Organizational Management For Dynamic Fit And Contracts – Contingency Theory And Management Styles

The Importance of Effective Management in Organizations

Discuss about the Organizational Management for Dynamic Fit and Contracts.

In the highly competitive business world of today, the importance of effective management of employees in an organization can never be overstated. It should be noted that the as organizations operate amidst cut-throat competition, with too many competitors dominating the market, effective management and efficient administration can only ensure organizational success. Even after the end of World War II, the concept of managerial formalism was dominating theories of management science. While management theories such as Frederick Taylor’s theory of scientific management, tried to emphasize the importance of offering frequent breaks to the employees for enhancing employee productivity, Weber’s management theory of bureaucracy believed that governmental administration of staffs at organizations can ensure the most effective management practice at workplace. However, although traditional theories as proposed by the classical theorists have discussed about a singular approach of organizational management, the classical management theories soon got rejected by in the later decades, with the emergence of the new Contingency Theory, as proposed By William Richard Scott (Wheelen and Hunger 2017). The purpose of the essays is to critically analyse the management theories and establish the fact that there is no one best way to manage.

There is no best way for managing employees at workplace. Especially, in the changed business scenario of today, different organizations have different demands and thus the same leadership style will prove to be ineffective in satisfying the various organizational requirements. The development level of the employees can also determine the management style of the leader. For instance, if a specific organization primarily comprises of highly experienced employees who have served in similar industry for more than 5 years, the manager of the company may not need to ensure a very tight supervision of employee activities (Ven et al. 2013).ven though the employees may not be left at their discretion, they can still be provided some form of autonomy at workplace. On the other hand, in case an organization comprises primarily of new employees, who have relatively less experience in the organizational activities, degree of managerial supervision is also bound to increase. Thus, it is clearly evident that the question of management of employees in an organization will largely rely on the circumstances, which may include factors such as the size of the organization, nature of its operation or the competence level of its employees. The pioneers of contingency theory of organizational management have rightly pointed out that there can never be any singular approach in organizational management, and that the optimal course of action in organizational management is always dependent upon the internal and external situation of the organization (Granlund and Lukka 2017). Besides, the location of an organization and the cultural orientation of the employees may also play an important role in determining the management style followed by the leaders. For instance, countries in the Asian continent, may be more inclined to have a hierarchically structured organization, where the leader may have to take up the role of an autocratic leader, while countries like Australia prefer flexible working environment and hence the leaders may have to take up a democratic management style.

The Rejection of Classical Theories and Emergence of Contingency Theory

The contingency theory as developed by John Woodward, has rightly pointed out that there can never be one leadership style to be followed in an organization, simply because there are various contingency factors, on which the organizational management of the companies depend. There can be various contingency factors such as technology, government, consumers, nature of competition and others that can determine the organizational management style adopted by a company. The kind of task or the nature of environment of the company will determine the nature of management practice at organization (Mikes and Kaplan 2013). Amongst the external factors, the most important factor is the location of the organization, and the cultural orientation of its employees. China enjoys a collectivist culture, where exchange of business opinions, and sharing of ideas, play an important role in the management of organization. Hence, if an organization is operating in China, its leaders must be able to embrace a mixture of autocratic and bureaucratic management style. On the other hand, countries like Norway have low-context culture, and hence the employees overlook the importance of informal conversation, too much managerial intervention or irrelevant messages in between work. Accordingly, the adoption of a democratic leadership style in Norwegian organizations is considered to be the most suitable.

Again, at the same time, in order to substantiate the argument that the management practice is subject to change as per circumstances, one must also remember that the proficiency of the employees and their competence level will also determine the organizational practice. The employees also experience professional development over a period of time, and hence depending on the professional development of the employees, the management style will depend. For instance, an employee may be an enthusiastic beginner in which case he is still a learning novice, a disillusioned learner who is still unconfident about his professional competence, the cautious performer who will work best under sufficient manager and a self-reliant employee who can work independently. Now, the management style to be adopted in dealing with a self-reliant employee will never be the same as the management style to be adopted for handing a less experienced employee who is an enthusiastic beginner (Sharma 2017). Hence, the managers need to improvise the management style and approach as per the needs of the people, he is working with. The effective leaders are well-aware of the fact that there is and there can be no singular management practice in a market that is so dynamic and diverse. It is clearly evident from the above argument, that a manager may have to adopt different management style, while handling different employees in the very same organization.

No One Best Way to Manage Employees

There are various management styles that can be adopted by the manager of an organization and the choice of a style will be solely dependent on the internal situation of the organization or nature of its employees. According to McBer, there are six distinct forms of management style- Directive , Authoritative, Affiliative, Participative , Pacesetting and Coaching style. Yet the adoption of a distinct style will vary according to the nature of the organization and skill of its employees or the organizational structure of the company. An authoritative leader is entrusted with the duty of supervising the performance of the employees, and guiding them n completion of the tasks. This form of leadership can be deemed best in companies where the employees require a clear direction, and most of the employees cannot work independently. In a press company, the journalists may be able to work independently and might not be comfortable with too much intervention from the Editor, and hence this form of leadership style will not be recommended for a publishing company (Burton et al. 2016). Again, the Participative style of leadership is a management style where the manager beside supervising the performance of the employees, offers them adequate autonomy to work independently. Although this form of leadership style can be regarded as the desirable leadership practice, its implementation in a Business Process Outsourcing company is inadequate. This is because, in the BPO organizations, the employees need to have proper coordination amongst them, and absence of proper supervision can be disadvantageous. At times, the manager may need to embrace the role of a coach, who need to groom and enhance the professional skills of his employees, and yet at other times, he may have to assume the role of a democratic leader, who will have to supervise employee performance, while also allowing employee independence. A company is considered to be commercially successful only when the function and its form of leadership are in accordance with each other. Technology, in fact, plays an important role in determining the management practice in an organization. In case, an organization is largely dependent on the use of technology, the management function and job role is bound to differ. In fact, there will be increased responsibility on management which in turn will lead to added managerial emphasis on planning, decision making, control, as well as coordination within the company. These kind of tech-reliant companies will always rely on computer-based management science techniques which in turn will require a higher intellectual capability of managers. This will produce additional strain on managers as well as employees, and the managers in order to ensure overall organizational productivity, will have to assume the role of an active, even autocratic leader.

Some of the most eminent authors and critics such as Urwick and Spender have emphatically stated that there can be no one way of managing employees in an organization. Organizational management refers to a set of management practices aimed at managing the employees, in organizations, and the practices are bound to vary according to a variety of factors, such as level of competition in the market, skill and competence of employees, nature of operation in the organization and others. The manager will require modifying and reinventing new management style, in order to suit the purpose.

Reference List:

Burton, R.M., Obel, B. and Håkonsson, D.D., 2016. 1 Contingency Theory, Dynamic Fit, and Contracts. Advancing Organizational Theory in a Complex World: Advancing Research in a Complex World, p.1.

Granlund, M. and Lukka, K., 2017. Investigating highly established research paradigms: Reviving contextuality in contingency theory based management accounting research. Critical Perspectives on Accounting, 45, pp.63-80.

Mikes, A. and Kaplan, R., 2013. Managing Risks: Toward a Contingency Theory of Enterprise Risk Management. Management Accouting Research.

Sharma, A., 2017. A Study on the effect of Performance Management and its effect on Organizational Effectiveness with special reference Third sector organizations using System Dynamics: A Contingency theory approach. Research Journal of Humanities and Social Sciences, 8(2), pp.109-115.

Van de Ven, A.H., Ganco, M. and Hinings, C.B., 2013. Returning to the frontier of contingency theory of organizational and institutional designs. Academy of Management Annals, 7(1), pp.393-440.

Wheelen, T.L. and Hunger, J.D., 2017. Strategic management and business policy. pearson.