A big part of management is knowing how to delegate duties to the right people. Companies come with massive responsibilities, and even the most talented executives are not capable of dealing everything themselves. It is why enterprises have senior and lower management. This chain of command allows for proper division of tasks. Only the most critical decisions are left in the hands of senior management. Management by exception takes advantage of this structure.
The senior executives are only brought in when operations deviate from the norm. Therefore, they have time to concentrate more on fundamental aspects of the business. Managers don’t have to be part of every single element of a project or operation going on in the company. This is because they would never have time to do anything else. For this reason, your business can benefit from the practice of management by exception. Perhaps MBE is a concept you have been considering in your company but are not sure how it serves the bottom-line. Here is why and how.
What Is Management by Exception?
Management by exception refers to the practice where the management of a company is only informed when there are issues with planned operations. Project managers usually work on a planned budget, and when they go over it, it spells trouble for the company. The senior management comes in to solve such issues when they arise. The idea behind management by exception is that senior executives should not be bothered with the details of operations unless they don’t align with the established standards.
Besides money, a project may have a strict timeframe as well. If a project manager focuses on a failed schedule, then the senior management has to know about it and try to reconcile the differences. If it’s a supply chain, MBE demands that senior management should be brought in if any of the processes are interrupted. Real-time information and communication are what make it possible to implement an MBE strategy effectively. Managers must be able to rely on their employees to approach them when problems come up.
Who Needs Management by Exception the Most
Management by exception is useful for businesses with large operations where managers cannot afford to get involved in each one. This type of management is suitable for giant corporations that have different tiers in management. A company with two employees may not need management by exception because there are no teams to speak of.
An MBE strategy is highly effective when dealing with multiple projects. Businesses with supply chain processes can also implement MBE. When you have to deliver goods from A to B, this involves various procedures and budgets. With MBE, senior management can ensure that these processes are all up to standard. MBE provides a systematic approach for employees to deal with budgetary or operational problems.
6 Ways Management by Exception Boosts Your Business
1. Reviewing the Operations
One reason management by exception is helpful to your business is that senior management doesn’t have to do very much when reviewing financial and operational results. Weighing down the senior executives with every little decision about a project can be counterproductive to the objectives of the company.
The reason is that the administration may not have sufficient time to deal with other issues that affect the health of the enterprise when they are always analyzing budgets and approving operations. Developing a system where the management only comes in when exceptions occur frees up time for senior executives to handle more critical issues.
2. Find the Right Staff
By delegating some matters to subordinates, management by exception gives employees the chance to approach projects from their own angles. They learn how to work with the given budgets and time frame. When problems arise that don’t fall under the exception category, subordinates have to solve them.
Such responsibilities allow your employees to grow and develop problem-solving skills that will benefit the enterprise later on. However, for your MBE framework to succeed, subordinates must have high skills. Workers must know their roles and fulfill them appropriately.
3. Efficient Operations
MBE requires the management to define goals clearly for subordinates to adhere to during their operations. Employees have standards to guide their job performance. These go a long way in improving the efficiency and productivity of business operations.
The senior management can guarantee this by ensuring that everyone understands the exceptions. By doing this, subordinates know the deviations they can handle and which ones need the intervention of the senior executives. Note that there is limited employee participation in objective-setting when using the MBE model.
4. Better Communication
Management by exception can stimulate communication in an enterprise. Subordinates have to report to the senior management when there are variances to the norm. So it means there have to be open channels of communication. An MBE strategy only works if there is timely and accurate reporting.
Teamwork is another ingredient that makes MBE work. Subordinates must be able to function as a team and work with the accounting department. This one has to set the financial plans and that demands communication.
5. Easier Decisions
The MBE model reduces the frequency of decision making. Because the senior management leaves most of the monitoring procedures to subordinates, executives do not face a high number of judgment calls. Decision making can deplete the energy and time of senior management, leaving them with less vigor to undertake other responsibilities.
With fewer decisions to make, senior management doesn’t have to fret over data analytics or anything else that may distract from the ultimate goals.
6. Employees Have Better Control of Issues
Your company will have an easy time identifying issues when using management by exception strategy. This is because subordinates have their budgets, timelines, and objectives to stick to. If anything at all stands out as an exception, employees discover it and inform the relevant executives.
It gives senior management an opportunity to handle deviations from the norm before they get out of hand. This can save your enterprise a multitude of issues.
Ticking the Exception
Management by exception is one way that you can improve the structure of your company. The strategy allows senior management to stay away from everyday financial and operational decisions. They only get proactively involved when there is an exception to the norm.
With the numerous tasks that managers have, MBE makes it less challenging to accomplish the most crucial ones. Modern technology facilitates the process further by allowing companies to automate ordinary tasks and only require intervention when an exception occurs.