Management by exception (MBE) is a business management style that focuses on identifying and handling cases that deviate from the norm. It is widely attributed to Frederick W. Taylor and was first discussed in his work, “Shop management: A paper read before the American Society of Mechanical Engineers.”
Key Facts
- Origin and Attribution:
- Management by exception is widely attributed to Frederick W. Taylor .
- It was first discussed in Taylor’s work, “Shop management: A paper read before the American Society of Mechanical Engineers” .
- General Business Application:
- Management by exception is a style of business management that involves investigating, resolving, and handling cases that deviate from normal business processes.
- It is used to address cases such as process deviation, infrastructure or connectivity issues, external deviation, poor quality business rules, and malformed data.
- The practice involves using skilled staff and software tools to handle exceptional cases.
- Business Intelligence Application:
- Management by exception has a business intelligence application where it focuses on analyzing statistically relevant anomalies in the data.
- Unusual situations or deviations in recorded data are presented to managers for further investigation and discovery of the root cause.
- It can bring forward business errors and oversights, ineffective strategies, changes in competition, and business opportunities.
- Process:
- Management by exception involves setting objectives or norms with predictable or estimated results .
- Deviations from the expected performance are analyzed, and if significant, the concern is passed to senior managers as an “exception” .
- The aim is to solve the exception immediately .
General Business Application
In general business, MBE involves investigating, resolving, and handling cases that deviate from normal business processes. These exceptional cases may arise due to process deviation, infrastructure or connectivity issues, external deviation, poor quality business rules, or malformed data. Skilled staff and software tools are employed to manage these exceptions efficiently.
Business Intelligence Application
MBE also has a business intelligence application, where it focuses on analyzing statistically relevant anomalies in the data. Unusual situations or deviations in recorded data are presented to managers for further investigation and discovery of the root cause. MBE can bring forward business errors and oversights, ineffective strategies, changes in competition, and business opportunities.
Process
The process of MBE involves setting objectives or norms with predictable or estimated results. Deviations from the expected performance are analyzed, and if significant, the concern is passed to senior managers as an “exception.” The aim is to solve the exception immediately.
Conclusion
Management by exception is a valuable tool for businesses to identify and address deviations from normal operations. By focusing on exceptional cases, managers can allocate their time and resources more effectively, leading to improved business performance.
References
- Management by exception – Wikipedia
- What is Management by Exception | GoCardless
- Management by Exception: What is It and How Does it Work? | Pricefx
FAQs
Who is credited with developing the concept of Management by Exception?
Frederick W. Taylor is widely credited with developing the concept of Management by Exception.
What is the primary objective of Management by Exception?
The primary objective of Management by Exception is to identify and address deviations from normal business operations or expected performance.
What are some examples of exceptional cases that Management by Exception aims to handle?
Exceptional cases that Management by Exception aims to handle include process deviations, infrastructure or connectivity issues, external deviations, poor quality business rules, and malformed data.
How does Management by Exception contribute to business intelligence?
Management by Exception contributes to business intelligence by analyzing statistically relevant anomalies in data. It helps identify business errors and oversights, ineffective strategies, changes in competition, and business opportunities.
What is the general process involved in implementing Management by Exception?
The general process of implementing Management by Exception involves setting objectives or norms, analyzing deviations from expected performance, and escalating significant deviations to senior managers for resolution.
What are the benefits of using Management by Exception in business?
The benefits of using Management by Exception include improved efficiency, better allocation of managerial time and resources, and enhanced decision-making.
What are some challenges associated with implementing Management by Exception?
Challenges associated with implementing Management by Exception include the need for accurate and timely data, the potential for overlooking minor deviations, and the risk of employee disengagement if exceptions are not handled effectively.
How can businesses ensure the successful implementation of Management by Exception?
To ensure the successful implementation of Management by Exception, businesses should focus on setting clear objectives, establishing appropriate thresholds for exceptions, providing adequate training to employees, and fostering a culture of accountability and continuous improvement.