Read the following passage and answer the question.

Bira Machines Limited is engaged in manufacturing of machine components. The company has planned to venture into automobile parts as well for which, it started doing the market research. The target production for machine parts is 500 units per day per worker. The company had been successfully attaining this target until three months ago. The company follows a practice where only significant deviations from a budget or plan are brought to the attention of management. Over the last four months, it has been observed that daily production varies between 450-460 units per day per worker. Management called the supervisor and asked him to find out the reasons for low productivity. CCTV cameras were installed to keep a check on employees. It was found that some of the workers used to spend more time for lunch than allotted. The report for the same was prepared and submitted by the supervisor to the management.

"The company follows a practice where only significant deviations from a budget or plan are brought to the attention of management."

Which of the following concept is mentioned here?

Management by Exception

The correct answer is option 3- Management by Exception.

The concept Management by Exception is mentioned.

It is a management practice where attention is focused only on significant deviations from a set plan or budget.

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.