Essentially this technique assumes that employees know what and how to do something, and corrections are applied when something blows up or, if being watching more carefully, mistakes are seen. This makes sense in many ways. For instance – when building flats, most carpenters I work with know how to build a typical flat & I would not expect to have to teach them this skill (generally, there are of course situations where this would not be the assumption). If the carpenters are in the middle of building flats and I see an error in construction (perhaps the plywood corner block has the grain going the wrong direction) then I would stop and correct it, and hopefully the carpenter would not make that mistake in the future. The technique makes sense because it is difficult to know what someone else knows and doesn’t know. At the same time people don’t always know what they don’t know – which could prevent them from asking question. The system streamlines a particular workflow, and only stops when there is an observable issue.
Management by Exception is a transitional model of leadership – it is based on tasks and does not really consider needs of the subordinate or personal development – just the job at hand. It can be done actively – when the manager watches closely for mistakes and then corrects them, or passively, when corrections only occur after a problem has arisen. The issue is that it always a negative transaction – interactions always happen after mistakes have occurred (there is no focus on catching people doing things right). In my experience, and what made me think about this style before I even realized that it was an actual style, is that when corrective action is applied frequently it creates a situation that is not very positive. While avoiding the transactional leadership style completely would create the most positive experience – I think that there is still room for management by exception as long as there is focus on catching good behavior not just problems.