What is the contingency theory of leadership, and how does it work?

Effective leadership can make or break a business. It’s in any business owner’s best interests to understand the different theories of leadership and find one that works well for their company and its culture.

Well-researched theories can provide a structured approach that improves outcomes and benefits both managers and employees alike.

One of these theories is the contingency theory of leadership.

The contingency theory of leadership is highly adaptable, as it recognizes the nuances involved in effective leadership. It’s based on the idea that there’s no one-size-fits-all leadership style.

Let’s take a deeper look at what this means and how it plays out in practice.

The contingency theory of leadership suggests that since every situation is unique, it will require a unique leadership perspective. What works best in one scenario might fail in another.

It contrasts with other leadership theories that treat the leadership traits or styles they recommend to be universally successful.

In particular, the theory explores the interplay between a leader’s inherent style and the situational factors they come up against—the nature of the stack, management structure, team dynamics, external pressures, and so on.

For example, a leader with a naturally hands-off approach might do well working with a team of highly skilled professionals who crave autonomy. But, as pressure increases and more structure is required, they may struggle to keep things together. The contingency theory doesn’t say for certain that this leader is unsuitable; it just recommends that the leader is aware of their strengths and weaknesses and adapts their style to the situation.

Agile has become a bit of a buzzword in the business world, with companies working hard to create workflows and teams that are flexible and able to adapt to changing conditions. It’s only natural that this concept is also extended to leadership styles.

Leaders who can change their strategy to match the current situation will see the same improvements as agile teams. Individual employees, the teams they are on, and entire organizations are all complex entities. Each is influenced by several internal and external factors. Given this diversity and complexity, the contingency theory of leadership says that it’s unrealistic to expect one approach to be continuously effective.

What drives success in a startup might not fare so well in an established corporation. Company cultures vary significantly, meaning the teams within those cultures respond differently to different leadership styles.

Finally, each individual requires a unique approach that resonates with them. Overarching leadership theories, for the most part, fail to account for any of this.

Recognizing the limitations of a fixed leadership style reveals the need for adaptive leadership. The contingency theory suggests that leaders need to possess the skills to read situations, understand the dynamics at play, and adjust their approach to match.

As with other forms of business agility, this isn’t just about reading the current moment; it involves a proactive approach to foreseeing shifts and being prepared to react swiftly when they occur.

Context is key for this type of adaptability. Team dynamics change as the team matures and enters different project phases. External conditions are another factor.

A good leader, according to the theory, is aware of how these factors impact how their leadership is perceived and adapts to make decisions that resonate with teams and individuals in the current context.

Businesses that embrace contingency theory principles often experience a more dynamic and responsive leadership framework, which is the goal.

Leaders who embrace the theory can address challenges and motivate their teams more effectively. Team culture begins to shift, and company culture as a whole becomes more adaptable as teams become more receptive to change.

Agility in leadership helps company culture become more agile, too. More agile companies are better equipped to respond to uncertainties as they arise or new opportunities as they present themselves, giving them a competitive advantage.

Given the focus on adaptability and the core concept that one size does not fit all, it’s not surprising that multiple models sit under the contingency theory of leadership umbrella. Each model brings a unique perspective. By embracing this multi-model approach and taking the time to understand each one, companies can realize a number of benefits:

• A more thorough analysis: examining leadership through different lenses allows you to gain a more well-rounded understanding of what it entails.

• Flexibility: when you understand all options, you can quickly shift your approach to adapt to a new reality as situations change and better fit an alternative model.

• Continuous learning: accepting the idea that multiple models can coexist encourages you to take the time to explore emerging insights and perspectives.

Now, let’s take a look at some of the more popular models that have emerged within the contingency theory of leadership:

Fiedler’s contingency theory

This is one of the oldest contingency theory models, having been developed in the 1960s by Fred Fiedler. It’s based on examining the interaction between the leadership style and how favorable it is.

Leadership style

Fiedler believed all leaders have one of the following two styles:

1. Relationship-oriented

2. Task-oriented

To determine which of these styles a leader has, Fiedler developed the least preferred coworker (LPC) score. The leader is told to think of the person they least enjoy working with and describe them.

You are more relationship-oriented if you give your least favorite coworker higher ratings across various factors. You are more task-oriented if you score them lower on the same criteria.

Situational favorableness

To match a situation with one of the two leadership styles, Fiedler suggests considering three major factors:

1. Leader–member relations: measures the degree of trust and confidence team members have in their leader. Higher trust and confidence mean better relationships and favorable conditions for relationship-oriented leaders.

2. Task structure: refers to how clear and structured a task is. High structure means the task is clear, making it ideal for task-oriented leaders.

3. The leader’s authority: the authority given to the leader. Task-oriented leaders rely more heavily on this than relationship-oriented leaders to get tasks done.

Implication

Fielder believed that maximum effectiveness could be achieved by matching the leadership style with the working situation.

Situational leadership model

Developed by Paul Hersey and Ken Blanchard, the situational leadership model states there is no single best style of leadership. Instead, leaders should adapt their style based on their employees’ readiness and capability levels.

Leadership styles

Hersey and Blanchard took a different approach to Fiedler. They believed that leaders could adapt to various styles instead of having a set style.

They outlined the following leadership styles:

• Directing (S1): high directive and low supportive behavior. Leaders define roles and tell people what to do.

• Coaching (S2): high directive and high supportive behavior. Leaders provide direction but also support and listen to followers.

• Supporting (S3): low directive and high supportive behavior. Decision-making is shared, and leaders facilitate and support followers.

• Delegating (S4): low directive and low supportive behavior. Leaders entrust decisions to their followers.

Follower readiness

The situational leadership model is about choosing the right leadership style for the followers the leader is dealing with. Followers are thought to fall into one of four categories:

• R1 (low maturity): followers lack skills but are enthusiastic and committed.

• R2 (some maturity): followers have some skills but may lack commitment.

• R3 (moderate to high maturity): followers are capable but might lack confidence or motivation.

• R4 (high maturity): followers are both capable and confident in their abilities.

Implications

Leaders should evaluate their followers’ readiness and adapt their leadership style accordingly.

The leadership style chosen should match the followers’ readiness. For example, a newer employee (R1) would benefit from a more directed leadership style (S1). Meanwhile, a seasoned employee (R4) would do better with a more hands-off approach (S4).

Path–goal theory of leadership

Proposed by Robert House, the path–goal theory of leadership says that leaders should focus on helping followers achieve their goals. Leaders can achieve better outcomes by identifying the path followers should take and helping guide them toward that goal.

Leadership styles

Under this theory of leadership, the different styles House describes are not meant to be taken in isolation. Rather, leaders should choose the set of styles that best matches the situation.

The styles are:

• Directive: provide clear guidance and set performance standards.

• Supportive: promote friendly and approachable relationships.

• Participative: consult followers and include them in decision-making.

• Achievement-oriented: set challenging goals and show confidence in followers’ abilities.

Implications

When determining which set of leadership styles are appropriate for which conditions, House says leaders should examine the characteristics of both the follower and the task.

For example, an experienced employee following a routine procedure might not appreciate a directive approach. An achievement-oriented leadership style might suit them better.

Vroom–Yetton decision model

Also known as the Vroom–Yetton–Jago decision model, this theory was developed by Victor Vroom and Philip Yetton and later refined by Vroom and Arthur Jago. It focuses on the level of participation in decision-making. It says that the level of follower participation should vary depending on the nature of the situation.

Decision procedures

The model breaks down the level of participation into three categories:

• Autocratic: the leader makes the decision alone.

• Consultative: the leader consults followers individually or in a group and then makes the decision.

• Group-based: the decision is made collectively by the leader and followers.

Decision tree

A series of questions are asked to create a decision tree. This determines the best approach.

• Decision quality importance: is the quality of the decision crucial? Crucial decisions should involve people who have relevant knowledge.

• Commitment requirement: does the decision need the team’s buy-in to be successful? If yes, the team should be involved.

• Leader’s information: does the leader have sufficient information to make a good decision?

• Problem structure: is the problem well-structured? If the problem or situation is ambiguous, more perspectives might aid understanding and lead to a better outcome.

• Commitment probability: if the leader were to make the decision by themselves, would their subordinates be committed to it?

• Subordinate conflict: will conflict arise among subordinates about this decision? If so, the leader should be more involved.

• Subordinate goals: do subordinates share the organization’s goals? If this is the case, they may be more likely to make a decision that benefits both them and the wider business.

Implications

According to the Vroom-Yetton Decision Model, an autocratic approach might be most effective in situations requiring rapid decision-making where the leader has all the necessary information.

For decisions that significantly impact the team and where buy-in is crucial for implementation, a more participative or group-based approach would be best. This would ensure commitment and leverage the team’s collective wisdom.

Adapting your leadership style to different work situations is a challenge that requires ongoing training and development. You’ll need to cultivate a high degree of self-awareness, enabling you to recognize when you need to shift your approach.

Continuous learning and development programs can be instrumental in helping leaders understand their inherent styles and how these can be applied in different contexts. This adaptability often needs nurturing, which requires dedicated effort and a commitment to personal growth within the leadership team. Leaders typically default to their preferred approach.