Essay on Contingency Theory

Having the appropriate structure is vital for an organisation or business to meet its aims and objectives. A business may be structured by:

An organization must align its strategy and structure to allow itself to achieve performance improvements over time. The four different structures, simple, functional, multidivisional, and matrix, are all suited to allow companies with different strategies to succeed but the company must decide which of these is correct for itself. A small start-up company will overburden itself with excessive cost if it seeks to implement a functional structure because it clearly will not have the talent on hand to create whole departments of HR employees or accountants. On the other hand, a company that grows to become a large multi-national

One of the themes in Thomas McCraw’s book American Business Since 1920: How It Worked is mastering centralized control through decentralized management. As the business world rapidly expanded competition for market share between the larger companies increased. More task management was necessary in order to delegate within the businesses as they expanded. The market was also changing and as an answer to that some companies implemented a revised version of traditional management; decentralized management (McCraw, 2009).

Structure is the basis through which an organization seeks to create control the direction of an organization. This is completed through clear definitions of the allocation of work, differentiation, and the coordination of having those responsibilities working together towards the efforts of the organization, integration (Bolman & Deal, 1993, pp). Through these methods, the organization is able to devise a division of labor that collaborates to bring about the missions and goals of an organization. The structure that comes about from this can be varied in their rigidness and flexibility it allows, and to an extent this is a great contribution to its success.

In addition, it is essential to generate detailed divisions for merchandise progress and industrial can have an effect on the company’s administrative structure known as product evolution. Centralized management retains all major decisions with one detailed decision-making group, whereas decentralized management lets company managers to have more ‘say’ in the executive process. Next, corporations that participate in the mass production of products may not exert as

The Contingency theory, developed in 1950s, argues that there is no 'one best way ' to structure an organization and we face different possibilities when determining how it should be structured and how it should be managed. Successful organizations adopt structures that are an appropriate response to a number of variables, or contingencies (Enoch, 2006).

There are two major objectives of decentralization which are to respond more effectively to external and internal change, and cut overhead costs and raise productivity by reducing the number of staff. This concept once achieved can implement the necessity for breaking down hierarchies and assist in downsizing.

Dave Grey believes the best form of structure for the modern day company is the ‘connected company’, as they ‘learn and move faster than their competitors’. This is due to the changing economic environment and how connected company structures were built to react to this. However, as company culture and employee motivation can be closely linked to the structure of a company, there will be noticeable challenges and benefits to any company implementing this structure.

Decentralization has several advantages. Staffs are encouraged to develop decision-making skills, which help them advance in their careers. The autonomy afforded by this style of operation also increases job satisfaction and motivation. For example, if maintenance staff receives a complaint on a fault by a customer, in a decentralized organization the maintenance staff has the power to fix the problem without getting the approval from the administration. If that same front maintenance staff determines that a customer has been

Other common terms for the idea of organizational decentralization include: team self-management, self-management, shared control, distributed leadership (Lambe, Webb, & Ishida, 2009) and holacracy (Robertson, 2007). While these terms may have small differences they all describe the common theme of distributing power across organizations. Several concepts help to explain why decentralization and the encouragement of teamwork throughout an organization are often superior to traditional management structure.

Structure and hierarchy come from how work and the work processes are coordinated together and relating how tasks and coordination of these tasks is to be obtained. When determining the authority in the structure of an organization, there are two major options, centralized and decentralized. A centralized organizational setup is where the authority to make important decisions is retained by managers at the top of the created hierarchy whereas a decentralized organizational setup is where the authority to make important decisions about organizational resources and to initiate new projects is delegated to managers at all levels in the hierarchy. Each choice is made based upon the main goal/task of the organization and what would better fit the organization. Whether work/the

First, the contingency paradigm, a closed system, considers uncertainty and how changes in the environment affect the internal aspect of the firm (Tolbert & Hall, 2009, p. 162). The elements can include items such as size and technology, as it relates to customer demand to name a few. Another example might be that a small firm would function better in a centralized fashion verses a large firm that would benefit more from a decentralized method, whereas, fast paced environments may require high technology and slow paced industries do not. The point here is that there is not one best practice for leading or structuring a firm, hence, the company should fit within the environment depending on internal and external factors (Long, 2014). It is important to note, hhowever, coordination can become problematic in this theory. For illustration, let’s say some environmental factor cause a company to change structure from a simple structure to a more complex one. Problems with coordination in the separate departments could present itself as communication and interaction is vastly different. The key here is for the firm to adapt to the environment, as well as, integrate the activity to make a seamless whole and reduce uncertainty. In fact, the best way to organize should be contingent upon

In a centralized organizational structure one individual is responsible for making all the decisions and maintains control of the company by giving direction. While Decentralized organizational structures often rely on several persons with the authority to make final decision for the company’s well being. Some benefits associated with a centralized organization are as follows: Reduction in cost in the work environment, having a focused vision on one common goal and Reduction in conflict. A Few drawbacks of a centralized organization include, No secrecy because all ideas and decisions are conveyed to all, No special attention and Delay in work. Advantages associated with Decentralization are; Huge relief is provided off the top managers, Greater use is made of employees skills and Decision making is left up to educational and well informed people.

At least two different organizational structures are identified, described, and compared in terms of their design principles.

Organization structure developed from the ancient times of hunters and collectors in tribal organizations through highly royal and clerical power structures to industrial structures and today’s post-industrial structures. According to Lawrence B.Mohr, Taylor, in the early theorists of organizational structure, Taylor, Fayol and Weber saw the importance of structure for effectiveness and efficiency, assumed without the slightest question that whatever structure was needed, people could fashion it. Organizational structure is a matter of choice.