Explain contingency theory. What is its relevance to human resource management?

A contingency theory is an organizational theory that claims that there is no best way to organize a corporation, to lead a company, or to make decisions. Instead, the optimal course of action is contingent (dependent) upon the internal and external situation.

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HRM practices are dependent on the organization’s environment and circumstances. Definitions of HR aims, policies and strategies, lists of activities and analyses of the role of the HR department are valid only if they are related to the situation of the organization.

Contingency theory is simple a part of risk management. It's the practice of putting different options / alternative plans in case plan A doesn't work out. In HR management, you apply this theory by putting options of managing your talent if: 1. They leave the company and go somewhere else 2. If their performance deterioratess

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A contingency theory is a type of behavior theory. In general, a contingency theory operates under the idea that organization and leadership should be approached according to the needs of the individual situation. In other words, there is no single best method of leadership, because different leadership styles and organizational methods will work better in different workplace situations. In order for a working body to achieve its maximum potential, leaders must determine the best management method for the individual situation.

In a general sense, human resources refers to the whole workforce within an organization, and structural contingency theory is concerned with the whole workforce. In a broader sense, human resources can indicate a specific department within the organization that oversees the relationships and interactions of everyone within the organization. This may involve hiring the right people for the right jobs, resolving conflicts, addressing complaints, and dealing with low productivity. These challenges all involve putting structural contingency theory into practice.

Examples

In order to truly understand structural contingency theory, it's necessary to understand the different specific theories pertaining to leadership. Since structural contingency theory is leadership-based, the organization must have an adept understanding of how different leadership theories work in order to decide the best method for the individual situation. For example, dominant leadership theories include task-oriented leadership and relation-oriented leadership. Relation-oriented leadership promotes productivity by focusing on the relationships and needs of the workers, while task-oriented leadership promotes productivity by running a tight ship and setting specific task-based goals. According to structural contingency theory, some organizations would thrive better in a task-oriented environment, while other would thrive in a relation-oriented environment.