"In company Ace Itd, if the plans lay down a 2 percent increase in labor cost as an acceptable range of deviation, only an increase in labor cost beyond 2 percent should be brought to the notice of the management. However, in case of major deviation from the standard (say, 5 percent), the matter has to receive immediate action from management on a priority basis".

Identify the concept of management highlighted in the aforesaid statement.

Management by exception

The correct answer is option 1- Management by exception.

Management by exception is highlighted in the given statement. 

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 percent should be brought to the notice of the management. However, in case of major deviation from the standard (say, 5 percent), the matter has to receive immediate action of management on a priority basis.