Contingency Approach

Examples of Contingency Approach in the following topics:

• The Contingency Viewpoint

  • The contingency viewpoint is a more recent development of organizational theory that attempts to integrate a variety of management approaches by proposing that there is no one best way to organize a corporation or lead a company.
  • The contingency approach claims that past theories, such as Max Weber's bureaucracy theory of management and Taylor's scientific management, are no longer practiced because they fail to recognize that management style and organizational structure are influenced by various aspects of the environment, known as contingency factors.
  • Debating which one of the previous approaches to management is the "best" approach is irrelevant in contingency theory, since the heart of the contingency approach is that there is no "one best way" for managing and leading an organization.
  • In this case, the contingency approach allows the employee to keep her/his job and saves the manager from going through the time and trouble to dismiss one employee and hire another.
  • Therefore, the organizational structure is a major component of the approach that management may take in resolving problems under contingency theory.

• Four Theories of Leadership

  • Theories of effective leadership include the trait, contingency, behavioral, and full-range theories.
  • Experts have proposed several theories, including the trait, behavioral, contingency, and full-range models of leadership.
  • According to this approach, called contingency theory, no single psychological profile or set of enduring traits links directly to effective leadership.
  • In other words, contingency theory proposes that effective leadership is contingent on factors independent of an individual leader.
  • In response to the early criticisms of the trait approach, theorists began to research leadership as a set of behaviors.

• Resource Mobilization Approach

  • The resource-mobilization approach is a theory that seeks to explain the emergence of social movements.
  • movements develop in contingent opportunity structures, which are external factors that may either limit or bolster the movement, that influence their efforts to mobilize.

• Randomization for two-way tables and chi-square

  • Randomization methods may also be used for the contingency tables.
  • In short, we create a randomized contingency table, then compute a chi-square test statistic.
  • This randomization approach is valid for any sized sample, and it will be more accurate for cases where one or more expected bin counts do not meet the minimum threshold of 5.

• Reporting Contingencies

  • Contingencies are reported as liabilities if it is probable they will incur a loss, and their amounts can be reasonably estimated.
  • A loss contingency is less than 50% likely to occur due to a past obligation.
  • Gain contingencies are reported on the income statement when they are realized (earned).
  • A probable loss contingency can be measured reliably if it can be estimated based on historical information.
  • Conservative accounting principles state that companies should report loss contingencies as they occur.

• Forecasting

  • Qualitative approaches are the opposite; they rely on logical premises or past experience to generate estimates about future circumstances.
  • The inherent problem with the qualitative approach is simple: subjectivity.
  • While quantitative measure use data to express objective results, qualitative approaches do not have this luxury.
  • Another method of forecasting, which is likely to be both quantitative and qualitative, is the causal/econometric approach.
  • The practice helps businesses create plans for different situations, in addition to contingency plans for adapting if and when necessary.

• Gain Contingencies

  • Gain contingencies, or possible occurrences of a gain on a claim or obligation involving the entity, are reported when realized (earned).
  • The disclosure of gain contingencies is affected by the materiality concept and the conservatism constraint.
  • Thus, for a gain contingency, only a realized gain is accrued for and disclosed on the income statement.
  • A material gain contingency that is both probable and reasonably estimated can be disclosed in the notes to financial statements.
  • Explain how a company reports a gain contingency on their financial statements

• Loss Contingencies

  • A loss contingency may be incurred by the entity based on the outcome of a future event, such as litigation.
  • A loss contingency is incurred by the entity based on the outcome of a future event, such as litigation.
  • Loss contingencies can refer to contingent liabilities that may arise from discounted notes receivable, income tax disputes, or penalties that may be assessed because of some past action or failure of another party to pay a debt that a company has guaranteed.
  • Unlike gain contingencies, losses are reported immediately as long as they are probable and reasonably estimated.
  • Summarize how a company would report a loss contingency on their financial statements

• Case study: gender discrimination exercises

  • These data are summarized in the contingency table below.
  • The contingency table below summarizes these results.
  • (b) One approach for investigating whether or not the treatment is effective is to use a randomization technique.
  • The paragraph below describes the set up for such approach, if we were to do it with- out using statistical software.

• Introduction

  • Sociologists distinguish between society and culture despite their close interconnectedness primarily for analytical purposes: It allows sociologists to think about societal development independent of culture and cultural change (which are discussed in the next chapter in greater detail) even though societal change and development are contingent upon culture.
  • It will then present some classic approaches to understanding society and what changing social structure can mean for individuals.