The term management by exception translates as “lead according to the exception principle”. Managers only intervene in the work of employees in exceptional cases.
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Definition / explanation
Management by exception is a management technique of a company. In routine cases, the managers let the employees make independent decisions. If the tolerance is not exceeded or unforeseeable events occur, the responsible employees work independently.
In addition, with Management by Exception, assessment criteria, goals and target values are set, control information is determined and criteria for success are selected. Corresponding control, information and reporting systems can precisely signal a defined exception. In addition, the responsibilities should be clearly defined and the goals known. The main goal of Management by Exception is to relieve managers.
Five phases of management by exception
- Determination of the metrics to achieve the set goals
- Evaluation criteria for a permitted deviation from the planned result are established
- Target size determination
- If the tolerance limits are exceeded, the executives intervene
- Target and actual states are constantly compared
advantages and disadvantages
- Relief of the managers with routine tasks
- higher employee motivation
- less control effort
- Employees work independently within their areas of competence
- additional training for employees to improve their skills and increase the delegation of tasks
- significant damage to the company due to unreliable controls
- Employees conceal their failure and leave managers in the dark about the real status quo
- Impairment of initiative and sense of responsibility of employees through restriction to routine tasks
- The superiors only intervene if the success criteria and goals are not achieved
- Insufficient motivation of the employees, as only the routine work is done by them and the interesting cases by the superiors