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Contingency Theory and Leadership

Contingency theory is an organizational theory that claims there is no best way to organize a company, to lead a company, or to make a decision. Instead, optimal action is contingent on internal and external situations. A contingent leader effectively applies their own leadership style to the right situation.

Contingency theory and leadership is very closely related. This theory assumes that leadership is a process in which the ability of a leader to do his influence depends on the group task situation and the levels of his leadership style, personality and approach that fits his group. So, being a leader is not due to the characteristics of his personality, but because of various factors in the situation and the interaction between the Leader and the situation.

The Contingency model of effective leadership was developed by Fiedler (1967). According to this model, the performance of the group is contingent on both the motivational system of the leader and the degree to which the leader has control and influence in a particular situation, the situational favorableness (Fiedler, 1974: 73).

The contingency approach is influenced by two previous research programs that seek to demonstrate effective leadership behavior. During the 1950s, researchers at Ohio State University provided a questionnaire to measure various possible leader behaviors in various organizational contexts. The result is two types of leader behavior that prove effective are:
• Consideration leader behaviors, where leaders build good relationships and interpersonal relationships and show support and care for subordinates and
• Initiating structure leader behavior, where a leader develops an organizational structure (for example, role assignments, planning, scheduling) to ensure completion of tasks and achievement of goals.

In addition, researchers from the University of Michigan's Survey Research Center suggested that previous theories such as Weber's bureaucracy and Taylor's scientific management had failed because they ignored that management styles and organizational structures were strongly influenced by various environmental aspects: contingency factors. There cannot be "one best way" to model leadership or organizational structure.

Contingency theory is built on the principles developed by the systems approach. Contingency theory sees organizational theory as being based on an open system concept. This is a different view from the views of classical theorists who see organizations as a closed system.

The essence of the Contingency Theory lies in its view of seeing relationships between organizations and the relationship between organizations and their environment. According to this theory, the relationship between one organization and another as a whole, depens on the situations.

Such a view demands organizational theorists and practitioners or managers to further develop adaptability, flexibility and simplicity in the decision-making process that they make. This Contingency Theory rejects the principles developed by classical theorists and replaces them with a more adaptive view of understanding organizations.

Read also: Qualities of Charismatic Leaders

Gareth Morgan in his Images of Organization describes the main ideas underlying contingency theory, namely:
• Organizations are open systems that require careful management to satisfy and balance internal needs and to adapt to environmental conditions
• There is no one best way of organizing. The most appropriate form depends on the type of task or environment that is being faced.
• Above all, management must care to achieve the best direction and conformity
• Various types or species of organizations are needed in various types of environments

According to Robbins (2001) Contingency Theory is a leadership approach that encourages leaders to understand their own behavior. This theory says that the effectiveness of leadership is a function of various aspects of the leadership situation.

Fiedler (in Robbins, 2001) suggests that effective group performance depends on the exact equivalent between the leader's style and the degree to which the situation gives control and influence to the leader. Fiedler created the instrument, which intends to measure whether someone is task oriented or relationship oriented.

To assess the motivational system of the leader, the leader must fill an attitude scale in the form of a semantic differential scale, a scale consisting of 16 bipolar scale items. The score obtained illustrates the psychological distance felt by the leader between himself and "the most unpopular co-worker" (Least Prefered Coworker = LPC).

Read also: “Change Leadership” Is That Possible?

A high LPC score indicates that leaders see the most disliked coworkers in a pleasant atmosphere. It is said that leaders with high LPC scores are relationship oriented. Conversely, a low LPC score indicates the degree of readiness of leaders to reject those who are considered unable to work together. Such leaders, more task oriented. Fiedler concluded that:
• Leaders with low LPC scores (task-oriented leaders) tend to succeed best in group situations that are either profitable, or that are very unprofitable for leaders.
• Leaders with high LPC scores (relationship-oriented leaders) tend to succeed well in situations of groups that are equal to the benefits.

As the basis of his study, Fiedler found 3 (three) critical dimensions of the situation / environment that influence the Leader's style that is very effective, namely:

• Position power
Power on the basis of this position / position is different from the source of power that comes from the type of charismatic leadership, or expertise (expertise power). Based on this power a leader has members of his group who can be governed / led, because he acts as a Manager, where this power is obtained based on organizational authority.

• Task structure
In this dimension Fiedler argues that as long as tasks can be clearly specified and people are given responsibility for them, they will differ from situations in which the tasks are unstructured and unclear. If the tasks are clear, the quality of the work will be easier to control and the group members can be more clearly accountable for carrying out the work, rather than if the tasks are unclear or vague.

• Leader-member relations
In this dimension Fiedler considers it very important from the point of view of a leader. Power on the basis of position / structure and task structure can be controlled more broadly in a business entity / organization as long as group members like to do and are full of trust in their leadership (good relations between leaders and members).

Based on these three variables Fiedler composes eight types of situation groups that differ in degrees of benefits for leaders. A situation with a high degree of profit, for example, is a situation where leader-member relations are good, high-duty structures, and power of position is great.

The most unfavorable situation is a situation where leader-member relations are not good, the task structure is low and power is a little position. Such is the explanation of the contingency theory and leadership.