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A contingency theory is an organizational theory that claims that there is no best way to organize a corporation, to lead a company, or to make decisions. Instead, the optimal course of action is contingent (dependent) upon the internal and external situation.
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HRM practices are dependent on the organization’s environment and circumstances. Definitions of HR aims, policies and strategies, lists of activities and analyses of the role of the HR department are valid only if they are related to the situation of the organization.
Contingency theory is simple a part of risk management. It's the practice of putting different options / alternative plans in case plan A doesn't work out. In HR management, you apply this theory by putting options of managing your talent if: 1. They leave the company and go somewhere else 2. If their performance deterioratess
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