Control by Exception/Management by Exception :- This principle of management control is based on the belief that—”An attempt to control everything may end up by controlling nothing,” Minor deviations from standards are insignificant for success. They should be ignored. Therefore, only significant deviations, which go beyond the permissible limit, should be reported to the management so that the management may take corrective action to deal with the situation.
Example 1: A manager establishes a quality control standard which says that 5 defects per 100 units produced are permissible. Under the “control by exception” principle, only significant deviations from this standard, i.e., 6 or more defects per 100 units should be reported to the manager.
Example 2: The management lays down a standard that the cost of production per unit should not exceed by 10% from the earlier period. If the actual cost exceeds by 10% (say by 15%), it should be reported to the management.
