Page 4 - Microsoft Word - Home assignment 19 Directing Meaning Importance

2. Management by Exception: Management by exception, which is often referred

to as control by exception, is an important principle of management control based
on the belief that an attempt to control everything results in controlling nothing.
Thus, only significant deviations which go beyond the permissible limit should be

brought to the notice of management. Thus, if the plans lay down 2 per cent
increase in labor cost as an acceptable range of deviation in a manufacturing

organization, only increase in labour cost beyond 2 per cent should be brought to
the notice of the management. However, in case of major deviation from the

standard (say, 5 per cent), the matter has to receive immediate action of
management on a priority basis.

The box below highlights the advantages of critical point control and management
by exception.

Advantages of Critical Point Control and Management by Exception
When a manager sets critical points and focuses attention on significant
deviations which

cross the permissible limit, the following advantages accrue:
1. It saves the time and efforts of managers as they deal with only significant

deviations.
2. It focuses managerial attention on important areas. Thus, there is better

utilisation of managerial talent.
3. The routine problems are left to the subordinates. Management by

exception, thus, facilitates delegation of authority and increases morale of the
employees.
4. It identifies critical problems which need timely action to keep the

organisation in right track.

After identifying the deviations that demand managerial attention, these

deviations need to be analyzed for their causes. Deviations may have multiple
causes for their origin. These include unrealistic standards, defective process, and