Contingency Management Theory can be utilized in most business applications. Contingency Management Theory defined on the premise that there is no best way to lead an organization as there are too variables, both internal and external (McGlone, 2005). The manager must change his or her leadership technique, depending on the situation (Nair, 2009). Contingency Management is dependent on the manager’s flexibility and personal library of potential responses to fulfill the needs of different situations (Nair, 2009). Contingency Management can be accomplished by both individuals and organizations (Nair, 2009).
The use of a reward system, allows the leaders or managers the ability to obtain a desired outcome by rewarding an employee with incentives. Managers are must analyze a situation and use ideas from his or her repertoire find an appropriate combination of management techniques to meet the needs of the situation (Nair, 2009).
Although considered a pioneer of Contingency Management, Mary Parker Follett focused on the relationship between management, worker, and the emotional exchange to improve work production (Kennedy, 2007). One of the key elements of Mary Parker Follett’s contribution to the Management discipline includes the belief that organizational leadership is “Situational,” leadership throughout an organization, at different levels and in different situations (Kennedy, 2007). Fiedler's 1967 theory is the first and most renowned contingency model (Nair, 2009). The Fiedler model proposes that most leaders are either task-oriented or relations-oriented and suggests it is important to understand the leader's personality and degree of situational control (Kennedy, 2007) (Nair, 2009). The strength of Fiedler's theory is its ability to predict leadership effectiveness according to individual and organizational variables. The weakness of Fiedler’s theory is that the model is inflexible and ignores a leader's potential for adaptability. There are many other contingency theories that have been developed since Fiedler's work. Some of the more significant theorists and their models include: Vroom and Yetton's (1973) decision-making theory, House's (1971) path-goal theory, Yukl's (1971) multiple-linkage model, Hersey and Blanchard's (1977) situational theory, and Kerr and Jermier's (1978) leader substitution theory (McGlone, 2005). Each approach focuses on a different leadership problems and stresses the necessity for manager to develop different leadership behaviors depending on circumstances (McGlone, 2005). Hersey and Blanchard's Situational Leadership Theory (SLT) is an example of a contingency theory that focuses on the employees' maturity. The right leadership style, according to SLT, is...