Rakesh is working in a blue pottery industry. His job is to paint the pots. He daily paints 30 pots out of which two or three get spoilt due to mishandling of the pots. His foreman, Mr. Mohan knows about the damages made by Rakesh, but does not tell him anything. One day Mohan scolds Rakesh as he had spoilt 5 pot out of 30. Identify the method of analysing deviations used by Mohan.

Management by Exception

The correct answer is option (4)- Management by Exception.

The method of analyzing deviations used by Mr. Mohan in this scenario is "Management by Exception."

This approach involves focusing management attention on significant deviations from the expected or planned performance. In this case, Mr. Mohan did not intervene or scold Rakesh when he was painting 30 pots with 2 or 3 getting spoiled, but he took action when there were 5 pots spoiled, which is a significant deviation from the usual performance. Management by Exception is about addressing and taking action on significant deviations, allowing routine matters to proceed without detailed managerial intervention.

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.