Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What does a contingency theory of management suggest?

1. Leadership style should be consistent across all situations

2. Different situations require different leadership approaches

3. One best approach works for all types of management

4. Leadership is solely based on personal traits

The correct answer is: Different situations require different leadership approaches

A contingency theory of management posits that there is no single best way to lead an organization or manage a team; rather, the most effective leadership style depends on the specific context and circumstances. This theory emphasizes that different situations—such as the organization’s environment, the nature of the task, the team’s dynamics, and the individual personalities involved—call for different leadership approaches. For instance, in a stable environment with routine tasks, a more authoritative or structured leadership style may be effective, whereas in a rapidly changing scenario, a more flexible, collaborative style might be necessary to foster innovation and responsiveness. This situational adaptability is crucial for managers to effectively guide their teams toward achieving objectives, making understanding and applying contingency theory essential for effective leadership. In contrast, the idea that leadership style should be consistent across all situations overlooks the variable nature of organizational dynamics. Suggesting that there is one best approach disregards the diversity of challenges faced by leaders. Furthermore, attributing leadership solely to personal traits minimizes the importance of situational factors that can greatly influence the effectiveness of a leader's approach.