Which concept of controlling is referred to as 'control by exception'?

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → Management by Exception

Option (1) Critical Point Control — Incorrect. Critical point control means focusing control on the key result areas (KRAs) that are critical to success. It is not called control by exception.
Option (2) Management by Exception — Correct. Management by exception is often referred to as control by exception. It rests on the idea that trying to control everything ends in controlling nothing. So only big deviations, beyond the allowed limit, are brought to the notice of management.
Option (3) Budgetary control — Incorrect. Budgetary control is a method of control in which budgets are used as standards. It is not the name for control by exception.
Option (4) Performance Appraisal — Incorrect. Performance appraisal means judging how well an employee has worked. It is not control by exception.

NCERT (2026-27 Edition): “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. …”

“Critical Point Control: It is neither economical nor easy to keep a check on each and every activity in an organisation. Control should, therefore, focus on key result areas (KRAs) which are critical to the success of an organisation. …”