The contingency approach in the organization and management of any given organization is affected by both the macro and micro factors to the particular organization. Macro factors such as politics and environmental issues may affect an organization both directly and indirectly. Micro factors, those that within the control of an organization, such as consumer perception on particular products directly affect the organization either positively or negatively. According to the contingency approach, handling a situation depends largely on the management's ability to cope in different situations and the uncertainty of the situation. The manager of any given organization has to carefully study the situation at hand and give a proper diagnosis so as to come up with the proper solution.
According to the contingency approach, one 'perfect' way of solving situations that arise in an organization does not exist. While the McGregor approach, theory Y, that people tend to work better when they feel respected and treated fairly may be true, it does not however account for those that found motivation in money rather than fair treatment, according to Frederick Winslow Taylor the founder of the scientific management theory. The contingency approach suggests that, different organization undergo different situations. Therefore it leaves room for the use of a multiple of approaches when solving one particular problem.
The contingency approach in organizational theories offers the management a chance to view situations from all possible angles therefore solving problems before they happen. Take an organization dealing in beauty products for example that is having problems with the performance of a particular product. The product could be failing for any number of reasons, either external customer dissatisfaction or employee dissatisfaction thus creating negative public relations for the company in question. The contingency approach allows the management to explore these options and therefore maximize on the situation to learn more about the product or even employees therefore staying ahead of competition.
The contingency theory however is not without its flaw. In situations where a quick decisions are necessary, this approach may prove to be a handicap for the management as it takes time to evaluate possible reasons for a particular situation.