Situational Leadership and Contingency Theory

A crisis is a reality in today’s fast-paced business environment, ranging from changing economic situations, unexpected technological changes, problems of workforces, and political dynamics, which causes instability to today’s organizations. It is safe to argue that the present crisis involving coronavirus (Covid-19) pandemic is unique compared to anything the world has experienced in over a century. The crisis seems prolonged and perhaps an existential problem to organizations. With the Covid-19 pandemic, many organizations were forced to convert and adjust to survive the crisis’s drawbacks. Effective organizational leadership in a prolonged crisis with such severe consequences is unquestionably critical for an organization and its people and necessitates policy changes to match the new trends. Different leadership approaches and theories are applied to help organization leaders correctly evaluate the situation during a crisis, set the correct path for the organization, and implement the policy plans to survive the crisis. Situational leadership and contingency theory are adopted by organization leaders to correctly assess the current Covid-19 pandemic crisis and set the correct path and policy plans for organizations to survive the crisis.

Situational Leadership Style When Setting Policy Framework during a Crisis

A situational leadership style is an adaptive approach that encourages organization leaders to take stoke of their team, weigh the many workplace variables, and select a leadership model and policy framework that best fits the circumstance and the organization’s goals. An effective leader applying a situational approach must adjust the organization set to fit the situation. When adversity such as the recent Covid-19 pandemic strikes, people need direction and guidance. Hence the organization leaders must exert their power and influence to direct the way forward. The leaders must correctly evaluate the situation and establish the policy framework necessary to implore and understand its potential outcome (McMillan & Raggo, 2020). The situational factors are essential in matching the policy and the leadership style that help manage the crisis.

There are four fundamental leadership styles that leaders adopting a situational approach can use to direct policy change during a crisis. Organization leaders can use a telling style or directing method, characterized by issuing instructions or directions to control the organizational behaviours. Leaders give recommendations on what and how the organization’s goals can be achieved amidst the changes and supervise carefully to observe areas that require improvement. Another approach is coaching or the selling style (Fener & Cevik, 2015). The approach entails a back and forth process where the organization sells the idea or delivers the policy content and convinces members to accept the process. The leadership goal in this scenario is to achieve the organization’s goals while meeting the stakeholders’ socio-emotional needs during the crisis (McMillan & Raggo, 2020). However, meeting the stakeholder’s needs does not imply being dishonest about the impact of the crisis or facts about the situation to ease concerns observed in several government institutions during the onset of the Covid-19.

Supporting or participating style is another strategy for situational leadership approach, applicable during crisis management. In this style, leaders offer fewer directions, but stead allows group members to suggest ideas that can inform policy decisions during the crisis (Ghazzawi, Shoughari & Osta, 2017). Under this approach, the leaders’ primary focus is to enable members to bring out their knowledge, skills, and expertise to accomplish the goals. The last leadership approach in situational style is delegating. The leader allows members to make the most decision, taking the most responsibility for what happens (Fener & Cevik, 2015). The style often uses experts to correctly evaluate the impact of the crisis and guide on the best course of action to manage the anticipated consequences. The leader may not interfere but let the experts do their job according to their best knowledge and understanding. Further, the leader desists from intervening with unwarranted social support. Since a crisis such as the Covid-19 pandemic is not a day-to-day operation of the organization, the situational leadership approach provides relevance in its management, allowing decisive leaders to apprehend the scourge, hence mitigating potential losses, both lives and financial.

Contingency Theory of Leadership and Policy Framework during a Crisis

The contingency theory of leadership presumes that a leader’s effectiveness is contingent on whether their approach matches particular circumstances. According to the theory, a leader can be effective in one situation and ineffective in another one. Therefore, to be a productive leader during a crisis requires one to be objective, self-aware, and adaptable. There is no single approach to leading an organization in a management setup. To correctly evaluate the situation and set the correct path and policy plans for organizations during a crisis, the contingency manager needs to pay close attention to the problem at hand alongside their management styles, ensuring that they both interact effectively. The correct approach to managing a crisis of any magnitude is dependent on the context; thus, a single rigid approach is ineffective in the long term. As such, the leader should be selected capable of making amicable decisions or inform policies relative to the condition and situation at hand. The central philosophy of this perspective is that an organization is an open system (Suharyanto & Lestari, 2020). Leaders must be careful when formulating a policy framework to satisfy and balance internal needs and adapt to environmental conditions.

The organization’s top managers or leaders play a central in crisis management using a contingency approach. Confronted with a crisis such as the current covid-19 pandemic, the leaders must decide on the approach and policy framework, including how decisions are made. For every potential solution to the problem, the leadership must evaluate the organization’s level of acceptance, estimating how satisfactory and effective this solution will be and selecting a specific decision-making style based on the considerations. The approach chosen determines the length and implementation process and the subsequent outcomes. Thus, the central issue in crisis management using the contingency approach is the leaders’ decision-making style, which depends on how they perceive the organizational context during the crisis. Decisions are considered strategic if they pose substantial implications to the organization’s future, such as product innovation, reorganization, or relation decisions (Suharyanto & Lestari, 2020). The contingency approach to crisis management assumes that factors with potential consequences to strategic decision-making also impact decision-making in less significant issues to the organization’s survival. There is no one most effective organizational approach during a crisis, and what works in one situation or problem may not work on another. As such, the decision-making and policy framework implement are strongly dependent on circumstances (Steinbach et al., 2017). The focus of the organization’s decision-makers during a crisis is to study how circumstantial factors affect the decision-making process during the crisis and the outcomes of a policy framework.  

Specific dimensions dictates the decision-making process, and the final policy framework adopted to manage the crisis. The first dimension is centrality, which implies how top management engages the lower-level managers in the decision-making process. The second dimension is the formalization. This means the degree to which the whole decision-making process is formalized. The third aspect is information, which denotes the level to which the organization’s decisions are based on information collected and analyzed and the advantages and disadvantages of such information (Steinbach et al., 2017). The last dimension is confrontation, which is the extent to which political processes influence the decision-making process. In this scenario, the managers have to confront other members who have conflicting interests. The freedom to decide which dimension of decision-making to apply to a specific problem is restricted by context and content factors (Steinbach et al., 2017). The chances are that managers will opt for a greatly centralized approach when the problem is incredibly significant for the company (a content factor), such as restructuring due to the covid-19 pandemic crisis. A formal approach is commonly applied in highly bureaucratic organizations (context factor). The end outcome depends on both the context or content factors (Suharyanto & Lestari, 2020). It is essential to adjust the decision-making process approach during the process to avoid chances of failure due to unforeseen factors that do not match the decision style selected.

The present policy paper discusses how situational leadership and contingency theory can be used by organization leaders to appropriately evaluate the current Covid-19 pandemic crisis and establish the correct path and policy plans for organizations to manage the crisis. The two approaches differ in their approach to leadership in crisis management. The situational style during a crisis focuses on changing organizational leadership behavior to adapt to the current situation. The contingency theory of leadership, on the one hand, presumes that a leader’s effectiveness is contingent on whether their approach matches particular circumstances.

References

Bosse, T., Duell, R., Memon, Z. A., Treur, J., & van der Wal, C. N. (2017). Computational model-based design of leadership support based on situational leadership theory. Simulation, 93(7), 605-617.

Fener, T., & Cevik, T. (2015). Leadership in crisis management: Separation of leadership and executive concepts. Procedia Economics and Finance, 26, 695-701.

Ghazzawi, K., Shoughari, R. E., & Osta, B. E. (2017). Situational leadership and its effectiveness in raising employee productivity: A study on North Lebanon organization. Human Resource Management Research, 7(3), 102-110.

McMullin, C., & Raggo, P. (2020). Leadership and Governance in Times of Crisis: A Balancing Act for Nonprofit Boards. Nonprofit and Voluntary Sector Quarterly, 0899764020964582.

Steinbach, A. L., Holcomb, T. R., Holmes Jr, R. M., Devers, C. E., & Cannella Jr, A. A. (2017). Top management team incentive heterogeneity, strategic investment behavior, and performance: A contingency theory of incentive alignment. Strategic Management Journal, 38(8), 1701-1720.

Suharyanto, A., & Lestari, R. D. (2020, December). The Fall and Rise of the Contingency Theory of Leadership. In Iapa Proceedings Conference (pp. 479-496).