Management by exception in cooperative

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Management by Exception in CooperativeSeminar Paper

For the attainment of academic degree of post graduate program in Cooperative development and leadership, Advanced Cooperative

Law and Management

Monday, April 17, 2023

Presented by: Eyob Muhdin

Coopw/027/05

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The presentation has the following part

Introduction1

Literature review2

Conclusion3

Bibliography4

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In cooperative, Management has greatly improved as cooperatives have become larger, more diversified, and integrated to match similar advances in the marketplace, on the farm etc.

In the early years, cooperative managers not only supervised operations but also maintained accounting records, waited on customers, and swept floors etc.

Boards of directors knew little about off-farm businesses of the detail, and hence, many cooperatives failed because of incompatible operating management in relation to cooperative nature and organizational structure.

As a result, cooperatives have increasingly adapted scientific Management techniques known as “Management by Exception” which were the philosophy of many scholars like Taylor.

Introduction…

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The idea of management by exception in human machine systems was born out of the supervisory control paradigm in the mid-1970s (Edwards and Lees 1974; Sheridan 1976; Umbers 1979).

Wiener (1988, p. 456), in his book described the concept: As “as long as things are going well or according to plan, leave the managers alone. Don't clutter their world with reports, warnings, and messages of normal conditions.”

Taylor (Frederick Winslow Taylor - March 20, 1856 - March 21, 1915), an American mechanical engineer who originally sought to improve industrial efficiency, and, sometimes called "the father of scientific management." explain the concept as follow under his well know book:

Introduction…

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Introduction

“The manager should receive only condensed, summarized, and invariably comparative reports covering,…leaving him free to consider the broader lines of policy. (Taylor 1911, p. 86)”

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Management style and Techniques

Before talking about Management by exception let us just have some understanding on Management styles and techniques:

Management style is the way in which a manager directs the staff under his authority.

Management technique is the type of obligatory personnel management laid down by the company for its managers.

Management techniques are the basic conduct and procedures adopted within a company when performing management tasks.

Literature review…

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Management style and Techniques[pictorial description]


Employee

Management by delegation

Management by exception

Task-Oriented Management style

Management Styles

Person-Oriented management

style

Cooperative management

style

Managemnet by by objectives

Management Techniques

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Management style can be catagorized in to:

With the task-oriented management style, the manager is primarily interested in the high quantity and quality of the work of staff.

In the person-oriented management style, the manager pays considerable attention to the needs and expectations of staff.

In the cooperative management style, staff is included in decision-making processes.


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Management Techniques can be catagorized

In Management by exception, the employee can make autonomous decisions concerning certain operations based on his or her own expectations and experience.

Management by delegation means that certain areas of authority and responsibility are transferred from the manager to the employee.

In Management by objectives, personnel management is based on working towards objectives, which, as a rule, are agreed between the manager and the member of staff (Batcos, N.A).


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What is Management by Exception

A "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).

Managing by Exception can be broadly summed up as creating the right conditions in the first place then only intervening when things aren’t going according to plan (hut, 2009).


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Types Management by Exception

Under his highly influential book entitled Leadership and Performance beyond Expectations in 1985, Bass(Joseph & Boyett, 2006) categorizes Management by Exception in to two ways:

1. Active Management by Exception2. Passive Management by Exception


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Active management by Exception

When leaders engage in active management by exception, they monitor the performance of their followers in order to detect poor performance or deviations from standards so they can take corrective action.


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Passive management by Exception

Leaders who engage in passive management by exception wait to intervene until serious mistakes are made and called to their attention.


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Purpose of Management by exception:

To only bother management with the most important variances from the planned direction or results of the business.

Which means,the concept can be fine-tuned, so that smaller variances are brought to the attention of lower-level managers, while a massive variance is reported straight to senior management.


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Advantages of Management by Exception

It saves the time and energy of senior executives and enables them to concentrate on more important problems and issues.

It facilitates the engagement of specialized staff for high-routine jobs. It reduces the frequency of decision making.

It leads to the identification of critical problem areas.

It stimulates communication.

This method allows employees to follow their own approaches to achieving the results mandated in the company's budget. Management will only step in if exception conditions exist.


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Disadvantages of Management by Exception

Small issues may be overlooked and these can turn into more serious problems later down the line

Staff may not feel valued if their concerns are not addressed or even looked into

Staff may feel completely isolated from the management due to no real interaction

Management may lose touch with everyday matters of the business.


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Management is the decision making element of the cooperative.

Broadly speaking, its role entails formulating and executing operating policies, providing good service, maintaining financial soundness, and implementing operating efficiencies to successfully meet its objects.

But, what makes different in managing a cooperative from any other type of business?

How the technique of management by exception work and be helpful in cooperative?

The followings are my review for the above critical issues:


Management by exception In Cooperatives

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“Decision making techniques are identical, but the cooperative’s objectives are different; therefore, the manager’s conclusions will be different.”

In addition, cooperative principles and objectives present a distinctly different managerial foundation.


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In this regard, the management of cooperatives is user oriented, member oriented, development oriented with concern for community and mostly cooperatives recommended to use cooperative management style under which Management by exception technique to complement with its constituency and unique feature.

This is because, the management of cooperatives is unique because of the value base and principles upon which the organization of the cooperatives is built and members and Board of director not spend most of their time in day to day operation rather leave the detail to hired manager by its nature.

This can be justified by the following organizational structure:

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Board of directors represent members within the framework of an official board of directors. All corporate powers of the cooperative, other than those specifically conferred upon members, are vested in its directors.

The board of directors, in turn, delegates much of its overall management responsibility of the daily operations to a full-time manager or chief executive officer.

The manager, in turn, is empowered to employ and discharge key employees such as department heads, who together with the manager comprise the hired top management staff or team.

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In general, in cooperative, day to day management is given to the hired general manager and overall management is evaluated even if the process is not formally planned.

Member-owners continually evaluate their hired management in terms of how well the cooperative is serving members.

Regardless of cooperative size, supervisory personnel are evaluated on the basis of how they perform day-to-day.

As it can be seen above, the owner i.e. the member and /or the board which is representative of cooperative member delegate all the daily base activities to the hired employees and intervene when there is a deviation from the plan through different evaluation techniques. As a result, most of the time the owner spend most of their time for expansion issue etc. than routine issues.

That is what management by exception in cooperative.

Management by Exception in Cooperative.docx

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Management by Exception (MBE) is a management philosophy and practice where manager intervention is primarily focused on the areas of organizational performance that need attention.

we can conclude that management by exception is effective technique for organization like Cooperative enterprises as we can we see from the above having the following condition.

If the people employed are responsible enough to move forward, and work toward organization’s/cooperative’s goal without constant prodding and supervision, than this is an excellent choice of management technique.

Conclusion

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1. Boyett, J. H. (2006). The Science of leadership. Transformational Leadership: the hignly effective leader/Follower relationship , p. 2.

2. Batcos. (N.A). Management style and Management techiques. 3. BBI. (na). What is managment by exception? Business-Building

information, (pp. 9-12).4. Cognition, T. (1999). To intervene or not to interven: The Dilemma of

Managment by exception. In T. Cognition. London: #1999 Springer-Verlag London Limited Cognition.

5. CPE. (2011). what is managment by exception? In CPE guiding book (pp. 1-3).

6. Gibson, T. (2010, October 13). what is Management by Exception. Ask an Automotive Professional (223), pp. 1-6.

7. hut, P. (2009). Management By Exception. In J. infonet, # 27 in th Hut introduction to Project Management (pp. 2-3).

Bibliography

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Economy & Finance

Management by exception in cooperative