Situational Contingency

(noun)

The theory that different leaders and leadership traits are required for different situations.

Related Terms

Examples of Situational Contingency in the following topics:

  • The Contingency Viewpoint

    • The contingency viewpoint of management proposes that there is no standard for management; instead, management depends on the situation.
    • Instead, the optimal course of action is contingent or dependent upon the specific internal and external situation management may find itself in.
    • Fred Fiedler takes this a step further to identify three leadership styles and empirical situation measurements to assess the degree of favorability a given contingency offers:
    • In other words, leadership needs to ensure that it is able to assess a situation, determine the task structure, and obtain a position of formal authority in order to be able to adequately manage a contingency situation.
    • An example of the contingency viewpoint in action is a manager facing a situation with an employee who regularly shows up late to work.

  • Leadership and Situational Context: Fiedler

    • This situational contingency understanding of leaderships suggests, for instance, that a leader in a strict, task-oriented workplace would have different qualities than a leader in a more open, idea-driven workplace.
    • The Fiedler situational contingency model measures leadership traits with a test that provides a leadership score corresponding to the workplace where the leader would be most suited.
    • The situation analysis has three components:
    • Fiedler's contingency theory has drawn criticism because it implies that the only option for a mismatch of leader orientation and unfavorable situation is to change the leader.
    • Also, the contingency model does not take into account the percentage of situations that might be somewhat favorable, completely unfavorable, or even extremely favorable.

  • Four Theories of Leadership

    • Theories of effective leadership include the trait, contingency, behavioral, and full-range theories.
    • These findings also show that individuals emerge as leaders across a variety of situations and tasks.
    • Stogdill and Mann found that while some traits were common across a number of studies, the overall evidence suggested that persons who are leaders in one situation may not necessarily be leaders in other situations.
    • In other words, contingency theory proposes that effective leadership is contingent on factors independent of an individual leader.
    • Fiedler's contingency model of leadership focuses on the interaction of leadership style and the situation (later called situational control).

  • Randomization Tests: Contingency Tables: (Fisher's Exact Test

    • Table 1 shows the results in a contingency table.

  • Practice 2: Contingency Tables

    • The student will conduct a test for independence using contingency tables.
    • Copy the data provided in Probability Topics Practice 1: Contingency Tables into the table below.
    • Graph the situation.

  • 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.

  • Classifying Liabilities

    • In situations where a debt is not yet callable, but will be callable within the year if a violation is not corrected within a specified grace period, that debt should be considered current.
    • Contingent liabilities can be current or long-term.
    • Contingent items are accrued if the claims and their likelihood of occurring are probable, and if the relevant amount of the liability can be reasonably estimated.

  • How Fisher Used the Chi-Squared Test

    • Fisher's exact test is a statistical significance test used in the analysis of contingency tables.
    • It is used to examine the significance of the association (contingency) between the two kinds of classification.
    • Most uses of the Fisher test involve, like this example, a $2 \times 2$ contingency table.
    • With large samples, a chi-squared test can be used in this situation.
    • For hand calculations, the test is only feasible in the case of a $2 \times 2$ contingency table.

  • 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