Management By Exception

Administrative policy of focusing on those events deviating from an established standard. Management by exception practices are established where it has been determined that only those events that deviate from a standard are significant. For example, only those creditors having outstanding accounts for more than 45 days will receive a second billing notice.

Concept or policy by which management devotes its time to investigating only those situations in which actual results differ significantly from planned results. The idea is that management should spend its valuable time concentrating on the more important items (such as shaping the company's future strategic course). Attention is given only to material deviations requiring investigation. The tools that facilitate use of this concept include Decision Support System (DSS); Expert System; Performance Report.