In the last post in this series, I argued that our nation’s business school professors really don’t know what they’re talking about when it comes to managing.

Nor, for that matter, do the teachers, instructors, and other academics charged with educating the managers, MBAs, and businesspeople of tomorrow.

I based this claim on the weakness of contingency theory – an approach to managing that seems to represent the current state-of-the-art in management and organizational theory.[1] For those of you who are unfamiliar, it is a view of managing that might be summed up as follows:

“There is no one best way of organizing. The appropriate form depends on the kind of task or environment with which one is dealing.”[2]

In other words, when it comes to how to best manage a particular business, a contingency theorist would argue quite simply that “it depends” on the circumstances.[3]

This sounds reasonable enough, I suppose. On some level, the best way to manage a particular organization is likely to be situationally dependent. For instance, I suspect very few people would argue that managing a team of synthetic organic chemists engaged in pharmaceutical research and development is exactly the same as, say, managing a bunch of bartenders.

Nevertheless—and as I argued in that last post—the limitations of such a “theory” are probably immediately obvious to you.

Imagine, for instance, if the engineering or medical professions subscribed to a form of “contingency theory” as well. What if it were acceptable, in other words, for a civil engineer to reply “it depends” when asked whether a particular bridge is still safe to cross, or is in need of renovations? Or if a pathologist was allowed to respond similarly when asked whether a particular cancer patient would be better off undergoing chemotherapy, or surgery? In either instance, simply saying “it depends” would be considered unacceptable – even ridiculous.

Of course “it depends.” But it depends on what?

And yet despite this perhaps obvious shortcoming, contingency theory is still widely accepted by the broader management community. Organizational theorist and management consultant Gareth Morgan is certainly an advocate. In the past, he’s argued that contingency theory “has established itself as a dominant perspective in modern organizational analysis.”[4] 20th Century business philosopher L.F. Urwick would seem to agree, having once proclaimed:

“…no serious student of management has ever suggested that there was one best way of organizing a business.”[5]

And even J.C. Spender, who I quoted at length in that previous post—and who has been highly critical of business schools and MBA programs in the past[6]—seems convinced. He argues that while contingency theory may have its limitations, it represents a step in the right direction.[7]

So this week, part two of my efforts to expose and de-bunk this so-called “contingency theory” of management.

I’ll argue that despite any insistence to the contrary, contingency theorists do actually believe there is only “one best way” to structure, organize, and manage a business.

They just don’t seem to realize it.

 

“Organic” management?

First, a little history.

The origins of contingency theory lie in the work of organizational sociologist Joan Woodward. Born in 1916, she was an early pioneer of the application of empirical research methods to the study of organizations. She was also only the second woman to be given a chair at Imperial College (UK). A prize has since been established there in her honor.[8]

In the 1950’s, Woodward studied manufacturing firms located in South Essex, England, the results of which she published in Industrial Organization: Theory and Practice (1965). Through these investigations, she and her fellow researchers hoped to discover “whether any particular form of organization was associated with management efficiency and success.”[9] And of the various organizational “forms” a business might choose to adopt, Woodward paid attention to two in particular – both of which had been previously defined by the sociologist Tom Burns:[10]

  • Mechanistic: These are organizations “characterized by rigid breakdown into functional specialisms, precise definition of duties, responsibilities and power, and a well-developed command hierarchy through which information filters up and decisions and instructions flow down.”
  • Organic: Such organizations “are more adaptable; jobs lose much of their formal definition, and communications up and down the hierarchy are more in the nature of consultation than of passing up of information and receiving orders. In this type of situation the chief executive is not regarded as omniscient.”[11]

Based on the data she collected, Woodward was in fact able to show different organizational forms worked better under some circumstances, but not others. “[F]irms with similar production systems appeared to have similar organizational structures,” she wrote.[12] Furthermore:

“…successful firms inside the large batch productions range tended to have mechanistic management systems. On the other hand, successful firms outside that range tended to have organic systems.”[13]

This was unprecedented. Woodward had “demonstrated empirically” the existence of a “link between technology and social structure” as she put it – something that no organizational scientist had ever been able to do before.[14] Based on her findings, she furthermore concluded that “there can be no one best way of organizing a business.”[15] Depending on the circumstances, she contended, one organizational “system” might be better than another.

And so a “contingency theory” of management was born.

 

Let’s take a look at your chart

At the risk of bogging you down in unnecessary detail, it is nevertheless worth examining some of the methods used by Woodward for her studies.

One of those was her reliance on organization charts. She writes:

“…a start was made by asking to see the organization chart. In about half the firms studied charts were available. Some were very elaborate. In one firm the general manager had a chart more that 20 feet long on his office wall…”[16]

As you are probably aware, an organization chart is one of those “pyramid-shaped” organizational diagrams with all the boxes and lines on it.[17] There’s a lot that goes into drawing up one of these charts, but basically each box represents an employee or organizational position, and the lines indicate who reports to who. Woodward includes several in her text, and without exception they conform to the same basic layout and shape.[18] The chief executive sits alone atop the chart, while other organizational personnel are located at progressively lower levels depending on their position, responsibility, and authority.[19]

References to organization charts can be found throughout Woodward’s text. For example:

“In unit production…not only did short and relatively broadly based pyramids predominate, but they also appeared to ensure success. Process production on the other hand, would seem to require taller and more narrowly based pyramids [my emphasis].”[20]

No less frequent are references to hierarchy – a term that is perhaps the more formal descriptor of what a “pyramid-shaped” org chart represents. For instance [my emphasis in each case]:

  • “…although all the successful unit production firms had short-command hierarchies, there was little evidence to suggest that the lines had been kept short as a result of deliberate decisions.” (p. 76)
  • “…particular reference to the nature and number of decisions taken at the different levels of the hierarchy.” (p. 86)
  • “The other two firms with divisionalized [sic] organization did not have this group of specialist advisers at the top of the hierarchy.” (p. 107)
  • “Direct and speedy channels of communication between one department and another were essential at every level of the hierarchy.” (p. 134)
  • “…at every level of the hierarchy…” (p. 157)
  • “…at all levels in the hierarchy down to…” (p. 159)

The implication here is significant, and thus worth stating more explicitly: From the very get go, Woodward seems to have conceived of all organizations as some sort of hierarchy. Broadly based, or narrow. “Divisionalized” or not. Mechanistic or organic. To her eyes, these were different “systems” of organizing. But on another, deeper level, it is perhaps safe to say that they are all just variations on a single organizational theme. Namely:

Hierarchy.

Interestingly, this predisposition would affect the selection criteria Woodward would use for her study. She writes:

“Preliminary contacts suggested that few firms employing less than 100 people had an elaborate formal organization.

What Woodward and her fellow researchers then chose to do with this information is revealing:

…it appeared that little would be lost if smaller firms were omitted.”[21]

In other words, Woodward seemed willing to exclude from her studies those organizations that were not yet large enough (or established enough) to conceive of themselves in more traditional organizational terms.

Nevertheless—and apparently despite her best efforts—a few firms lacking “elaborate formal organization” (i.e. an org chart) made their way into her study anyway. Her response in these instances is equally revealing:

“In most cases…inability to produce an organization chart or state who was responsible to whom in the hierarchy—indicated an organic management system.”[22]

In other words, the lack of an org chart was interpreted as evidence of “organic” management. And that, of course, is just one type of hierarchy according to Burns’ definition of the term (see above).

But Woodward’s prejudice is perhaps most on display in how she chose to handle those firms who couldn’t supply an org chart of their own:

“When no organization chart was available the research workers built one up for themselves through a process of question and answer.”[23]

That’s correct. An organization chart would then be drawn up for that firm by Woodward and her colleagues. And as her text makes it clear, that chart is all but guaranteed to have been a traditional, “pyramid-shaped” diagram consistent with management by hierarchy.

 

The many shall become one

Mechanistic vs. organic. Rigid vs. adaptable. Narrowly-based vs. broadly-based. And “divisionalized” vs. not.

To Woodward’s way of thinking, these were perhaps just some of the many different ways of organizing a business, or for-profit enterprise. Having defined and characterized such “systems” of management, she was then able quantify and establish their existence at the manufacturing firms she’d selected for observation. And all of this led her to posit that there was no “one best way” to organize.

If Woodward viewed the organizational world through the lens of hierarchy, she might be forgiven for doing so, given the time. Hierarchical org charts had become commonplace in the preceding decades. Many large, successful corporations had drawn up such diagrams to describe their operations, and so in fact view themselves in this way.[24] Nor had any serious alternative to management by hierarchy been conceived of as of yet, much less proposed.[25]

No less significant is the fact that many those responsible for organizational planning at the firms studied agreed with her conclusions:

“The majority felt that there was no one best way of organizing a firm.”[26]

Finally, it is also worth reiterating that since Woodward’s time, contingency theory has withstood every significant challenge to it. In fact, a “contingency theory” of leadership has been developed in the intervening years as well.[27]

Of the criticisms that have been offered, however, most point out the weakness of simply concluding that good management practices “depend” on the circumstances. For instance, organizational scholars Longenecker and Pringle argue that an absence of universal management principles, or the lack of a general theory, can hardly be considered a “theory” itself:

“The dissimilarity of management situations is a fact and explains why particular management practices work in some cases and not in others. Differences in situations affect organizational effectiveness and explain the weakness of over-stated universal principles. But dissimilarities or situational differences do not become a general theory…”[28]

What they do not argue (or acknowledge), however, is what I hope I’ve been able to convince you of in this week’s post: That despite any insistence to the contrary, the origins of contingency theory are in fact based on the assumption that there is one best way of managing.

And that “one way” is management by hierarchy.

 

No “one best way” is not the best way?

Okay…but so what?

In other words, what if Woodward was blind to the fact that she was looking at different permutations of the same organizational form (hierarchy), and not identifying unique and distinct “systems” of management like she thought she was? Couldn’t see the forest for the trees, so to speak. Big deal.

Besides, what’s wrong with management by hierarchy, anyway?

Well, Woodward herself might offer a clue as to what that might be, having this to say about the “successful” firms she studied:

“In spite of their success…employment in these firms was characterized by stress and anxiety [my emphasis].”[29]

At any rate, I’ll wrap up this week’s post by suggesting that maybe its time to re-examine some of what seems to known about managing – one of those things being this notion of “contingency theory.”

Again, the failings of this theory of management would seem to be two-fold:

(1) Contingency theory argues that the best way of managing a particular organization “depends” on the situation. And yet no one within the organizational community has thus far been able to describe specifically what it might depend on.[30]

(2) Despite the insistence that there is no “one best way” to manage, contingency theorists nevertheless do seem to agree that management by hierarchy is that one best (or only) way – even if they do so unwittingly. It’s fair to say that this is contradiction.

So maybe we do need to re-think what we do and do not know about managing more generally. Especially if the current state-of-the-art management theory is as suspect as it appears.

And good place to start might be to go back to “first principles,” so to speak. So let’s re-ask the question that got Woodward started on her investigation in the first place. To paraphrase her study’s statement of purpose:

What is it that makes a company successful?

To be sure, good management systems/procedures/practices are important. And Woodward’s studies represents a well-intended effort to identify what those might be.

But good managers and good management are only part of what’s really critical, aren’t they? More generally, it’s good employees—at all levels—that are required for organizational success.[31] Be it good managers, good frontline employees, good support staff, good executives, or a good CEO; what seems to matter most are the human resources – or employing individuals with “right stuff,” so to speak.

So for the next post in this series, I’ll begin there:

What can a business do to ensure that everyone it employs (managers included) is up to the job?

 

 

Next in the series: The right stuff

 

 

Endnotes 

[1] Luthans, Fred, and Todd I. Stewart. “A general contingency theory of management.” Academy of Management Review 2.2 (1977): 181-195.

[2] Morgan, Gareth. 1986. Images of Organization. San Francisco: Berrett-Kohler Publishers, Inc. and SAGE Publications, Inc., p. 44. (Page numbers refer to the Executive Edition, published in 1998. Most recent edition published in 2007.)

[3] “It Depends: A Contingency Theory of Accommodation in Public Relations” by Amanda E. Cancel, Glen T. Cameron, Lynne M. Sallot, and Michael A. Mitrook, Journal of Public Relations Research, 1997, 9(1), p. 31-63.

[4] Morgan, Gareth. 1986. Images of Organization. San Francisco: Berrett-Kohler Publishers, Inc. and SAGE Publications, Inc., p. 44. (Page numbers refer to the Executive Edition, published in 1998. Most recent edition published in 2007.)

[5] Woodward. Joan. Industrial Organization: Theory and Practice (2nd Ed.). Oxford University Press, 1980 (1965, 1st Ed.), p. 246.

[6] Spender, J.C. “The Business School Model: A Flawed Organizational Design.” Journal of Management Development. 2014, Vol. 33: No. 5, p. 429.

[7] J.C. Spender, personal communication, October 2016.

[8] From the “Joan Woodward” Wikipedia entry. https://en.wikipedia.org/wiki/Joan_Woodward. Retrieved Dec. 15, 2016.

[9] Woodward, op. cit., p. 14.

[10] Burns, Tom, and G.M. Stalker. 1961. The Management of Innovation. London: Tavistock Publications.

[11] Woodward, op. cit., p. 23.

[12] Ibid., p. 50.

[13] Ibid., p. 71.

[14] Ibid., p. 50.

[15] Ibid., p. 10.

[16] Ibid., p. 12.

[17] I place the descriptor “pyramid-shaped” in quotation marks because these charts are only two-dimensional – and as anyone familiar with basic geometry can tell you, for an object to be truly pyramid-shaped it must occupy three dimensions. Technically speaking, org charts are therefore triangle-shaped.

[18] Woodward, op. cit., p. 101-119.

[19] Ibid., p. 115, 127.

[20] Ibid., p. 71.

[21] Ibid., p. 9.

[22] Ibid., p. 24.

[23] Ibid., p. 12.

[24] Chandler, Jr., Alfred D. “Origins of the Organizational Chart”, Harvard Business Review, March-April, 1988, p. 156-157.

[25] So far as I can tell, the first substantial challenge to the traditional “pyramid-shaped” hierarchical organization chart was the “matrix organization,” an organizational form that allows for the possibility that a given employee might report to more than one person. Raymond E. Hill, Bernard J. White Matrix Organization and Project Management Michigan Business Papers #64, 1979, (Division Of Research, Graduate School Of Business Administration, University Of Michigan, Ann Arbor, MI).

[26] Woodward, op. cit., p. 122.

[27] Fiedler, Fred E. A Theory of Leadership Effectiveness. 1967. McGraw-Hill: New York.

[28] Longenecker, Justin G., and Charles D. Pringle. “The Illusion of Contingency as a General Theory,” Academy of Management Review, July 1978, p. 682.

[29] Woodward, op. cit., p. 180.

[30] Longenecker, op. cit., p. 679-683.

[31] According to the Gallup Organization, companies with highly “engaged” employees have a distinct and measurable competitive advantage over their rivals. 12, The Elements of Great Managing by Rodd Wagner and James K. Harter. 2006 (New York: Gallup Press, NY).