In the world of business, the only constant is change. For organizations to stay competitive, they need flexible management strategies that allow them to adjust to various situations and environments. This is where contingency management comes into play. 

In this article, we’ll explain the basics of contingency management and show you how to use it in your organization. 

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Understanding the contingency approach in management

Contingency management holds the belief that we cannot manage every situation in the same way. It means making backup plans for unexpected situations instead of sticking to just one plan.

People in a meeting around a table with someone speaking to them

Different situations require different responses, and managers must be ready to adapt their strategies to ensure success. This approach is particularly useful when dealing with complex, unexpected situations that can arise in a rapidly changing economy. By anticipating potential challenges and developing alternative plans, contingency management enables organizations to respond more effectively to unexpected events.

Key principles of contingency management

Key principles of contingency management include:

  • Flexibility: Being open to change and adapting plans as required. Managers must be able to adapt quickly and be open to new ideas and approaches.
  • Preparation: Anticipating and preparing for different potential scenarios. Managers should be good at planning, pay attention to details, and know the company’s strengths and weaknesses well.
  • Resource allocation: Allocating resources to ensure that each potential scenario can be addressed effectively. Managers must have the relevant resources at their disposal, such as financial means, human resources, and technology.
  • Risk management: Identifying and managing potential risks that could impact the execution of the contingency plan. Managers should be able to craft backup plans, establish contingency funds, and implement risk management strategies.
  • Communication: Confirming that all stakeholders are informed and aware of the contingency plan. Managers must regularly communicate with all stakeholders and frequently update all staff. 

Benefits of contingency management in organizations

The top benefits of contingency management in organizations are:

  • Ability to respond effectively to unexpected events: Stay ahead of the competition and make the best decisions for the organization.
  • Managing risks: Planning for challenges and having backup plans helps organizations avoid problems and handle unexpected events more easily.
  • Boosting performance and reaching goals: When organizations prepare for different situations, they can make decisions and handle changes more effectively. This can help them to stay ahead of the competition and achieve long-term success.

Assessing your business’s needs

Assess your organization’s needs using the following guidelines: 

Identify contingency approach internal and external factors

Internal factors are those that are within your organization’s control, such as organizational structure, culture, and resources. But external factors are things your company can’t change, like shifts in the economy, new competitors, or rule changes. By spotting these factors, you can find out which situations might affect your organization and make a backup plan for them.

Suppose your organization operates in the tech industry. The actions and factors within your company can have a significant impact on your business operations. These include having skilled staff, conducting research, and providing a quality product or service. New technologies, government policies, and stock market changes can impact how your organization functions.

Analyze organizational structure and culture

Your organization’s structure and culture can impact how you handle various situations. A company with lots of leaders might not like change, but one encouraging teamwork can change more easily. Addressing a change-resistant culture might be necessary to embrace a contingency approach.

Organizations that foster a culture of innovation and collaboration are better equipped to respond to changing scenarios. They are more likely to experiment with new ideas and are willing to take calculated risks. Organizations that are inflexible and resistant to change may struggle to adjust to new situations.

Evaluate resources and capabilities

Think to yourself: Do I have the resources I need to respond effectively to different scenarios? Are my employees equipped with the necessary skills and knowledge? When you look at what you have and can do, you can figure out which situations you’re best prepared for — and which you might need extra help with.

Suppose your organization is planning to expand into a new market. In that case, you need to evaluate whether you have the necessary resources and capabilities to do so. You may need to invest in new technology, hire additional staff, or train existing employees to acquire new skills. 

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Developing a contingency plan

Once you have assessed your organization’s needs, the next step is to develop a contingency plan. This involves:

Setting clear objectives and goals

What are you trying to achieve with your plan? What are your priorities? Setting clear goals helps you focus on what you want to achieve and make sure your plan fits your strategy.

If your organization is a manufacturing company, your objective may be to ensure that production continues during equipment failure. Your goal may be to minimize the impact of any disruptions on your customers and maintain profits.

Identifying potential risks and challenges

Potential risks and challenges could include anything from economic downturns to changes in legislation to natural disasters. By identifying these risks, you can prepare a plan to mitigate their impact.

For businesses located in an area prone to hurricanes, one risk could be damage to your facilities and equipment. If a hurricane hits your suppliers, it can cause problems in your supply chain.

Creating contingency strategies and action plans

Create potential contingency strategies and action plans, with specific actions that you will take if a specific scenario occurs.

If there’s suddenly less demand for your product, what will you do to save money and stay profitable? Maybe you could reduce production, lay off staff, or find new markets for your product.

If your organization faces a cyberattack, your backup plan might involve isolating the impacted systems. Additional actions include notifying customers and stakeholders, and cooperating with law enforcement to find out who did it.

Assigning roles and responsibilities

Finally, assign roles and responsibilities for executing the contingency plan. This ensures that everyone knows what they are responsible for and can act quickly if the plan needs to be implemented.

If a big machine breaks and your backup plan is to stop making things, you will need to take certain actions. Firstly, you will have to inform people about what they should do in this situation. Additionally, it will be necessary to notify customers about any potential delays. Lastly, you will have to collaborate with suppliers in order to resume production as quickly as possible.

Implementing the contingency approach

With a contingency plan in place, the next step is to implement the approach. This involves several crucial steps to ensure that the plan is effective and successful.

Communicating the plan to stakeholders

Communicate clearly to all stakeholders, employees, customers, suppliers, and investors. By keeping people informed and up to date, everyone will be aligned and work toward the same goals.

Use clear and concise language, avoiding technical jargon or complex terminology. This will help ensure that everyone understands the plan and their role in implementing it.

Training and development for effective contingency management

It’s important to provide training and development opportunities for employees so that they have the skills and knowledge they need to implement the contingency plan effectively.

Consider workshops, seminars, and online courses, and tailor them to the specific needs of your organization and employees. This will help ensure that they have the skills and knowledge they need to respond to any contingency effectively.

Monitoring and adjusting the plan as needed

Finally, it’s important to monitor the implementation of the contingency plan and make adjustments as needed. This may involve revisiting your assessment of internal and external factors, updating your contingency strategies, or modifying roles and responsibilities.

Regular monitoring of the plan is crucial to ensure that it remains relevant and effective. This may require setting up a monitoring team or appointing a dedicated individual to oversee the plan’s implementation. It’s important to establish clear metrics for success and regularly review progress against these metrics.

Using Wrike for your business contingency approach

Wrike serves as an invaluable asset for businesses seeking to bolster their contingency approach. By using Wrike in their contingency plans, organizations can be more flexible and responsive when dealing with unexpected disruptions.

The platform helps team members work together in real time and easily adjust to changing situations. Wrike helps with task management and automation, making contingency plans easier to execute quickly and effectively.

Wrike helps store and find important documents and information, like disaster recovery procedures and communication plans. With Wrike, businesses can fortify their ability to navigate unexpected challenges, maintain operational continuity, and protect their long-term viability.

Different logos giving an example of integrations with Wrike to help with contingency management


Implementing a contingency approach in management requires careful planning and attention to detail. Organizations can handle surprises and adapt to a fast-changing business world. They can do this by identifying risks, creating a backup plan, and effectively implementing it. By using a contingency approach, managers can be prepared to handle different situations and make the right decisions for their organization.

Master the contingency approach in management and increase your organization’s adaptability with Wrike. Get started with a free trial to leverage our project management platform to tackle changes head on.

Note: This article was created with the assistance of an AI engine. It has been reviewed and revised by our team of experts to ensure accuracy and quality.

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