Question

Name the principle that a manager should consider while dealing with deviations effectively. State any one situation in which an organisation’s control system loses its effectiveness.

Answer 1

The principle of management that a manager should consider while dealing with deviations effectively is management by exception. It means that any attempt to control everything results in controlling nothing. Only those deviations must be brought to notice which are beyond the permissible limit.

For example, A management has planned to earn a 5% profit on its annual sales. At the end of the year, the actual performance is compared with the planned performance. The profit is estimated to be a total of 4.5%. This is only a small deviation and should not be brought to the consideration of the management. However, if the deviation is of two percent, the management must resort to taking corrective actions, as this is a huge deviation from the planned performance.