Under management by exception, what should happen in case of a major deviation from the standard?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → It should receive immediate action of management on a priority basis.
Option (1) It should be reported to management at the end of the month with the other deviations. — Incorrect. A major deviation cannot wait for a month-end report. It is not kept with the small deviations; it is taken up at once.
Option (2) It should receive immediate action of management on a priority basis. — Correct. Under management by exception, only significant deviations beyond the permissible limit go to management. If 2 per cent is allowed and the deviation is 5 per cent, it is major. Such a deviation must get immediate action on a priority basis.
Option (3) It should be noted and taken up in the next round of planning. — Incorrect. Waiting for the next plan lets the loss grow. A major deviation needs action now.
Option (4) It should be analysed by the subordinates before it is brought to management. — Incorrect. Subordinates handle the routine problems. A major deviation is the kind of exception that goes straight to management.
NCERT (2026-27 Edition): “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 labour cost as an acceptable range of deviation in a manufacturing organisation, 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. …” |