Which of the following theories of leadership is based on situational variables?

Contingency theories

Contingency theories, or the contingency approach to management, are multifaceted and have many implications. For now, however, it will suffice to provide an overview and some relevant highlights. Contingency theories, in a sense, question the universal applicability implied by some of the theories already discussed (although they do more readily relate to Lewin’s open system concept). In a nutshell, contingency theories posit that good management will look different based on situational variables. Early research on contingency theory points out that such variables as style of leadership, job design, participation in decision-making and organizational structure are critical to understanding what will lead to a good overall managerial outcome (Shepard and Hougland, 1978: 414). A more recent definition of contingency theories in the Encyclopedia of Management breaks them down into two categories: environmental contingencies and internal contingencies (Helms, 2000: 125–6).

Environmental contingency theories focus mainly on the relative stability of the environment. In relation to libraries, as has already been mentioned, change is occurring at a rapid pace, leading to a significant degree of instability. This alone seems to suggest an emphasis on flexibility. Internal contingencies concern factors such as the size of an organization. A larger library with more staff will have to be managed differently and probably require more formality, for example, all other factors being equal, than a library with fewer staff. The types of employees in an organization also play a role here within the internal contingency context. Managing librarians with MLIS degrees and a wide range of experience is going to be different to managing high-school students working part-time at McDonalds. Again, if flexibility is required due to the external situation libraries face, an appreciation of and ability to utilize highly educated staff fully are relevant to the internal situation.

One of the more interesting theorists within the many in this area is Fred Fiedler. Fiedler is known for an instrument referred to as the LPC or ‘least preferred co-worker’. A manager who takes this test is asked to rate their least preferred associate on a whole number of different characteristics. Once tallied, the results indicate whether or not the individual is task or relationship oriented. Further study has shown that a task orientation to management, which focuses almost exclusively on what needs to get done as opposed to the individual employees, is most effective at the polar extremes whereby a manager has a very high or very low degree of power and group cohesion. The relationship approach, focused as one would expect on the individual relationship with employees, works better in more moderate circumstances (Fiedler, 1964).

Traits and Situations

Contingency theories of leadership vary in opinion as to the degree an individual’s preferred orientation plays into their ability to successfully lead. It is therefore important to evaluate each theory independently. In the case of Fiedler’s contingency theory, a leader’s preference plays a significant role in the ability to be successful in a variety of situations. Specifically, the theory states that leaders who favor a human-orientation (High LPC) approach will do best in situations considered favorable while task-orientation leadership (Low LPC) will be most effective in unfavorable situations. The theory attempts to provide a balance between the importance of an individual’s preference and situational factors. Figure 1.1 provides additional clarity.

The Hersey-Blanchard Situational Leadership Theory focuses more on situational factors than on an individual’s preferred orientation. Placing more emphasis on the maturity level of followers as it relates to their ability and willingness to accomplish tasks, it requires leaders to be flexible in their leadership style to be successful. Leaders must be attuned to their followers’ skill and motivation levels in order to decide which leadership style to use. In this way a leader’s preference for task or human orientation is not a factor as they need to be able to switch between the two as needed to respond to the maturity level of the group. Figure 1.2 illustrates matching maturity level to the most appropriate leadership style.

The decision tree used by the Vroom-Yetton-Jago-Decision model focuses solely on the situational factors to recommend an appropriate leadership style. The model is designed to ascertain the degree of group involvement required to make a decision by analyzing the decision quality, availability of information, and likelihood of decision acceptance (Vroom & Yetton, 1973). As an individual answers questions they are guided to use either an autocratic, consultative or group-based leadership style. The model ignores a leader’s orientation preference and only considers the skills and willingness of followers if they are important to a successful outcome. The diagram in Figure 1.3 illustrates the decision tree process.

Structural contingency theory argues that the most effective structure for an organization is contingent (i.e., dependent) on the structure fitting the organization's level of contingency factors. Where the structure fits the contingencies, then high performance results, whereas, where the structure misfits the contingencies, then low performance results. The main contingency factors are size, task uncertainty, and diversification. Each organization varies on its levels on these contingency factors and on corresponding structural variables. As size increases, so the fitting structure is more bureaucratic (i.e., has many departments, many hierarchical levels, high specialization, high formalization, and low centralization). As task uncertainty increases, so the fitting structure is less formalized and more decentralized—it also features structures to coordinate between functional departments such as project teams. As diversification increases, so the fitting structure is divisionalized, which raises the degree of bureaucratic structuring. The greater the diversification, the more autonomous the divisions and the smaller the corporate central office. Divisionalization also needs to fit the priority given to innovation vs. cost reduction. Matrix structures, of various types, fit intermediate levels of diversification. Overall, large size and diversification raise the required degree of bureaucratization, with task uncertainty causing some variations to it.

Risk control lessons of contingency-based leadership for bank managements

In 1967, Fiedler—the proponent of contingency theory of leadership—isolated three variables that influence leadership effectiveness. These situational characteristics, according to him, are leader–member relations—the extent to which the manager likes and is liked by subordinates or organization members; task structure—whether the task and its processes are well structured and understood by the group members; and leader-position power—the extent to which the manager is empowered through formal authority to do their work.

There are eight different possible combinations of the variables which influence choice of leadership style. The deduction is that the work situation could be highly favorable or unfavorable to the manager. Favorable condition exists where the manager is influential (strong leader-position power), enjoys good working relationships with subordinates (good leader–member relations), and the task is highly structured (task structure). At the other extreme, where these situational characteristics are lacking, work condition becomes unfavorable for the manager. Correlating leadership styles with group performance, Fiedler suggested the most effective or useful leadership approach in a given situation.

From the summary of his findings, either of two types of leadership styles could be adopted; the manager could apply the task-oriented or relationship-oriented leadership. The task-oriented style, for instance, requires good leader–member relations, structured task, and a strong leader-position power. It will also be successful if the opposite extremes exist. This implies that task-oriented leadership is appropriate where the work situation is either relatively favorable or relatively unfavorable. Where the work situation is moderately favorable, the relationship-oriented style appears to be more effective. An example of this case is where leader–member relations might be good, but the task is unstructured, while leader-position power is weak.

2.3 Leadership as a Charismatic Process

Like the attributional school of thought, the contingency approach has also set the stage for a more relational slant on the study of leadership. Believing a leader cannot be studied meaningfully in isolation from his or her surroundings, this approach views leadership as an interactive process between the leader, the followers, and the situation. This orientation, transcending earlier, more naive approaches to leadership behavior, is an important step forward.

The problem with many relational theories in the past is that their point of convergence was too narrow. Initiation vs. consideration, social orientation vs. task orientation, autocracy vs. democracy—such dimensions are overly simplistic in describing leadership in its context. Furthermore, these earlier relational studies focused far too much on exclusive superior–subordinate relationships, ignoring (or slighting) the various constituencies of the leader: the industry environment, the national culture, and the culture that characterizes the organization.

This shortcoming has opened the door for a fresh look at charismatic leadership. Another impetus for this line of research has been the prevalence of a business climate of uncertainty and unpredictability—a breeding ground for the emergence of charismatic leadership. In our competitive, global world, where the transformation and revitalization of organizations holds a central position, the leader is increasingly seen as a crucial agent of change.

The new focus, then, is on the inspirational role of leaders. Researchers are turning to the study of leaders who by force of their personality have an extraordinary effect on their followers. The challenge for leaders of organizations becomes how to affect the mind-set of the organizational participants through value creation, through influencing the organization's culture, and through building commitment to the organization's mission, objectives, and strategies to obtain well-above-average organizational performance.

The first person to take up this new challenge was political scientist MacGregor Burns (Burns 1978). In his writing, he extends Max Weber's reflections on charisma (Weber 1947), making a distinction between transactional and transformational leadership. While transactional leadership can best be viewed as a mundane contractual exchange based on self-interest (often described in the literature as the manager's role), transformational leadership seeks to satisfy the higher needs of followers—to engage in a process of mutual stimulation and elevation whereby followers will transcend their own self-interests for the good of the group (Bennis and Nanus 1985, Conger and Kanungo 1998).

A number of researchers have built on Burns' notion of transformational leadership, using observed behavior of leaders to break the concept down into various components, in an effort to broaden early charismatic conceptualizations. For example, Bass and Avolio (1993), who view charisma as a subset of transformational leadership, list four behavioral components in the context of transformational leadership: (a) charisma or idealized influence, (b) inspiration, (c) intellectual stimulation, and (d) individualized consideration. According to them, charisma alone is insufficient to put in place a successful transformation process. Shamir et al. (1993), building on earlier work done by House (House 1977), contend that charismatic leadership affects followers' self-concepts and has motivational consequences due to (a) changing follower perceptions of the task that has to be accomplished, (b) offering an attractive vision of the future, (c) creating a group identity, and (d) heightening individual and collective feelings of self-efficacy.

These various offshoots of a focus on the inspirational role of leadership contribute to a rich description of what the leadership mystique is all about. Researchers who view leadership as a charismatic or transformational process give proper attention to the contextual and cultural dimensions that are part and parcel of leadership dynamics. They are sensitive to the impact of the environment on leaders and on their behavior. Furthermore, they reject narrow instrumentalism in favor of a perspective whereby the leader is seen as the transformational agent of change. Some scholars have made the point, however, that the transactional role of leadership should not be ignored. They suggest that the most effective leaders take on two roles: a charismatic role (consisting of envisioning, empowering, and energizing) and an architectural role (designing the organization, setting up structures, and formulating control and reward systems (Kets de Vries and Florent-Treacy 1999)).

Some scholars of leadership argue, however, that in spite of the new, richer color given to leadership research, additional steps need to be taken to deepen our understanding of the leader's relational interchanges. And the challenge is formidable. In spite of the various rational ways in which researchers attempt to deconstruct leadership and charisma, charismatic leadership is not rational in the traditional sense of the word. By its very nature, it is unstable, in that it exploits what can be interpreted as irrational processes. We need now to find ways to explore the forces that transcend rationality. Critics also argue that the study design of many researchers evaluating inspirational leaderships treats all leaders and all followers as amorphous, interchangeable groups of people; in other words, they fail to attend to differences in personality style. To rectify these shortcomings in leadership research, deeper insight into people's desires, wishes, and needs is needed; and that insight can be provided by a clinical focus.

2.1 The Contingency Model of Leadership Effectiveness

The first and most extensively researched and validated of the contingency theories is the Contingency Model (Fiedler 1967, Fiedler and Chemers 1984). The leader characteristic included in the model is the leader's ‘motivational orientation’ which determines the priority of task accomplishment relative to interpersonal harmony. So-called ‘task-motivated’ leaders who emphasize structure, order, and clear directions are differentiated from ‘relationship-motivated’ leaders who emphasize cohesion, flexibility, and participative decision-making. The situational variable in the Contingency Model is the degree of predictability and orderliness in the task environment which is, in turn, determined by the supportiveness of followers, the clarity and structure in the task, and the amount of formal authority accorded the leader. Task-motivated leaders are most effective in situations where their emphasis on clear direction and structure fits well with existing levels of orderliness (i.e., highly predictable situations) or might contribute what is lacking and needed (as in highly unpredictable situations). Relationship-motivated leaders fare best when their more flexible and responsive style fits with the ambiguities of moderately predictable situations where some elements contribute to orderliness, but others might detract from it (e.g., situations requiring creativity or sensitivity to potential conflict).

Elaborations and extensions of the Contingency Model have shown that the fit between leader and situation was related to the leader's experienced stress and stress-related illness (Chemers et al. 1985), and that such stress affected the ability of the leader to make effective use of cognitive resources such as intelligence and job-related experience (Fiedler and Garcia 1987).

1 The ‘Environment’ in Organizational and Management Studies

The environment in organizational and management studies has historically been treated as an organizational contingency (see Structural Contingency Theory). The environment was synonymous with the organizational environment, something abstract and a-temporal, having little to do with the natural environment (Shrivastava 1994). The main concern of theories of organizations in the 1960s was the restriction that the external environment imposes on the survival of organizations, rather than the environmental burdens that organizations cause to the natural environment.

The pervasive assumption in both research and management practice that organizations had a capability, and indeed should, control their environments was questioned in the work of the population ecology perspective (see Ecology: Organizations). The title suggests that the organizational ecology (as it is also known) is an ecological theory of organizations. In fact, it represents the transplantation of concepts and calculus techniques from the discipline of ecology to the world of formal organizations. The application of biological models to the analysis of the ‘ecology of organizations’ has nothing to do with the natural environment. The use of the concepts of ‘environment’ and ‘ecology’ as metaphors to express the ‘organizational environment’ or ‘the ecology of organizations’ was not an intentional strategy to deny the importance of environmental issues in organization studies. The all-encompassing meaning of the terms themselves is what could mislead one to think the opposite. Nonetheless, what makes these perspectives vulnerable to criticism is the dominant epistemological position about research in organization studies that they tend to assume. The positivistic rigidity that dominated organizational studies until the late 1970s resulted in a scope of research that did not allow much space for its own reflexivity.

The emergence of new metaphors and paradigms for organizational analysis in the late 1970s undermined the historic hegemony of functionalist perspectives (see Organizations, Metaphors and Paradigms in). These new theoretical approaches questioned some taken for granted assumptions about research and management, transforming organization studies into a ‘contested terrain’ (Clegg et al. 1996). The acknowledgment that the external environment affects organizational action in the same way that organizations impact on the natural environment began to appear in early 1990s, giving rise to the development of research and theories on organization and environment.

Implicit in the studies about environmental issues in organizations is the assumption that a theoretical imperfection allows companies to externalize their environmental and social costs on to society. Market prices do not always reflect total costs of products (Hawken 1993). There is a discontinuity between empirical outcomes and theoretical representations of organizational action. Environmental and social costs that occur during the life cycle of products—the extraction of raw materials, manufacturing, use, and final disposal or recycling—are not considered in most companies' accounting systems (Grey et al. 1993). Increasingly demanding regulatory measures, public demand for environmental protection and compensation, and consumer demand for cleaner processes and products, constitute some of the current environmental challenges requiring organizations to eliminate or internalize these costs. Firms responded to these challenges by developing novel environmental strategies and management practices, described in the next section.

Situational theory and contingency theory

In the 1960s and 1970s two new kinds of leadership theory emerged. They were the situational theory and contingency theory approaches. While trait theory and behavioral theory focused primarily on the leader him/herself, situational theory focused on the situation (Antonakis et al., 2004: 152). Different situations require different styles of leadership. Different situations also create different kinds of leaders. What would Gandhi have become if India had not been under British rule? Would he have still become the great leader who is fondly known as the Father of the Nation? While situations create leaders, leaders don't always have control of all situations at hand. A successful leader is also one who learns to adapt to different situations. Situational theory focused more on getting the task done than on developing people skills. One might argue that tasks cannot be accomplished without good people skills, but then one has to remember the autocratic leadership style that does get tasks done without focusing on developing human relationship skills.

Contingency theory states “that a leader's effectiveness is contingent on how well the leader's style matches a specific setting or situation” (Wolinksi, 2010). If leaders were successful in the roles they played, then it was considered a perfect match. Success in this theory was not determined by tasks accomplished, but by measuring the success of a leader's relationships and their effectiveness in accomplishing success for the organization. This theory shifted the focus of the leader from being task-oriented to relationship-oriented (Antonakis et al., 2004: 155). Winston (2001: 519) quotes Dobbs, Gordon, Lee, and Stamps saying “that the aspect of leadership theory that relates most closely to leadership diversity is contingency theory, which is also called pragmatism, realism, and Realpolitik.”

Some more recent leadership theories are transformational leadership, transactional leadership, charismatic leadership, and virtual leadership.

While transformational leadership “refers to the set of abilities that allows a leader to recognize the need for change” (Griffin et al., 2010: 325), transactional leadership is about sustaining stability within the organization. Transformational leaders can work with change and some might even thrive in an environment of change, but transactional leaders are not always comfortable with changes in their environment and may not be the best leaders to manage change.

Charismatic leadership depends on the magnetic personality of the leader. While charisma can be an important trait for leaders, not all successful leaders have been charismatic. Winston Churchill was a great leader, but not many would have considered him to be charismatic. On the other hand, John F. Kennedy had charisma. A discussion of whether he was a great leader with strengths and weaknesses, or a charismatic leader, is beyond the scope of this book. The fear with charismatic leaders is that they could have unquestioning followers and this could mean the downfall of an organization, eventually. Having complete faith in any one person and letting them lead as they wish cannot possibly mean success in the long run. And the leader's charisma may not necessarily help with his/her leadership qualities or abilities; it might just be their personality that is charismatic and therefore likeable. Then again, charismatic leaders have their place too: politics and the entertainment industry are great places for charismatic leaders. Being charismatic is an innate quality, not always a learnt one, and this is parallel to, if not similar to, Great Man theory.

Virtual leadership is still a fairly new kind of leadership. As the demographics of organizations change to include outsourcing and contracting various positions to hired workers in other countries, virtual leadership requires a new set of skills. It requires leaders to be able to work with people who are in different states, countries, and continents, in different time zones, from different cultures, and in different work situations. They may not have all the equipment needed, or a power shutdown on a given day might mean that work cannot be processed. Due to a political situation or a religious holiday in their own country, workers might not want to work on a particular day. A virtual leader has to be knowledgable not only about the work of the organization but also about the cultural work ethic of the different groups he/she has to work with, their political scenarios, and any legal issues with various demographics. This leader will depend a lot on email or phone communication where body language remains invisible to the listener. Apart from finding the right kind of leadership style, a virtual leader also needs to have great communication skills.

A leader should be aware of the organization's policies and expectations, its administrative style, its employees and their expectations, its external environment, and its implications on the organization. The leader should be able to adapt his/her style to suit the organizational needs or choose an organization that requires his/her style of leadership. If there is a disconnect between the two styles, it can be disastrous. In January 1997, Elizabeth Martinez resigned from her position as Executive Director of the ALA. As Martin (1996) states, Martinez was “hailed as a strong and visionary leader who would be able to represent the profession effectively while managing this very complex and unruly organization,” but Ms. Martinez did not think the ALA was ready to change. There may be other underlying reasons for her resignation, but it came as a shock to the American libraries.

Where are We Going from Now?

As time passes by and management styles evolve, new determining variables appear, and the relative importance of the old ones changes. Hence, it is recommended that holistic empirical surveys be carried out periodically, to act as yardsticks of our current knowledge. Qualitative methodologies such as observation and case studies would be useful from time to time in order to explore the perceptions of practising managers, to capture emerging determinants and to identify new lines of thinking for further quantitative research.

The fact that the results show different patterns depending on the region and/or the sectoral class, should be accepted and lived with. Hence, instead of devoting time and resources to the search for a unified theory of innovation, we can use portfolio models such as that presented in this chapter as a starting point and then identify the determining variables with the highest predictive power for the particular context. Using the set of important determinants as a base, auditing systems can then be developed putting the research results into practice.

In my view, the most fruitful direction for further research would be to untangle the ‘black box’ of the contingency theory. Contingency theory has been accused of having rather abstract and vague dimensions of the environment (Mintzberg et al., 1998). We need to map what determinants work under what exact environmental circumstances. Despite the fact that this is a highly complex problem due to the number of intervening variables, I propose work in two directions.

Empirical research on the important determinants of innovation in countries and regions with different managerial cultures and stages of economic development. International surveys carried out under exactly the same conditions (same industries and same measurements for innovation and its determinants) would be particularly useful;

Empirical research in order to confirm and establish the use of taxonomies, such as Pavitt's ‘technological trajectories’. The creation of taxonomies of firms is encouraged in theory development, as it allows large amounts of complex information to be collapsed into more convenient categories, which are easier to comprehend (Carper & Snizek, 1980).

We always have to keep in mind that research on the determinants of innovation can have immediate usable and practical outcomes. The results of these studies will be valuable for: (1) company managers and consultants who want to identify the keys to high rate of innovation and (2) public policy-makers, who can see the impact of general ‘infrastructure’ variables like education, training, venture capital and information on the company's innovation potential.

The decision-making tree

One last approach to making decisions which will be discussed here is the decision-making tree. The decision-making tree or normative decision model is a contingency model which grew out of the work of Fred Fiedler (1964), whose work was discussed in the first chapter. Building on Fiedler’s point that decisions are made within specific contexts, Vroom and Jago (2007) set out to create a systematic way to approach decision-making and problem-solving. Two initial factors that they considered of great importance were the quality of a decision and the need for acceptance. That is, certain decisions have a greater impact than others and some decisions require greater buy-in from staff in order for them to be effective. On their next set of dimensions, they considered various styles that could be applied to making a given decision. These ranged from solving the problem entirely on one’s own, gathering information from others (although not necessarily telling them what for) and then making the decision, consulting with appropriate group members individually and then making a decision, sharing a problem with the group for a discussion but then making the final decision, and finally, offering a problem up for discussion and having the group decide on a course of action. It is worth noting that, by combining these two dimensions, this model suggests using a tree where one simply moves along the branches to find out which approach is best for a given decision (Dubrin, 1998). While the process is very straightforward, not all situations lend themselves to being perfectly characterized. Thus I would suggest using this concept more as a way of thinking.

Before moving on, let’s consider how this model might apply in a library. Let’s pretend that you are considering a policy change in the library that will be a major benefit to patrons but will require all of the staff to carry it out effectively, relatively unsupervised. You can see right away where the library director would need the staff to buy in to such a decision. Thus, making it a group decision or at least allowing the group to have input before making a final decision would be of value. One qualification or caveat needs to be stated, however, when considering opening up an important decision of this nature to the group. Research has indicated that most experienced managers are hesitant to have a wide-open discussion on an issue that they know will bring up overwhelming conflict among staff (Vroom and Jago, 2007). Likewise, an important decision affecting patrons but not requiring staff buy-in might be made by the director on his or her own or after one-on-one consultation with appropriate staff. Interestingly, in issues of lesser importance this process can be even further simplified. Decisions of low importance or quality, according to this model, which do not need a commitment from the library staff can also just be made by the director. Not everything needs to be put to a vote, even in a library with a highly participatory culture. Of course, issues of lesser importance that would probably not raise a negative degree of conflict and need staff commitment can just as easily be put to the group if there is time to do so.