According to Public Administration in Canada, (pg 70) contingency theory is one of the most recent theories in organizational structure, it argues that there is no "one best way" of structuring an organization. Instead contingency theory suggests that the best way to structure a particular organization is contingent(dependent) on a number of factors such as the attitudes of the managers and employees, the nature of the task performed by the organization and the nature of the environment.
The basic premise of Contingency Theory is that there is no one best way to organize a corporation, to lead a company, or to make decisions. There are too many external and internal constraints that will alter what really is the best way …show more content…
According to the contingency theory, stable environments suggest mechanistic structures that emphasize centralization, formalization, standardization, and specialization to achieve efficiency and consistency. Certainty and predictability permit the use of policies, rules, and procedures to guide decision making for routine tasks and problems. Unstable environments suggest organic structures which emphasize decentralization to achieve flexibility and adaptability. Uncertainty and unpredictability require general problem solving methods for non routine tasks and problems. Paul Lawrence and Jay Lorsch suggest that organizational units operating in differing environments develop different internal unit characteristics, and that the greater the internal differences, the greater the need for coordination between units.
Joan Woodward found that financially successful manufacturing organizations with different types of work technologies (such as unit or small batch; large-batch or mass-production; or continuous-process) differed in the number of management levels, span of management, and the degree of worker specialization. She linked differences in organization to firm performance and suggested that certain organizational forms were appropriate for certain types of work technologies.
Organizational size is