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Contingency Theory

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According to Public Administration in Canada, (pg 70) contingency theory is one of the most recent theories in organizational structure, it argues that there is no "one best way" of structuring an organization. Instead contingency theory suggests that the best way to structure a particular organization is contingent(dependent) on a number of factors such as the attitudes of the managers and employees, the nature of the task performed by the organization and the nature of the environment.
The basic premise of Contingency Theory is that there is no one best way to organize a corporation, to lead a company, or to make decisions. There are too many external and internal constraints that will alter what really is the best way to lead is in a given situation. In other words, it all depends upon the situation at hand as to what will be the best course of action. An organizational / leadership / decision making style that is effective in some situations, may be not successful in other situations because organizations, people, and situations vary and change over time thus, the right thing to do depends on a complex variety of critical environmental and internal contingencies. The contingency approach to organizational design tailors the design of the company to the sources of environmental uncertainties faced by the organization. The point is to design an organizational structure that can handle uncertainties in the environment effectively and efficiently.
The contingency theory approach to the study of organizations developed beginning in the 1950's and 1960's as a response to prior theories of management such as Weber's theory of bureaucracy and Taylor's scientific management which sometimes failed despite their diversity because they neglect that effective management styles and organizational structures are influenced by various aspects of the

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