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What Management by Exception Really Means

        posted by , January 02, 2013

Management by Exception (MBE) is a technique whereby management only investigate high impact deviations from planned results. This frees management to focus on strategic activities.

Management by Exception is used by organizations in several different ways as the following examples illustrate:

1. Call Center Management

A manager at a call center may spend 100% of his or her time dealing with customers who have serious customer service complaints.

This can be considered management by exception because the manager doesn't supervise employees and only gets involved when there is a significant problem.

This technique reduces management expenses. However, it's a reactive style of management that tends to reduce customer satisfaction.

2. Project Management

A project manager doesn't schedule regular meetings. Instead, meetings are only scheduled when their is a important issue to discuss.

This approach frees project resources to focus on their deliverables.

3. Sales Management

The management team of a sales driven organization focus on marketing and product development. They manage the sales team with a series of sales KPIs. Management only becomes involved in the sales process when a sales team, product or campaign is underperforming.

Management by Exception allows management to focus on key revenue opportunities.

Management by Exception Versus Exception Management

Management by Exception implies that management only focuses on critical exceptions.

Exception Management is the management of all exceptions. This can include process deviation, infrastructure failures, system problems, legal issues and other business exceptions.

Exception Management doesn't necessarily require management attention.

When Management by Exception Makes Sense

Management by Exception is commonly criticized for being reactive.

It's best applied to business scenarios in which proactive management is prohibitively expensive or difficult.

For example, management of a call center may find that expensive preventative measures such as additional training only have a marginal effect on customer satisfaction.

Management by Exception also makes sense when your processes are highly optimized and measured. If you're doing something right, you can focus management efforts elsewhere.

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