As late as the 1950’s Classical Management thinking still dominated the way we thought about management and organisational design. Through the works of Fayol, Taylor and Weber we were led to believe that there was one best way to solve every managerial or organisational problem, a universal method which could be used in every circumstance. “Taylor, Weber, Mayo and Fayol all recommended single, universal solutions to management problems, often in the forms of laws and principles1”, this therefore seemed to ignore the differing circumstances or external factors that maybe occurring or affecting each managerial problem.
Around this time, led by the work and research of British academic Jane Woodward, contingency thinking came to the forefront of managerial thinking. It provided an alternative to classical management theorists, it suggested that there wasn’t always one “best way2” to solve each managerial problem, but the solutions were dependent on the circumstances or factors occurring within the company/business at that particular time. “The appropriate solution in any specific case depends, is contingent upon the circumstances prevailing at the time3″, this statement from Huczinski and Buchanan seems to uphold such view. It therefore focuses more directly on the external environment rather than internal design.
The main contingency factors, which are likely to effect the solutions to a problem and the performance of an organisation, which were also identified by Jane Woodward, were Size, Technology and the Environment4, although undoubtedly there are a number of other external factors which also play a key part in managerial thinking. There are no doubts that such contingency thinking has contributed to and/or changed our knowledge of Management and of organisational design to some extent despite criticism ” It has provided a further insight into our understanding of relationships among factors influencing the structure, management and operations of work management”. There are obviously a number of ways in which such contingency thinking has contributed to our knowledge of management and organisational design and these will now be discussed.
Most importantly the major way that contingency thinking has contributed to our knowledge of management and organisational design is that we no longer look to just one “best way” to solve each problem, but look to solutions dependent on the circumstances at hand, as discussed in the introduction. This has lead to greater knowledge in many areas of management and design. Within management itself contingency thinking has lead varying models of how managerial processes should take place, but more importantly how organisational structure should be designed in each circumstance.
Through contingency theorists we learnt that the size of a company and the structure within it would play a large part in determining the success of a company, therefore such an inter-relationship would be the key to determining such success. Again it suggested that one solution as in classical management theories could not be applied to every company no matter of the size. There would obviously be large differences between the solution to problems for multi-national enterprises and those solutions to problems for small independent companies. Therefore you could not have a one structure fits all theory, as this simply would not work. ”
In very small organisations there is very little need for formal structure. With increasing size, however, and the associated problems of the execution of work and management of staff, there are likely to be more formalised relationships and greater use of rules and procedures6″. This therefore suggests that there is indeed a need for different organisational designs determined by the size of its company in order to achieve success.
Therefore it could be argued the larger a firm becomes the greater the need for formal structure. In a study conducted by John Child he found that there was an inter-relationship between levels of bureaucracy and success the as the company became larger ” The larger the company, the greater the association between bureaucracy and superior performance7″. He also found that there was also an apparent inter-relationship between the success of small firms and levels of bureaucracy.
In this case he found that the small firms who had very little levels of bureaucracy or formal structures performed better “At the other end of the scale, among small firms of only a hundred or so employees, the better performers generally managed with very little formal organisation”8. Therefore we now appreciate the inter-relationship between size and the organisational design of company, in determining its success, and understand that there is definitely not “one best fit” structure for all organisations.
Contingency thinking has also taught us the need for an inter-relationship between the environment and the organisational structure. Therefore the environment it is working within should determine the structure of the organisation. Therefore this again disregards the previously accepted “one fits all” theory of classical management theorists. Contingency thinking suggests that success is determined by acquiring a perfect fit with the environment a round it “Success depends on securing a proper fit or alignment between itself and the environment9”. Therefore out of such thinking developed two main organisational structures, which would fit the environment around it.
Firstly the “Mechanistic” system, which is solid, rigid, and very much, follows the rules of a bureaucracy, there is high task specialisation, many rules and regulations and decisions are made centrally. It was argued that such a system is best suited to that of stable conditions within an environment. Secondly, the “Organic” system which has a much more fluid, flexible structure, where there is little task specialisation, very few rules and decisions are spread out. This is argued is best suited to an unstable environment, where uncertainties are rife and unforeseeable problems arise on a consistent and regular basis.
Therefore the main result of this is that we understand that the more volatile or unstable the environment is the more flexible an organisation needs to be in order to achieve a relative amount of success. Whilst organisations in stable environments do not have to be so flexible, although the rewards of such an environment are often much less. Therefore organisational design must fit around its environment in order to be successful, with many organisations fitting somewhere between being “organic” and “mechanistic” Therefore in most circumstances in order to achieve “best fit” organisations mix aspects of each structure and form it together.
This was also supported by Burns and Stalker and the research that they provided in 1961, in which they studied an electronics organisation and a Mill factory and found large differences in the structures of the two organisations. The electronics organisation was highly “organic” responding to an unstable market place, the mill organisation was very much mechanistic in its nature, as it was predominantly in a very stable, rigid market place.
Therefore we also most acknowledge the contribution contingency thinking has had in our understanding of the effects of “best fitting” the environment around us has on an organisations level of success, and thus on the designs of organisations in such environments. Lawrence and Lorsch also found that differing environments led organisations to develop differing structures, they built on the work of Burns and Stalker, but focussed on differentiation and Integration. They found that the most successful organisations became more differentiated as there environment became more unstable and uncertain, thus splitting into sub-units, which would develop their own structures in order to cope with such uncertainties. Although this divergence could itself cause conflict, due to conflicting interests of goals between developing sub-groups, and therefore cause new problems.
Therefore when the environment became uncertain and an organisation became more diversified, it would need to increase integration ” the authors found that as environmental uncertainty increased, and thus the degree of differentiation increased so organisations had to increase levels of integration”. This was in order to unite the main aims of the sub-groups, therefore halting any such problems before they started. Therefore again we understand and learn from such contingency thinking in its approach to organisational design within certain environments. However in the theories of mechanistic and organic structures and their “best suit” there does appear to be some evidence of back door universalism, suggesting that there is a best way for each circumstance.