Introduction
Executives often make important business decisions based on little more than the advertising information that appears on the back of books…
Let's imagine this case at first:
A patient visits the doctor because he is not feeling well, before the doctor can describe the symptoms, he describes a prescription and says "Take two of these pills three times a day and call me next week."
Then the patient replies "But I have not told you that it is wrong, how do you know that your pills will relieve me?"
"Why not?" Says the doctor, "it served my last two patients."
Obviously, no competent doctor would practice medicine in this way (although similar cases are seen in our country), nor would any rational patient accept it. Yet management consultants routinely prescribe such generic prompts, and executives usually embrace this therapy, naively believing that if a particular measure helped other companies succeed, it must also help theirs.
Managers contribute greatly to creating conditions for effectiveness when they confirm that tools, information, and control methods provide people with the feedback knowledge they need for effective motivation.
The motivation to be considered from a Systems and Contingency point of view.
Development
The conceptual counterpoint…
" The task of administrators is to maintain a system of cooperative effort in a formal organization" while the word contingency means something uncertain or eventual, which may or may not happen. It refers to a proposition whose truth or falsity can only be known by experience or evidence and not by reason.
General systems theory does not seek solutions to problems or attempt practical solutions, but rather, produce theories and conceptual formulations that can create conditions of application in empirical reality.
In a broader aspect, the contingency approach highlights that organizational effectiveness is not achieved by following a single and exclusive organizational model, that is, there is no single best way to organize in order to achieve different objectives of the organizations within a changing environment.
The TGS states that the properties of systems cannot be significantly described in terms of their separate elements; systems understanding only comes when systems are studied globally.
Current studies on complex organizations led to a new theoretical perspective: the structure of an organization and its functioning are dependent on the interface with the external environment. The most notable contribution of the authors of the Contingency Approach is in the identification of the variables that produce the greatest impact on the organization, such as the environment and technology, to then predict the differences in the structure and operation of the organizations due to the differences in these variables. Thus, different environments require different organizational relationships for optimal effectiveness.
Systems Theory arises from the concern for the construction of more or less defined open models that dynamically interact with the environment and whose subsystems denote a complex internal and external interaction. Organizations are analyzed as open systems, that is, open to the exchange of matter, energy and information with the environment that surrounds them.
TS is considered too abstract and conceptual, therefore difficult to apply to practical managerial situations. Although it has great applicability, its systematic approach is basically an understandable general theory, covering all organizational phenomena. It is a general theory of organizations and administration, an integrative synthesis.
The Contingency Approach highlights that organizational effectiveness is not achieved following a single and exclusive organizational model, that is, there is no single best way to organize, in order to achieve the different objectives of organizations within an environment also changing.
The word contingency means something uncertain or eventual that may or may not happen, it usually represents a proposition whose truth or falsity can be known by experience or reason. This is based on the fact that:
There is no unique and exclusive organizational model to organize - there is dependence on the external environment, the variation in the environment and technology influence the variation of the organizational structure.
Today it is affirmed that Contingency Theory marks a new pattern in the General Theory of Administration (TGA), leaving behind some approaches but that in one way or another contributed to the emergence of this.
The most notable contribution of the authors of the Contingency approach is in the identification of the variables that produce the greatest impact on the organization, such as the environment and technology, to predict differences in the structure and operation of organizations due to the differences in these variables. Thus, different environments require different organizational relationships for optimal effectiveness. An appropriate model is necessary for each given situation. On the other hand, different technologies lead to different organizational designs. Variations in the environment or in technology lead to variations in the organizational structure. For a better understanding, it is necessary to explain what is meant by environment and technology.
It refers to the unfolding of the visualization from the inside out of the organization: the emphasis is on the environment and environmental demands on the organizational dynamics. In this sense, the Contingency approach highlights that it is the environmental characteristics that determine the organizational characteristics. It is in the environment where the causal explanations of the characteristics of organizations can be located. Thus, there is no single best way to organize. It all depends on the environmental characteristics relevant to the organization. The contingent vision of the organization and its administration suggests that an organization is a system composed of subsystems and delineated by identifiable limits in relation to its environmental suprasystem. This contingent approach is directed,above all, towards the recommendation of organizational designs and union systems more appropriate to specific situations.
A surprising number of books and articles on management equally confuse the attributes between attributes and results with chance.
The Case… to ground the theories
Let us ask ourselves if you have ever seen a study that, for example, contrasts the success of companies financed with venture capital with those financed with corporate capital. This does not articulate a theory of causality, and it does express a correlation between attributes and outcomes, and that is generally the best thing to do when what causes a certain outcome is not understood.
For this case let's say that some studies can show that 20% of startups financed by venture capitalists are successful; another 50% end up among those in trouble and the rest fail completely. Other studies may claim that the success rate of startups financed by corporate capital is much lower.
However with these studies it cannot be concluded that the company will be successful is financed with venture capital - the mechanism - that contributes to the success of a new company.
How to choose the theory?
Executives who want to solve a problem want to cut to the chase: which theory will help? How to distinguish a good theory from a bad one? That is, when is a theory well developed enough that its categorization scheme is actually based on causal links between circumstances, measures, and outcomes, and not on coincidences?
When researchers are just beginning to study a business problem or issue, articles that simply describe the business can become an extremely valuable basis for researchers' subsequent attempts to define categories and then explain what causes the phenomenon to occur. From this basis, a theory can emerge that explains which systems work under what circumstances.
It is vital to beware of jobs that insist on the need for a revolutionary change in all things. This is the fallacy of going straight from description to theory. If the authors imply that their findings apply to all companies and in all situations, then you must not believe. We must know not only where, when and why things must change, but also must remain the same. Most of the time, new categorization schemes do not disrupt established thinking. Rather, they provide new ideas about how to think and act in circumstances-dependent ways. For example, Porter's work on International Competitiveness did not destroy Trade Theory, but rather, identified a circumstance in which a different mechanism of action led to competitive advantages.
If the authors classify the phenomenon into categories based on its attributes, simply accept that the study represents only a preliminary step towards a reliable theory. The most that can be known at this stage is that there is a certain relationship between the characteristics of the companies that are being studied and the results they experience. These can be described in terms of a general trend (for example: 20% of all venture capital-financed companies succeed; far fewer companies financed with corporate capital do so). But if they are used to guide the actions of the company, you run the risk of getting into trouble.
Correlations that are disguised as causality often take the form of adjectives. However, a true theory must include a mechanism. Thus, a theory of how financing helps startups succeed might suggest that what venture capitalists do to help startups succeed is allocate small amounts of funds to many experiments. That encourages startups to immediately abandon failed initiatives and try new methods. What corporate capitalists do, which is less effective, is flood a new company with a large amount of money up front, allowing it to pursue an initiative that is doomed for a long time. Then they withdraw their backing,thus preventing the company from trying different methods to find out what will work. During the dot-com boom when venture capitalists flooded startups with money, the fact that the funds themselves were venture didn't help reverse the predictable disaster.
Remember that a researcher's findings can hardly ever be considered final. Discovering a circumstance in which a theory did not accurately predict an outcome is a success, not a failure. Progress results from refining theories to explain the situations in which the theory failed.
Personal inclination towards…
Seek to understand the relationships that are established within subsystems and organizations and their environment. A theory is sought to suggest appropriate organizational designs for specific situations.
The Contingency Approach is based on the approaches of other theories and the criticisms of each of them to show that nothing is absolute. There is no optimal method for organizations, each one adapts to the one that provides the best result. The contingency point of view of organizations and their administration proposes that an organization is a system composed of subsystems and delimited by identifiable limits with respect to the suprasystem that surrounds it. The contingency point of view seeks to understand the interrelationships within and between the Subsystems, as well as within the organization and its environment, define the relationship schemes or configurations of variables.
The Contingency approach represents, in fact, the first serious attempt to answer the question of how systems interact with their environment. The Contingency approach tries to provide something more useful and practical for the administration of complex organizations. The lack of harmony between an organization and its environment leads to inefficiency. When a subsystem of an organization "behaves" in response to another system or subsystem, it can be said that the response was "contingent" on the environment… therefore, a contingency approach is an approach in which the behavior of a subunit is dependent on its environmental relationships with other units or subunits that have some control over the desired consequences of that subunit.
The contingency approach accepted the basic premises of the Systems Theory regarding interdependence and the organic nature of the organization, as well as the open and adaptive nature of organizations and the need to preserve their flexibility in the face of environmental changes. The central thesis of the Contingency Approach is that there is no generally valid, optimal or ideal method or technique for all situations: what exists is a variety of alternative methods or techniques provided by the various administrative theories, one of the which may be the most appropriate for a given situation.
One of the curious aspects of the Contingency Approach is the fact that almost all the concepts used are placed in relative terms and not in absolute terms, as in a continuum. It is mainly in the Theory of the Contingency that the fact that from the Structuralist Theory it is noticed with more preponderance: the borders between the diverse theories and schools become more and more uncertain and permeable with a growing and powerful exchange of ideas and concepts.
Conclusions
The exposed theories present, each one for its part, a different approach to the administration of organizations. Each theory presents the solution or solutions found for a given circumstance, taking into account the localized variables and the most relevant issues. To say that one theory is more true than the other is not correct, much less do I have the power to make a judgment of such magnitude, it would be better to say that each theory presents the solution within the chosen approach taking into account the variables selected within or outside of organizations.
Traditional theories have viewed human organization as a closed system. This has led to not taking the environment into account, causing little development and understanding of feedback, which is essential for survival.
Reality
Unfortunately, many scholars and consultants in Management research intentionally stay in the correlation-based theory-building stage, in the mistaken belief that they can increase the predictive power of their "theories" by processing huge databases into powerful computers and producing regression analyzes that measure the correlations of attributes and results in increasingly higher degrees of statistical significance. Executives trying to be guided by that kind of research can only hope to be lucky: if they acquire the recommended attributes, they will somehow also benefit from success.
Generally, the advances that lead from categorization to an understanding of fundamental causality do not come from processing more and more data, but from very detailed field research, when researchers are introduced to companies to carefully observe the operation of causal processes.
Law 100.
Chester Barnard: The Functions of the Executive (1938).
TGS: General Systems Theory.
Implying that the source of capital financing is a cause of success rather than simply an attribute that can be related to a company that is successful for some other currently unknown reason.
Things are usually the way they are for very good reasons and not just because.
Which is a description of how something works.
The consequences are always contingent on behavior within the environment.
Bibliography
CHIAVENATO, Idalberto. Introduction to the General Theory of Administration, Colombia, Editorial Mc Graw Hill, 1994.
KOONTZ, Harold. Administration a Global Perspective, Mexico, Editorial Mc Graw Hill, 1998.
MORRIS, Daniel. Management Siglo XXI, Colombia, Editorial Mc Graw Hill, 1995.
ROBBINS, Stephen P. Management, USA, Prentice Hall Publishing, 1998.
