Identify the concept of controlling to which the following statement is related.

"Only significant deviations which go beyond the permissible limit should be brought to the notice of management."

Management by exception

The correct answer is option (3)- Management by exception.

The given statement is related to 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 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.

OTHER OPTIONS

• 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. These KRAs are set as the critical points. If anything goes wrong at the critical points, the entire organisation suffers.

• Taking corrective action- The final step in the controlling process is taking corrective action. No corrective action is required when the deviations are within acceptable limits. However, when the deviations go beyond the acceptable range, especially in the important areas.

• Feedback- It feedback refers to the process of providing and receiving information or data about an organization's performance, processes, products, services, or employees, with the goal of making improvements and achieving better results. It plays a crucial role in various aspects of business management.