Strive for Greater Efficiency and Effectiveness within a Human Resources Division

The contingency theory approach to organizational design states that the structure that fits the contingency produces beneficial outcomes for the organization. This chapter argues that institutional theory also implies that there is an institutional fit that produces beneficial outcomes for the organization. The argument is that contingency fit produces internal effectiveness, whereas institutional fit produces external legitimacy and support. Contingency and institutional theories tend to conflict by prescribing different structures as their fits. The chapter shows that these differences are widespread and the fits can be completely different strutures. Hence the organizational designer may be placed in a dilemma.