied successfully to unique situations to enhance organizational effectiveness. For example, a small business at the start-up stage may adopt a centralized management style where the founding manager makes all the crucial decisions. Mostly in such situations, the entrepreneur is the vision bearer who understands the business idea and the strategies to be applied to achieve success [Joh142]. Big organizations may have complex operations that require robust decisions making at different levels and units. Decentralization may be a better option for such big businesses. In addition to combining various schools of thought, a contingency approach allows organizational management to apply lessons learnt from previous failures or success in relation to challenges and opportunities facing the business. A contingent approach allows the business management to adopt hybrid styles of leadership depending on the nature of work, employees’ abilities and external situation facing a business (Van de Ven, et al., 2013). For example, a business struggling with a rapid loss in market share and a dip in sales volumes may require an autocratic leader who has a good understanding of the changes that need to be implemented to improve the situation. When Steve Jobs joined apple for his second term, he immediately discontinued unprofitable projects and introduced a focus on quality, design and innovation. Jobs had his own standards of good performance, quality and market-relevant products. This may have made him to be regarded as dictatorial but his efforts led to Apple becoming one of the most profitable businesses that popularized the Smartphone in the world. Jobs also had to tap top management talents to run the company at the highest levels. He did this to benefit from their marketing and people management skills. This means that an autocratic leader may have to adopt a participative style of management that will enable him to tap the talents and energies of his team [Sch15]. This approach may also motivate a team of demoralized workers who may be sensitive about criticisms. Evidently, a contingent approach offers business leaders to experiment with a mixture of different styles of leadership at different levels or units to achieve overall success for the organization. Arguments against the Contingency approach to management While the contingency approach has been lauded as an effective model in responding to unexpected external environment factors, it may lead to strategy confusion in some situations [Jef12]. For instance, external environment factors may give false signals such as signs of recession in a strong economy may only be short term. A business may decide to postpone the launch of a new product due to such signs only for a competitor to seise the opportunity. It is also very important to note that some managers may not have full market information and thus act on their instincts or previous experience. This means that a business may abandon its strategic focus and engage in unstable changes that affect the morale and productivity of workers. Investors, employees and consumers should always have the trust that a business will always make the right decisions partly due to the firm structures in place [Jay141]. Clearly, there is a need to have acceptable management principles guiding decision-making in any organization to eliminate the problem of strategy confusion at the highest level. Strategy confusion may lead to losses in terms of resources wasted, time spent n deliberation and lower productivity due to loss of morale among midlevel managers and subordinates. Contingency management is founded on the notion that a business has full knowledge of it external factors [Zei88]. The management should as well foresee the possible impact of an external factor on the business. However, this may not be the case particularly when such changes occur in unpredictable speeds. Having a better understanding of the external factors may cost the business its time, money and human resources to the extent that it becomes a costly distraction. It is not possible to apply the contingent theory in situations where the management lacks full information considering that decisions are made on limited information. It is, therefore, prudent to adopt a management approach that reduces business risks and upholds some level of predictability to guarantee expected results. In any case, it is not possible to control external factors or prepare a business adequately to respond to such challenges. The Bureaucratic Management Theory is arguably the very opposite of the contingency approach. The Bureaucratic Management Theory builds on the scientific management principles advanced by Fredrick Taylor in early 20th century [Col04]. Max Weber advanced the bureaucratic management approach that emphasizes on the need to have standardized procedures, central authority, defined job roles and routine tasks. The Bureaucratic Management approach can be highly beneficial in terms of focusing the business on rational decisions founded on facts. This eliminates chances of making quick irrational decisions founded on emotions and false external signals. The contingency approach leaves a loophole as there is no guidance on how decisions should be arrived to. This leaves room for abuse as managers can veer off from principles that protect employees, shareholders and communities. However, the rigidity of Bureaucratic Management systems may impede competitiveness for businesses at a global level where organizations have to be robust. Conclusion From the literature analysed thus far, it is apparent that the contingency theory of management is a relevant management approach in a dynamic and unpredictable environment. Contingency approach combines different management schools of thought including systems and chaos theories to enhance the flexibility of an organisation. In line with the contingency approach, a manager is able to adapt his leadership style to the different employee relations, managerial challenges, and market opportunities facing an organisation. However, it is also fair to note that the contingency approach should be applied with caution as it is possible that personal bias, emotions and unrealistic ideas may distract a business from its strategic focus. References Col04: , (Cole, 2004), Zei88: , (Zeithaml, et al., 1988), Jay141: , (Jayaram, et al., 2014), Rob08: , (Lussier, 2008), Per10: , (Pertusa-Ortega, et al., 2010), Joh142: , (Harte, 2014), Sch15: , (Schlender & Tetzeli, 2015), Jef12: , (Miles, 2012), Read More