- January 4, 2017
- Posted by: admin
- Category: Articles
The nice thing about management by exception is that efficiency killers are being identified rapidly and time is freed up to spend more wisely.
Management by exception is often perceived as a bit of an old-fashioned technique, but a technique that when well implemented makes the organization a lot more agile.
In this management control system, managers and supervisors only investigate high impact deviations from the plan rather than loosing themselves in the nitty gritty details (management of the exceptions).
Management by exception (MBE), when applied is a style of management that gives employees the responsibility to take decisions and to fulfill their work or projects by themselves. It consists of focus and analysis of relevant anomalies in the data. If an unusual situation or deviation in the recorded data appears, which could cause difficulties for the business and can’t be managed by the employee at his level, the employee should pass the decision on to the next higher level
To make an MBE really work 3 things are crucial:
- Budgets, forecasts and planning should be reliable
- Exceptions should be clearly quantified and directed to the appropriate management level
- The reporting system should be timely and accurate
When implementing MBE, it’s important to avoid a few pitfalls:
- Set thresholds that make sense so routine matters are clearly separated from exceptions
- Once the system is working well don’t fiddle it
- Focus on eliminating inefficiencies
- Make sure all employees get empowered and receive enough direction and coaching
- Watch out not to frustrate junior executives as complex cases can be too often out of bounds for them
- Don’t forget to not only focus on the negative aspects but celebrate (small) victories