Organizational behavior is a field of business or management studies that looks at the relationships between individuals and the factors that motivate them, both intrinsically and extrinsically. The contingency approach focuses on the various factors, or contingencies, that have an impact on an organization's behavior.
Reacting to Contingencies
The fundamental basis of contingency theory is that there is no best way to manage a corporation or to deal with employees. Such activities cannot be planned, because so many things change so quickly in the business world. Rather than being proactive, managers and business leaders must be reactive to the various changes and contingencies they face on a day-to-day basis.
Internal and External Influences on Leadership
The contingency theory of leadership holds that the success of a business leader or manager is contingent on numerous internal and external factors facing him. Internal factors include the character and quality of his subordinates, the level of support received from superiors within the organization and the tasks assigned to him. External factors include economic concerns, the level of competition in the marketplace and relationships with channel partners and business partners, among others.
Contingency Theory and Decisions
The contingency theory of decision-making argues that the effectiveness of a decision-making procedure depends on many contingent factors surrounding the decision. Such factors include time constraints, for example. Generally speaking, the greater the time constraint, the more flawed the decision-making process will be. Another important contingency is the amount of relevant information possessed by a decision-maker and his subordinates. The greater the amount of information, the more sound the decision should be.
Contingency Rules and Context
The contingency rules theory suggests that rules, consequences and their impact on the behavior of individuals or groups of individuals depend upon the context in which they exist. For example, the influence of some rules might be more significant in situations in which a member of senior management is present or on the level of importance placed on the potential benefit of disobeying a rule.