After reading this article you will learn about:- 1. Meaning of ‘Management by Exception’ 2. Merits of ‘Management by Exception’ 3. Principles.

Meaning of ‘Management by Exception’:

Trying to control everything may end up in controlling nothing”. Managers cannot control every organisational activity. This is neither desirable nor possible within the frame of time, money and resource constraints.

If actual performance conforms to planned performance, the matter need not be brought to the notice of top managers. Even when the deviation is not significant (when it is within the range of control), the matter may not be reported to top managers.

However, if deviations are significant (beyond the acceptable range of errors), they should be reported up the hierarchy for managerial action. These deviations may be exceptionally good or bad situations. The principle of ‘management by exception’ states that managers should concentrate only on significant deviations rather than each and every organisational activity.


“The more the managers concentrate control efforts on significant exceptions, the more efficient will be the results of their control.”

Merits of ‘Management by Exception’:

The principle of ‘management by exception’ has the following merits:

1. It saves time, effort and money as superiors deal with only exceptional deviations.

2. It leads to development of lower-level managers as they learn to deal with simple and routine problems.


3. It leads to optimum attainment of organisational goals by categorizing the deviations between significant (those that significantly affect organisational objectives) and insignificant (those that do not require top managerial attention).

4. It leads to optimum utilisation of resources as they are concentrated in areas that need managerial attention.

Principles of ‘Management by Exception’:

The principle of ‘management by exception’ is closely related to the principle of ‘critical point control’. While critical points determine the areas or elements where control should be exercised, the ‘exception principle’ determines the deviations occurring at the critical points.

It, thus, serves as a performance appraisal technique which identifies significant deviations in the ‘critical points’ and reduces their chances of recurrence.