The contingency approach to management
- is based on the theory that there is no one best way of managing, as organisations face contingency variables due to individual differences, environmental uncertainty, technology used for routineness of tasks and organisational size which affects its structure. (Robbins, Bergman, Stagg and Coulter, 2008, pp. 54). This is contrary to classical management theorists such as Henri Fayol, who in his fourteen principles of management, emphasised the centralisation, standardisation and specialisation features of managing, emphasising that they will lead to the achievement of efficiency, consistency and a successful future for the organisation. (Rodrigues, 2001). In the example of the Westpac Banking Corporation (Westpac) and one of their front-line managers (whom was interviewed for this paper), it will be evaluated which methods and approaches of management are reflected in the company’s structure and organisational behaviour.
Westpac was founded in 1817 and was the first private bank established in Australia. Today it is a multinational corporation and employs about 39,000 people globally. (Westpac Banking Corporation, (Chapman, 2011). Their vision is to help their customers, employees and businesses to prosper and grow. One of their many purposes now is to invest in technology and operations, by launching revolutionary technology in order to improve their process service delivery and to strengthen technology capabilities. (The Manager, personal communication, March 11, 2011).
The interviewee will be referred to as ‘The Manager’ for anonymity purposes. The Manager is first-line manager in the Information Management Solution Delivery Department of Westpac, has 13 full time subordinates, and also employs contractors from all over the world when assistance is needed with his software projects in order to meet deadlines. The Manager is responsible for budget analysis, sets the specifications and deliverables of the projects, and, after gaining senior managers’ approval to proceed with the projects, manages them until they are completed.
According to Fayol’s fourteen principles of management, employees must sacrifice their interests for the good of the organisation. Thus, an organisation should employ only individuals who are fully committed to its objectives and are willing to readily comply with its mandates (Rodrigues, 2001). The situation in Westpac’s Product and Operations division, where The Manager is working, contradicts this theory. During the interview The Manager pointed out that there are a lot of differences in the desire for personal growth and expectations amongst individual employees of the organisation. He noted that “Successful guys need to be challenged and want change. We have to accommodate them as they are the core of our team” (The Manager, personal communication, March 11, 2011). This is an indication of a contingency approach to management when the company is willing to adapt to constant changes by fulfilling employees’ desire for a challenge. Furthermore, Mintzberg also suggested that nowadays managers should encourage and drive people: motivate them, inspire them, coach them, and nurture them, push them and mentor them (Mintzberg, 1994). Empowerment and team building activities such as workshops, information sessions and brainstorming sessions have become a culture within the Westpac Group. This is an integral part of the organisation’s goal for staff motivation and sustainability. (The Manager, personal communication, March 11, 2011).
Fayol’s theory of management also suggested that the work can be performed more efficiently and more productively if it is divided into smaller elements and assigned to specific workers. Thus, the dominant thought in designing jobs was specialisation, each employee performing a specific task (Rodrigues, 2001). The Manager noted that his specific IT technical skills are not utilised very often. However, these skills allow him to understand the technical goals of the projects and help with issues which may arise. The Manager, instead of concentrating on his specification (what he should have done according to Fayol’s theory), now mostly manages his team members, establishes software specifications and project schedules and distributes work. His interpersonal and conceptual skills are constantly applied to meet deadlines and receive customer satisfaction. Westpac’s investment in technology, which was mentioned earlier, is the response to high standards of quality and other deliverables which customers have come to expect nowadays. Therefore, The Manager’s job, as a front-line manager of one of the divisions of Westpac, is to adapt and respond quickly to changing contingencies and markets instead of specialising and purely concentrating on his IT skills (Chapman, 2001).
According to Katz’s management theory, managers often acquire their managerial positions because of technical knowledge and competencies (Peterson and Van Fleet, 2004). By the time The Manager joined the Westpac Group, he already had years of experience in the information technology field. He confirms Katz’s theory by noting IT is his specialty and managing duties is required more than doing IT work; however, his technical proficiency allows him to understand technical goals in order to use that to leverage team skills to achieve the end result. At the same time, he also contradicts Katz’s belief that some managers will tend to avoid the managerial aspects of their job preferring instead the technical aspects (Peterson and Van Fleet, 2004). During the interview, The Manager insists his job is mostly managing, combining it with his technical knowledge and skills only when a problem arises and performing as a team leader to eliminate the issue.
Katz proposed a broad three-category typology of skills: technical, human and conceptual which, according to him, are the essential sets of managerial skills (Peterson and Van Fleet, 2004). Technical skills imply a proficiency in a specific field. Human skills are defined as an ability to work cooperatively with others and to be a team player. Finally, the conceptual skills are defined as an ability to see an organisation as a whole. This was noted by The Manager during the interview, that, as a manager, he uses technical, interpersonal and conceptual skills all at a maximum level to achieve better results. At the same time he mentioned that in order to achieve those results he has to constantly adapt to new changes and challenges and be a “facilitator, a personal delegator, a leader and a guide to the team” (The Manager, personal communication, March 11, 2011). Basically, The Manager faces contingency variables every day of his work and uses a situational approach to deal with these.
The so-called ‘hierarchy principle’ of Fayol suggests that communication in organisations should be basically vertical; that a single, uninterrupted chain of authority should extend from the highest level to the lowest position in the organization. The Manager mentioned that the Westpac Group has a hierarchical structure, but with units independent to each other. He also pointed out that there is a horizontal communication in the organization between departments and units through a variety of meetings, workshops and seminars. Such a structure of the company suggests firstly, that the organisation is built on autonomous business units which operate at the front-line of the business. Secondly, it means that these business units are connected to one another through cross unit integrative processes, designed to ensure a smooth flow of information (The Manager, personal communication, March 11, 2011). It reflects a contingency approach to management within the Westpac Group.
The Manager, as many other managers nowadays, according to Mintzberg, maintain a self-developed network of outside contacts and informers who provide him with relevant information and ‘favours’. It has been said “It is critical to leverage external contacts to get privilege information” (The Manager, personal communication, March 11, 2011). In his research, Mintzberg emphasises that managers often spend a lot of time building vast arrays of contacts and intricate coalitions of supporters beyond their own units (Mintzberg, 1994).
It is assumed nowadays that the one best way to organize and manage does not exist. In contrast, in the beginning of the twentieth century, there were many scientists who tried to create a ‘one size fits all’ model of management which could be adapted to any organisation. Henri Fayol, Henry Mintzberg and Robert. L. Katz contributed many years of their lives to the creation of different theories, rules and procedures of management. Despite this, many organisations now, including the Westpac Group, use a contingency approach to management which criticises these theories (which are partially based on valid assumptions) and states that there are a number of alternatives which are appropriate to particular situations.
The Manager as a front-line manager of the Information Management Delivery Department of Westpac is clearly using a contingency approach to managing: he is adaptive to new challenges and problems (and even mentioned during the interview that he loves his job because every day it is different: new issues, new solutions); furthermore, he is capable of resolving non-standard issues. He is not concentrating purely on his specialisation in the IT industry and often uses his interpersonal managerial and conceptual skills and leaning towards diversification of his job and his subordinates. He is using the situational (contingency) approach in different areas of his work such as planning, control, distribution, empowerment and leadership.
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