In case of 100 meter racing if it is expected that athlete will complete the race between 3 to 4 minutes and during practice if an athlete is completing the race in less than 4 minutes than there is no problem but moment athlete takes more than 4 minutes than it will be a cause for concern as athlete has taken more time than estimated time range. In case of management similar concept is there which is called management by exception, it refers to that strategy in which business results are compared against estimated results and if deviations are within range then there is no need for action but moment deviations go out of range it calls for action by management. In order to understand more about this concept, one should look at the advantages and disadvantages of management by exception –
Advantages of Management by Exception
Time-saving
The first and foremost advantage of management by exception is that it helps the top management in saving a lot of time because since management has to look into major deviations only and not all minor deviations they can utilize that time for some other productive activities which in turn will help the company in the achievement of desired objectives.
Better Control
It helps in better control because all departmental managers in the back of their mind know about their targets and actual results, and they also know that moment actual results deviate too much from excepted results management will take action against them besides top management too can focus more on major deviations rather than worrying about minor deviations which in turn ensures better control over organization as a whole.
Tool for Action
Management by exception is a good tool for taking action against those who do not achieve the targets or deviates too much from their targets because in this strategy management view only major deviations as serious and on the basis of those major deviations they can take action against incompetent people working in various departments of the company.
Disadvantages of Management by Exception
Considers only Major Deviations
The biggest drawback of management by exception is that it considers only major deviations and ignores minor deviation which in future can haunt the company. In simple words in a way this system by ignoring minor deviations allows them to become big deviations and hence trouble the company in the future.
Dependent on Planning
Another problem with this strategy is that the success of this strategy is highly dependent on planning because if management in the planning stage set stiff or too low targets than this system will be of no use. Hence for example if in the above case of athlete if target for completing the race is set below 1 minute then it will be too unrealistic and if target for completing the race is set above 10 minutes then it will be too easy same is the case with companies and that is the reason why the success of this strategy is highly dependent on planning stage.
Ignores other Factors
It ignores other factors and takes action only on the basis of deviations which sometimes can be wrong, hence in the above example if athlete was sick and was not able to complete the race within stipulated time than one should take sickness factor into mind while considering it as a major deviation, same is the case with companies where departments are punished by management even when deviations happened due to circumstances which were not in their hand.
As one can see from the above that management by exception has advantages as well as disadvantages and that is the reason why any company thinking of adopting this strategy in the company should carefully read above points and then take the decision.