Overall explanation

Below you will find how you can plan and draft the essay. Remember this is an example of one way you could approach the question. At Level 6 the questions are much more open so your response may be completely different and that's okay.

Essay Plan

Intro – what is contingency theory?

Each factor in a paragraph: external environment, technology, size, culture, goals, leader style, the people

Conclusion – there is no universally ‘right’ way to structure an organisation, and it can change over time.

Example Essay

The Contingency Model of organization is a management and organizational theory that suggests there is no one-size-fits-all approach to organizing and managing a company. Instead, it proposes that the most effective organizational structure and management style depend on various external and internal factors, often referred to as contingencies. The core idea behind this model is that the optimal way to organize and manage an organization is contingent upon the unique circumstances or contingencies it faces.

Key factors that should be considered in the Contingency Model of Organization include:

Environmental Factors: The external environment, including factors like the industry in which the organization operates, economic conditions, competition, and legal and regulatory requirements, can greatly influence the organization's structure and strategy. An organisation should consider STEEPLED factors and Porter’s 5 Forces when deciding which company structure would be most appropriate.

Technology: The nature of the organization's technology and the rate of technological change can impact its structure and processes. Some organizations may need to be more flexible and adaptive due to rapidly changing technologies, while others may rely on stable and proven technologies. For example, does the organisational structure allow people to work remotely from home?

Organizational Size: The size of the organization can affect its structure and management practices. Smaller organizations might have a more informal structure, while larger ones may require more formal hierarchies. For example a small organisation would not benefit from a bureaucratic structure, but a large organisation may need several levels ofmanagement and a degree of bureaucracy.

Organizational Culture: The culture of the organization, including its values, norms, and beliefs, can influence how it is structured and managed. For instance, an innovative and entrepreneurial culture may lead to a flatter, more decentralized structure.

Goals and Strategy: The goals and strategy of the organization play a crucial role in determining its structure and management style. Different strategies, such as cost leadership, differentiation, or innovation, may require different organizational structures and approaches.

Leadership Style: The leadership style of top management can impact the organization's structure and culture. Leaders with a preference for centralization may create a more hierarchical structure, while those who favour decentralization may opt for a flatter structure.

Human Resources: The skills, abilities, and motivation of the workforce can influence how an organization is structured and managed. A highly skilled and motivated workforce may require less supervision and a more decentralized structure.

The important thing to note with the Contingency Theory is that the organization's needs and circumstances can change over time, so what works best today may not be suitable in the future. Organizations must continuously assess and adapt their structures and management practices as contingencies evolve.

In essence, the Contingency Model recognizes that there is no universally optimal way to organize and manage an organization. Instead, managers must carefully assess and consider the various contingencies that affect their organization and make decisions accordingly. This approach promotes flexibility and adaptability in organizational design and management, allowing companies to better respond to changing circumstances and maximize their effectiveness.

Tutor Notes

- Another way this could come up as a question is related to a case study. You may be asked to pick out factors which would effect the way an organisation is structured.

- You could also be asked pros and cons of the contingency theory (pro: very flexible, highly responsive to changes con: people don’t know where they stand, harder to find accountability)

- It’s covered in detail in the studyguide but it’s quite a simple concept – the best structure for an organisation depends on lots of different factors.