Fiedler's contingency theory states that there is no single best way to lead and a leader's effectiveness depends on how well their style matches the situation. The theory assesses situations based on leader-member relations, task structure, and the leader's position power. It suggests that relationship-oriented leaders are best for unfavorable situations with poor relations or unstructured tasks, while task-oriented leaders can be effective for favorable situations with good structure and the leader's authority. The theory aims to be prescriptive and flexible, but critics argue its assessments are subjective and not universally applicable.