Everything you need to know about the levels of management in an organisation. By levels of management we mean a line of demarcation between various managerial positions in an organisation.
The number of levels of management increases as the size of the business and number of employees increase.
The hierarchy of management positions from top to bottom is called levels of management. The level of a manager in the hierarchy determines the amount of authority and status enjoyed by him.
The supervisory level managers have less authority than middle level managers who have in turn less authority than the top managers.
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The levels of management are:- 1. Upper Top Level and Top Level 3. Upper Middle Level 4. Middle Level 5. Lower Level.
Additionally, learn about the responsibilities of managers at different levels.
Levels of Management: Upper Top Level and Top Level, Upper Middle Level, Middle Level and Lower Level
Levels of Management – 3 Levels of Management: Top Level, Middle Level and Low Level (With the Responsibilities of Manager at Different Levels)
The term ‘levels of management’ refers to a line of demarcation between various managerial positions in an organisation. In every organisation there is a chain of superiors and subordinates from the highest level to the lowest. This chain is known as chain of command or scalar chain. The chain consists of a series of managerial positions like chief executive, departmental heads, section officers and supervisors. The level of manager in this chain determines his authority and status.
There is no fixed number of management levels for a particular organisation. It all depends upon the size, technology and the range of production in the organisation. Moreover, the number of management levels cannot be increased to an unlimited extent as – (i) It makes coordination and control difficult, (ii) It increases the gap between the top management and the rank and file and (iii) It complicates the communication process.
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Generally, this chain is divided into three levels of management:
1. Top Level:
Top management is the head of an organisation. Managers at this level ensure that major performance objectives are established and accomplished. Common job titles for top managers include Board of Directors, Chief Executive Officer (CEO), Chief Operating Officer (COO), president, vice president. These senior managers are considered executives, responsible for the performance of an organisation as a whole or for one of its significant parts.
2. Middle Level:
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Middle management generally consists of heads of functional departments. It is concerned with the task of implementing the policies and plans laid down by the top management. It is also a link between the top management and lower management. Middle managers report to top managers and are in charge of relatively large departments or divisions consisting of several smaller units.
Examples of middle managers include; clinic directors in hospitals; deans in universities; and division managers, plant managers, and branch sales managers in businesses. Middle managers develop and implement action plans consistent with company objectives, such as increasing market presence.
3. Low Level:
The initial management job that most people attain is typically a first-line management position, such as a team leader or supervisor — a person in charge of smaller work units composed of hands-on workers. Supervisory management is the lowest level in the hierarchy of management. Job titles for these first-line managers consists of supervisors, foremen, accounts officer, sales officers, department head, group leader, unit leader and so on.
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They are directly concerned with the control of the performance of the operative employees. They assign specific jobs to the workers, evaluate their performance and report to the middle level management.
Responsibilities of Managers at Different Level:
i. Laying down the overall objectives, plans and broad policies of the enterprise.
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ii. Organizing the business into various departments and divisions.
iii. Provides guidance, direction and overall leadership.
iv. Coordinating the work of different departments.
v. Monitoring business environments
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vi. Building and maintaining good public relations with the outside public.
i. Executing plans in accordance with the policies and directives of the top management.
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ii. Setting objectives consistent with top management goals, planning, strategies, etc.
iii. Selecting suitable operative and supervisory personnel.
iv. Issues detailed instructions and collecting information on performance.
v. Coordinating and linking groups, departments, and divisions.
vi. Monitoring and managing the performance of subunits and managers who report to them
vii. Implementing the changes or strategies generated by top managers.
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viii. Participates in operating decisions.
ix. Motivating personnel to achieve higher productivity.
x. Trains other managers.
xi. Reporting and making recommendations to top management.
3. Lower Managers (First-Line Managers/Supervisors/Team Leaders):
Responsible for –
i. To plan the activities of his section.
ii. To issue orders and instructions to the people who work for him.
iii. Managing the performance of entry-level employees and maintaining discipline among workers.
iv. Making schedules and operating plans based on middle management’s intermediate-range plans.
v. Provide training to the workers and solving their problems.
vi. Facilitating team performance and internal team relationship.
vii. Managing external relationships
viii. To act as liaison between the middle management and the rank and file workers.
ix. To send periodical performance reports to the middle management.
Levels of Management – Top Management, Middle Management and Lower Management
Figure 1.2 shows an indicative organization structure to demarcate the various levels of management in an organization. The organization structure may vary from organization to organization according to the nature of the industry and areas of activity of the organization.
1. Top Management:
Top management of the organization is constituted by the Chairman, and the Board of Directors, the President, and the Chief Executive Officer (CEO). The strategic knowledge and skills are most useful for this level of managers, whose primary role is to set the vision, mission, and long-term direction of the organization. They also create the strategic objectives for the firm. For example, a strategic objective for a firm may be to double the sales revenue in the coming five years.
2. Middle Management:
According to Drucker, the operating (middle) management tends to see things “functionally.” Thus, the middle management consists of managers taking care of the functional areas like operations, finance, marketing and human resources, strategy and management information systems.
The functional areas may be segregated into specialized sub-functions. For example, marketing department may be divided into sales and branding sections. As shown in Figure 1.2, the General Manager (Sales) would report to the Vice-President (Marketing).
The middle managers need the operating knowledge and skills to convert the strategic plans set by the top management into operating (annual) policies and targets. They later use control mechanisms to gauge up to what extent the lower management is successful in implementing these policies and in achieving the targets.
For example, the strategic objective of doubling the sales revenue in the next five years may be converted by the middle management into operating annual objective of 20% growth in sales revenue every year for the coming five years.
3. Lower Management:
Lower management level is formed by the managers who are entrusted with the job of implementing the operating policies and targets given by the middle management. As shown in Figure 1.2, the regional managers are responsible achieving the sales targets for their respective regions like North, South, East, and West.
The Regional Manager (South), say, has a team of managers operating under him for the states of Karnataka, Tamil Nadu, Kerala, and Andhra Pradesh. Depending upon the sales growth prospects in the four states, the Regional Manager (South) may charge the Manager (Karnataka) to achieve a sales growth rate of 30%, while instructing the Manager (Kerala) to achieve a sales growth rate of 15% and so on such that the overall growth for all the four states in South aggregates to 20% (the operating target set by the middle management).
The technical knowledge and skills come most handy for the lower management. For example, Manager (Karnataka) must know the concepts of customer relationship management (CRM) to retain her existing customer base, while using the selling skills to rope in new customers.
It is noteworthy that human knowledge and skills are of great utility at all levels of management. For example, the Board of Directors has to deal with numerous shareholders, lower management has to deal with customers, vendors, etc., and the middle management has to take care of the compelling demands of top as well as middle managers while dealing with external people like the government agencies, financial institutions, etc.
Levels of Management – In Most Business Organisations: Top Level Management, Middle Level Management and Lower Level Management
In most business organisations, three broad levels of management can be identified.
1. Top Level Management:
The top level management constitutes the chief executive and the directors. At this level, the mission, goals, and corporate strategies are formulated. Long term plans are made. Major policy decisions are taken. Basic organisation structure (this explains number of departments in the organisation, number of people at each level, authority relationships, and so on) is outlined. The employees are adequately motivated to strive for meeting organisational objectives. The performance of the middle level managers is evaluated and controlled by the top management.
The time horizon for this level of management is often 5-10 years. In business organisations, the top management is solely responsible to the shareholders for the conduct of the business and also for the welfare of all employees.
2. Middle Level Management:
Middle level management is responsible for carrying out the decisions and policies made by the top management. It includes departmental managers, functional managers such as – marketing manager, production manager, and others. Here, the managers plan, organise, direct, and control for the activities within their respective departments only. The time horizon for this level of management is commonly one year. They are responsible to their superiors for the operations of their department or unit only.
3. Lower Level Management:
Lower level management is also called operational level, which includes foremen, supervisors, and the like. Managers at the operational level supervise their workers in their day-to-day tasks.
As a part of this, they plan (make targets and schedules), organise (allocate task and time to meet daily targets), direct (instruct and motivate the employees to do the job better), and control (ensure that the work is completed satisfactorily according to the schedules). The time horizon for this group may vary accordingly – between a week and a month. They are responsible for the work of all the employees under them.
To summarise, the functions of management are performed all through the levels and across the organisation. All these management functions are being carried out at every level of management. For instance, at higher levels of management, time spent for planning and organising is high whereas for lower levels, it is low.
The top level management spends relatively less time on other functions such as – directing, communicating, coordinating, and controlling because these are essentially taken care of by the other levels in management.
As management functions are performed in the entire organisation and at all the levels, management is considered ubiquitous in nature. The nature and size of the organisation does not matter. In other words, it makes no difference whether the organisations are profit making or non-profit making, corporate or non-corporate bodies, political or non-political organisations, and so on. The functions of the managers in all these organisations remain the same.
Further, the logical sequence of the functions cannot be subordinated by even one function. It is because every function has its own logical significance. The manager, at one level, would be performing more than one function at a time. In other words, he may have to plan, direct, and also control.
The principal of a college will plan the logistics for the college, direct the Heads of Department (HODs), and also control or monitor whether the class work is going as required or not.
A close understanding of management functions would help to identify the bottlenecks in real life organisations. Consider an organisation where the finance manager raises large funds, the production manager goes on producing but the sales manager finds it difficult to sell the goods. What is the problem here? It is evident that it is the sales problem.
This implies that the general manager is not effectively coordinating the efforts of the sales manager and the production manager.
The underlying current of the functions of any manager is to achieve, his/her organisational goals. An understanding of functions of management and the contemporary management practices will enhance the effectiveness and efficiency of the manager.
Levels of Management – In a Large Scale Business Organisation (Upper Top Level and Top Level, Upper Middle Level, Middle Level and Lower Level)
Managerial Hierarchy and Number of Levels:
Managerial Hierarchy means classification of managerial positions into a number of levels in the organisation. There is no Tailor-made formula to determine the number of management levels required in an organisation for efficient management. The number of levels of management depends upon the size of the business concern. The number of levels of management increases when the size of the business and work force increases.
As well as span of control is one of the important factor for determining the number of levels of management. There is a limit to the number of sub-ordinates, a person can supervise and guide. Levels of management are increased to achieve effective supervision. It does not mean that an unlimited number of management levels be created. If there are so many levels of management, instead of effective supervision more problems may crop up.
The problems may be of effective communication, coordination, control etc. These may ultimately harm the discipline of the business organisation. Classification and understanding of levels of management is very important as they substantially determine authority relationships and give social status to their occupants. The time and effort spent on different functions will depend on the level on which the manager is placed in the managerial hierarchy.
Though every manager has to perform all the managerial functions, the stress placed on individual functions varies at different managerial levels. The term manager includes all managers’ right from the Managing Director up to the first line supervisor on the shop floor. Managing Director who occupies the position of top most level of management normally spends most of his time on planning and organising and less time on staffing, directing and supervision.
On the other hand the foreman representing supervisory level of management will devote less time on planning and organising and more time on directing and controlling.
It is necessary to give prime regard to the span of control less or minimum number of levels. If managers exceed their feasible span of control less or minimum number of levels of management will be required but it will increase administrative and social distance.
In a large scale business organisation there are generally four levels of management, namely:
1. Upper top level and top level
2. Upper middle level
3. Middle level
4. Lower level
In many cases a job title indicates the management level to which an executive belongs. But in every case job title does not indicate management level. Some job title may be misleading. For example a Vice-President may have limited authority and minor impact on the overall operations of the firm. In a small organisation, designation of a manager may look attractive though all important decisions are taken by its owner, who also performs managerial functions.
The number of managerial levels and also managers at a particular managerial level vary from firm to firm. For example in a small sole traders shop there is only one level of management represented by owner manager who takes all the decisions affecting the operation of the business. But in big corporations, multinationals, top management may include a large number of people who take strategic decisions affecting the entire firm.
1. Upper Top Level and Top Level of Management:
Top level of management of a company consists of the Board of Directors, the Chief Executive, the General Manager, Secretary and others concerned with the policy making. General operations are distinct from some functional specialization. They are the ultimate level of authority in the operation of the enterprise, this level of management establishes objectives, frames policies and defines the goals of the enterprise.
It is accountable to the owners of the concern for the overall management of the company. Top management sees that the policies are put into effect and judge the results. Board of Directors is the trustee of the organisation.
Its includes:
i. Deciding long-range policies, plans, objectives, goals, programmes, budgets, strategies etc.
ii. Designing structure of organisation.
iii. Reviewing financial and operational results of the company.
iv. Issue of general directives for their implementation (implementation of policies, plans, programmes, etc.)
v. Overall review of performance and progress.
It also appoints top managerial personnel and ratifies the appointment of managers at lower levels. Executive functions of top management are performed by the Chief Executive or the Managing Director. He is responsible for the day-to-day management of the company under the overall guidance of the Board of Directors. He is responsible for executing the policies and programmes laid down by the Board of Directors and also acts as a link between the board and other personnel in the organisation.
He provides effective leadership to the organisation and acts as a coordinating link between various departments. The role of top level management is very important. Success as well as smooth running of an organisation depends upon the way, the top level management adopts.
Interest, hard work, honesty, willingness to work for long hours, their dedication devotion of the people at top level ultimately convert the business organisation into profits. All this help in creating good image of the organisation in the market.
2. Upper-Middle Level of Management:
It consists of the head of the personnel administration department, production or works manager, sales manager or others responsible for research, finance, accounting and so on. It means upper middle management includes heads of various functional departments or divisions.
Thus upper middle management consists of the executives responsible for leading functions within the enterprise such a personnel administration, production, sales, research etc. In certain companies these people are on the board of directors and are therefore part of top management.
Main functions of this level are described by Hempel as under:
i. Establishment of an organisation.
ii. Selection of best suited executives of staff or of employees.
iii. Appointment of sufficient workmen to carry out the plans.
iv. Installation of proper departments.
v. Designing of operating policies and operating routines.
vi. Actual assignment of specific duties to each departments and to each individual.
vii. Obtaining the necessary funds as well as control of costs, and the financial status of the company.
viii. Solution of all problems of actual sales activities and distribution, finance production, labour relations, wages etc.
A vital role is played by the upper middle management. This level of management is very essential in large organisations.
3. Middle Management:
Middle management stands between upper middle management and lower management in five levels of management. It stands between top management and lower management in case there are only three levels of management. Middle management may be further bifurcated into two parts as mentioned above, upper middle management and lower middle management.
Upper middle management includes heads of various functions departments or divisions. The lower middle management is primarily concerned with achieving specific goals of the departments to which they are attached. Lower middle management includes branch managers, superintendents and heads of various sections.
Middle management consists of the deputy heads of the various sections of Personnel Administration and Management; Mary C. Niles has described the functions of middle management in the following words –
Middle management acts with and under top management to accomplish the following broad objectives of administration:
i. To run the details of the organisation, leaving the top officers as free as possible for their other responsibilities.
ii. To co-operate in ensuring smooth functioning of the organisation.
iii. To understand the interlocking of departments in major policies.
iv. To achieve the co-ordination between the different parts of the organisation.
v. To build up a contented and efficient staff where reward is given according to capacity and merit and not according to change or length of service.
vi. To develop leader for the future by broad training and experience.
vii. To build up a team spirit in all the person working to provide a product or service wanted by others.
All the above functions can be generalised in the following four important functions of middle management:
i. To execute various functions in accordance with the policies, directions and guidance of the top management.
ii. To work in making a smooth functioning organisation.
iii. To achieve co-ordination between different parts of the organisation.
iv. To promote team spirit in the organisation.
4. Lower Level of Management:
There are people in any organisation who are entrusted with the job of supervising the functioning of operative staff. Such people form lower level management. Foremen are the officials manning this level of management. Foreman have direct supervision over the working force in office, factory, sales or other areas of activity of the concern. Lower or supervisory management is directly concerned with the supervision and control of the performance of operative or rank and file employees.
Supervisory personnel perform those jobs which typically involve immediate and continuing contact with operative workers. Lower level managers are more concerned with direction and control functions of management. They devote more time on supervision of various jobs than on other management functions.
In general, the following are the important functions of lower i.e. supervisory management:
i. To supervise and guide the subordinates.
ii. To plan and organise the activities of the group.
iii. To arrange for necessary materials, machines, tools etc. for workers and to provide them necessary working environment.
iv. To provide training to the workers.
v. To solve problems of workers.
vi. To communicate workers, problems to the higher level of management.
vii. To maintain discipline among workers.
viii. To maintain good human relation in the organisation.
Levels of Management – Four Activity Levels of Management
Four Activity Levels of Management:
Level # 1. Top Management:
It consists of the board of directors and the general executives such as the general manager or chief executive, managing director, secretary. Others concerned with the general administration, however are distinct from functional specialisation. They are the supreme level of authority in the operation of the enterprise; they perform all conceptual functions like determining the objectives, defining the goals, establishing policies, seeing to it that the policies are put into effect, and judging the results.
Level # 2. Upper Middle Management:
It consists of functional heads of production, finance, marketing personnel, materials, accounting, and the like.
They establish an organisation and select proper staff to carry-out the plans of the top management. They set-up the proper departments, design operating policies, and operating routines. They assign actual specific duties to each department and to each individual. They obtain the necessary funds and exercise control over costs and the working of their own personal areas.
Level # 3. Middle Management:
Under the broader functional areas, there are deputies, superintendents and departmental heads responsible for either line or staff functions. They are called middle management.
Mark C. Niles beautifully summarises the functions of the middle management in the following words:
(i) Whereas, the top management is concerned with conceptual thinking, the middle management is concerned with the details of operation. The top officers are kept free from routine matters by the middle management.
(ii) The middle management cooperates with the top management for the smooth functioning of the organisation.
(iii) It interlocks the various departments in framing the major policies.
(iv) It develops manpower for the organisation.
(v) It develops leaders for the future by imparting training.
Level # 4. Lower Management:
i. Foremen and Supervisory Staff:
They act as a link between the management and the workforce. They are the men who directly supervise the working force in the office, factory, sales field and other areas of the activity of the concern.
ii. Operating, Force or Rank and File:
It consists of all those who themselves manage their tasks and their tools.
Levels of Management – Generally in Big Companies: Top Management, Middle Management and Operative or Lower Level Management (With Functions)
By levels of management we mean a line of demarcation between various managerial positions in an organisation. The number of levels of management increases as the size of the business and number of employees increase.
Generally in big companies following are broader levels of management:
1. Top Management.
2. Middle Management.
3. Operative or lower level Management.
1. Top Management:
It is considered as the brain of the organisation and includes the top most people like vice-president, Managing Director, General Managers and Chief Engineer.
It performs functions like:
i. Laying down plans and policies.
ii. It gives directions and guidance to the middle level.
iii. It prepares report about the progress of all Departments or Divisions.
iv. It co-ordinates the functioning of different divisions.
v. It approves budgets prepared by different managers.
2. Middle Management:
It includes different heads of functional department like the Manager Finance, Manager Marketing, Manager HR and Manger Production etc.
It deals with:
i. Interpreting the policies framed by top managers.
ii. Preparing the organisational set up in their respective departments.
iii. Assigning duties and responsibilities for timely execution of the plans.
iv. Motivating personnel to achieve high productivity.
v. Co-ordinating with other departments for smooth running of the entire organisation.
vi. Collecting information and performance reports.
vii. Reporting to the top managements.
3. Operative or Lower Level Management:
Operative management is at the lowest level in the management ladder and consists of supervisor, superintendents, section officers, and foremen etc., who are responsible for actual working. They are link between workers, clerks, salesman, machine operators and higher levels of management.
Operative level management passes on the orders, directions and suggestions of the superiors to the workers and clerks etc.
The important functions of operative level of management are:
i. Planning activities of one’s concerned section.
ii. Assigning work to the workers and the clerks.
iii. Guiding, directing and supervising workers.
iv. Working as a link between higher authorities and the workers.
v. Maintaining discipline and team spirits amongst the workers.
vi. Providing feedback to the authorities at operative level. Lower level management responsible for day to day work and are answerable to middle level management.
Levels of Management – Classification of Management Levels: With Functions
Management levels signify the hierarchy of management in any organisation. The managers can be divided into a number of levels depending upon their activities. The number of levels will depend upon the size of business, number of workers and effective span of control.
The hierarchy of management positions from top to bottom is called levels of management. The level of a manager in the hierarchy determines the amount of authority and status enjoyed by him. The supervisory level managers have less authority than middle level managers who have in turn less authority than the top managers.
Classification of Management Levels:
Pfiffner and Sherwood have classified management levels into four viz., – corporate management, top management, middle management and supervisory management. Koontz and O’Donnell and Brech have classified the levels into two, viz., top level management and supervisory level management.
Joseph Litterer has suggested three levels, viz., institutional level, general management and departmental management. J.B. Batty has classified management into four levels, viz., top management, upper middle management, middle management and supervisory management.
For the sake of convenience, the levels of management may be classified into three groups:
1. Top management,
2. Middle management, and
3. Lower or supervisory management.
The various positions which are included in each level of management are illustrated below:
1. Top Management:
Top management lays down policies and objectives of the enterprise. It performs the higher level management functions and takes the policy decisions. Top management includes board of directors and chief executive of the company. In some cases, departmental heads are also taken as a part of top management.
Top management coordinates the affairs of the business and reviews the performance of the middle and lower levels of management. The board of directors is merely a decision-making body and the decisions are implemented through the chief executive of the company. Top management controls the affairs of the enterprise also.
The functions performed by the top management are given below:
i. Laying down broad objectives and policies of the organisation.
ii. Taking decisions for the accomplishment of the goals of the enterprise.
iii. Coordination of various departments and divisions.
iv. Laying down guidelines for the departmental and divisional heads.
v. Making appointments to middle level positions in the company organisation, such as Divisional Managers, Secretary, Departmental Heads, etc.
vi. Reviewing the work of executives at different levels to ensure that their performance is in accordance with the objectives laid down.
2. Middle Management:
Middle management consists of heads of various departments. The job of middle level managers is to organise their departments to implement the top management’s policies. They are responsible for the results in their areas. They also perform the management functions of planning, organising, staffing, directing and controlling. They issue the instructions to the first level management. They serve as the channel of communication between the top and lower management.
The functions of middle level managers are given below:
i. Planning for the execution of policies and programmes of top management.
ii. Analysing the achievements of lower levels in the light of various plans and programmes.
iii. Discussing the solutions of current problems and proceeding further with their results.
iv. Appraising the performance of subunits.
v. Guidance and motivation of supervisory personnel.
vi. Achieving coordination between different sections or units.
3. Lower or Supervisory Management:
Lower or operative management consists of foremen, supervisors, office superintendents, etc., who are engaged with the direction of the operative employees. The managers at this level are in direct contact with the operative employees. They are more concerned with direction and control functions as compared to planning and organisation functions of management.
First line supervisors serve as an important link between the management and the workers. They implement the top management policies and provide feedback to the higher levels of management. The lower level managers plan the day-to-day activities and assign tasks to their subordinates, guide them and take corrective steps whenever necessary.
The functions of first-line management or supervisors are given below:
i. To supervise and guide the operative workforce.
ii. To plan and organise the activities of the group.
iii. To arrange for necessary materials, machine tools, etc., for workers and to provide them the necessary working environment.
iv. To provide training to the workers.
v. To solve problems of the workers.
vi. To communicate workers’ problems to the higher level management.
Levels of Management – Top Management, Intermediate Management, Middle Management and Supervisory Management
Every organisation consists of managerial hierarchy or chain of command which has several levels of authority.
In a big company, the management levels may be classified as follows:
1. Top management,
2. Middle management, and
3. Supervisory or operating management.
In a very large enterprise, the middle management level may be subdivided into upper middle management and lower middle management.
1. Top Management:
Top management consists of the Board of Directors and the chief executives. Board of Directors is accountable to the shareholders in the annual general meeting of the company. It is basically an organ of overall review and control. Chief executive is concerned with the overall management of the company’s operations. He maintains coordination among different departments/subsidiaries/units of the company.
Thus, the main functions of top-management are:
(i) To design broad organisation structure.
(ii) To analyse and interpret changes in the external environment of the company.
(iii) To establish long-term corporate plans (goals, policies and strategies) of the company.
(iv) To formulate and approve the master budget and departmental budget.
(v) To appoint departmental heads and key executives.
(vi) To coordinate and integrate the activities of different departments and divisions of the company.
(vii) To provide overall direction and leadership to the company.
(viii) To decide the distribution of profits, etc.
(ix) To exercise overall review and control of the financial and operating results of the company.
(x) To represent the company to the outside world.
2. Intermediate Management:
The intermediate or upper middle management comprises departmental or divisional heads, e.g., works manager, marketing manager, personnel manager, finance manager, etc. It is also known as departmental or functional management. Every divisional or departmental head is the overall incharge of one particular division or department. He is accountable for the performance of his division or department to the chief executive. He coordinates and controls the activities of all personnel working in different branches or sections of his particular department.
3. Middle Management:
Middle management or lower middle management level consists of sectional heads, e.g., plant manager, area sales manager, branch manager, office manager, etc. These executives serve as a link between intermediate or top management and the operating management.
The main functions of middle level managers are:
(i) To interpret and explain the plans and policies formulated by top management.
(ii) To monitor and control the operating performance.
(iii) To cooperate among themselves so as to integrate the various activities of a department.
(iv) To train, motivate and develop supervisory personnel, and
(v) To lay down rules and regulations to be followed by supervisory personnel.
4. Supervisory or Operating Management:
This is the lowest or first level of management in an organisation. It consists of supervisors, foreman, sales officers, accounts officers, purchase officers, etc. The distinguishing feature of supervisory management is that it deals with non-managers, i.e., workers, where all other levels deal with executives.
The functions of supervisory management are as follows:
(i) To plan day-to-day production within the goals laid down by higher authorities.
(ii) To assign jobs to workers and to make arrangements for their training and development.
(iii) To issue orders and instructions.
(iv) To supervise and control workers operations and to maintain personal contacts with them.
(v) To arrange materials and tools and to maintain machinery.
(vi) To advise and assist workers by explaining work procedures, solving their problems, etc.
(vii) To maintain discipline and good human relations among workers.
(viii) To report feedback information and workers problems to the higher authorities.
Levels of Management – Top Management, Middle Management and Supervisory Management (With Functions)
Management is a universal concept. It is not restricted to a single activity or a group of people. All individuals working in an organisation are responsible for specific functions to be performed and are bound together in a hierarchy of relationships. The hierarchy of relationships give rise to different levels of management.
These levels of management act as line of demarcation between various management positions in an organisation. At each level, a manger receives responsibilities from the manager at higher level and authority to get work done from its subordinates.
The chain of authority responsibility relationship defines the Levels of Management.
Each organisation usually has three levels of hierarchy:
Top management of an organisation includes all such individuals who are responsible for taking core and crucial decisions for the organisation. They are usually the senior most executives of the organisation. Though they carry out all the functions of management but they are largely responsible for planning and organising for the entire organisation. They are the face of the company.
Example – The chairman, the chief executive officer, chief operating officer, president, vice-president, individuals heading the different functional levels etc. are part of the top management.
Functions of Top Management:
i. Setting of business objectives – Top management defines the main objectives of the organisation and sets the short term and long term targets.
ii. Coordinating Resources – It is the responsibility of top management to integrate diverse elements and coordinate the activities of all the departments to achieve organisational goals.
iii. Formulation of plans and policies – Top management is responsible for survival, welfare and growth of the organisation. They formulate plans, policies and strategies to achieve organisational goals and meet the challenges of ever changing market demands.
iv. Managing human resources – They constantly lead, direct, and control the efforts and performance of all individuals working in the organisation.
v. Welfare and survival of organisation – Top level management is not only responsible for the survival and growth of the organisation but also for the welfare of all its stakeholders.
2. Middle Management:
Middle level management is responsible for implementation and controlling the plans and strategies developed by top-level management. In the process, they act as a link between top managers and lower level managers. They perform all the functions of management but they are largely organising, staffing, directing and coordinating business activities.
Examples – Head of Departments; Factory heads; Operation managers etc.
Functions of Middle Level Management:
In order to implement and control the plans formulated by top management, the middle level managers perform following functions:
i. Interpret policies and plans – The middle level managers interpret the plans and policies framed by top management and explain them to line managers for effective implementation.
ii. Recruitment of appropriate personnel – The middle level managers ensure that their departments have personnel with adequate qualification and experience to perform functions expected from them.
iii. Organising activities – The middle level managers organise required resources and activities so that the plans are implemented effectively and organisational goals are achieved.
iv. Instructing and controlling employees – The middle level managers assign necessary duties and responsibilities to first line managers. They maintain discipline, control all the activities and evaluate performance of each workforce.
v. Motivating personnel – The middle level managers motivate the line managers so that they perform at their best while achieving the desired objectives. They try to provide line managers the appropriate facilities and represent their complaints and problems before the top management.
vi. Smooth functioning – Middle level managers make sure that all the departments work as a team and co-operate with each other for smooth functioning of the organisation.
3. Supervisory or Operational Management:
The lower level management is directly responsible for implementation of plans developed by top management and instructions given by middle level management. They are the lowest level in the hierarchy of the organisation with very limited authority. The lower level of management mainly focuses on directing and controlling.
Examples – Supervisors; Foreman; Line managers etc.
Functions of Lower Level Management:
i. First line managers interact with actual work force and transfer the information and instructions provided by the top and middle level management.
ii. They oversee the efforts of the workforce to achieve the maximum output at minimum cost of production.
iii. The first line managers supervise and monitor the production process closely to ensure that there is minimum wastage of resources and best quality of output is achieved.
iv. They are responsible to maintain safety standards and provide proper working conditions to the workforce.
v. The first line managers lead, direct and motivate workforce to achieve the organisational goals-most effectively. They appraise the performance of their subordinates and recognize efforts there in the form of rewards, incentives or promotions.
vi. The first line managers are responsible to maintain discipline and loyalty among the entire workforce.
The direct link with the workforce enables the first line managers to understand the problems and complaints of their subordinates and represent them to the middle level management.
Levels of Management – Top Management, Senior Middle Management, Junior Middle Management and Supervisory Management
Levels of management in an organization represent its hierarchy, or pecking order, or a system in which people or things are put at various levels according to their status or importance.
Factors that Determine Levels of Management:
The number of levels of management in an organization will depend on its size, technology, number and quality of workforce, and range of its operations. A large organization, for example, will need a large number of levels of management to facilitate efficient planning, organization, direction and control of its activities at various work centers.
An organization that uses complex technology of manufacture in which a product passes through several stages to become the final product will also need several levels of management. Same with an organization that manufactures a large number of diverse products.
However, in the interest of efficiency and achieving greater productivity, it is advisable to keep the levels of management to the minimum. Unnecessary increase in the number of levels will only increase costs and create communication and coordination problems between various levels. Lack of communication between managerial and operative staff may also cause misunderstanding, making coordination of their activities that much more difficult.
Different Levels of Management:
It is difficult to give a precise definition of the term “top management.” In a technical sense, it means the owners of organization, i.e., sole proprietor, partners of a firm, or shareholders of a company.
But in a general sense, top management refers to all those who occupy top functional positions in the organization and are assigned the task of accomplishing the objectives, policies, and procedures determined by the owners.
Thus, top management in a company comprises the Board of directors, and chief executives officer (CEO) who may be designated chairman-cum-managing director (CMD), managing director (MD), general manager (GM), managing partner, and so on. In fact, heads of all major activity areas (production, sales, and finance) may be bracketed under top management.
The top management generally performs the following functions:
i. Setting out general objectives and policies of the business.
ii. Laying guidelines, for departmental heads, i.e., policies on production, marketing, finance, personnel management, public relations, etc.
iii. Organizing the business into various sections and departments for eventual accomplishment of organizational goals.
iv. Making, appointments to top positions in the organization, such as the managing director, general manager, secretary, departmental heads, etc.
v. Reviewing the work of executives at different levels and ensuring that their performance is according to the pre-determined plans.
To sum up, management combines the role of a teacher, disciplinarian, coordinator, tactician, and inspirer of men’s work.
But as Peter Drucker has put it, top management is mainly “an organ of review, of appraisal and of appeal.” It is rarely an organ of action, except when a crisis situation forces it to assume such role.
Chief Executive Officer (CEO):
Chief executive officer, being himself a part of top management, is tasked with the responsibility of accomplishing the objectives and broad policies determined by top management. He is the conduit, the sole link between top management and the heads of departments. He is the face, the chief spokesperson of top management.
He performs many important duties – First, issuance of clear-cut instructions to departmental and sectional heads to act within the framework of policies, procedures, rules and strategies formulated by top management, and approving the plans and procedures recommended by departmental and sectional heads.
Second, he coordinates the activities performed at different levels of management and helps in defining authority-responsibility relationships between mid-level managers such that they work as a team.
Third, he monitors, reviews and controls the activities performed by his subordinate managers. To this end, he requires department managers to send him reports of their activities based on which he prepares his own report to the top management.
Lastly, the chief executive is required to lead his team to better and more purposeful action. His success on this front will depend on how far he is able to solve the human problems in the running of an enterprise.
Level # 2. Senior Middle Management:
Departmental heads, such as production manager, marketing manager, finance manager and personnel manager, constitute senior middle management of the organization.
These managers work within the framework of goals, objectives and policies decided by top management. But their focus is mainly on accomplishing short-term, rather than long-term goals of the organization. For example, one of the objectives formulated by top management may be to double the profits within a given frame of time, but for the production and sales managers the focus will be on achieving the production and sales targets for a month or a quarter.
Senior middle managers enjoy enough freedom within their own areas to set targets and rearrange priorities depending on the requirement of a given situation. But their decisions must be within the framework of organizational objectives and must get prior approval of the CEO.
Level # 3. Junior Middle Management:
Managers positioned immediately below the departmental heads constitute the junior middle management. Deputy production manager, deputy sales manager, office manager, works manager, transport manager, etc. will fall under this category.
At the junior middle management level, the nature of responsibility narrows down further. It only involves managing the day-to-day activities of their areas of work. However, since managers at this level are tasked with producing specific results within a short duration of time, they have to keep strict vigil on the day-to-day activities to ensure that they are directed to achieve those results within the given time-frame.
Within the framework of decisions made by their respective superiors, junior middle-level managers have authority to allocate duties among the staff placed under them and make necessary short- terms plans for achieving the targets set by the superiors.
Level # 4. Supervisory Management:
The supervisory staff constitutes the lowest rung of the management ladder. They may bear designations such as superintendent, supervisor, foreman, charge-hand, and so on. Their main job is to supervise the operative staff placed under them. The work performed by them is mainly of a technical nature; they control the direct labor in the factory or in the field.
Mainly, the supervisory staff is concerned with the following:
(a) Planning of day-to-day work.
(b) Assignment of specific tasks and duties.
(c) Keeping watch on worker-performance.
(d) Submitting reports and statements to their superiors.
(e) Evaluation of work performed by individual workers.
(f) Maintaining close and personal contact with workers.
Levels of Management – Top Management, Middle Management and Lower Management
Generally, three levels of management are distinguished:
1. Top management,
2. Middle management, and
3. Lower management.
1. The Top Management:
The Board of Directors in a corporate organisation is the body responsible for policy-making, appeal and review of operations. It was also noted that the Board has become a tired fiction now because much of the executive management is vested in the chief executive (manager, managing director, managing agent or secretaries and treasurers). The chief executives, responsible for the issue of instructions on the basis of policy formally laid down by the Board of Directors, really constitute the top management.
2. The Middle Management:
The heads of departments and superintendents constitute the middle level of management. They have to take instructions from the chief executives and direct and guide the supervisors under their charge. The most important part of their job lies in co-ordination of the activities of those above them, those below them and those at par with them.
3. The Lower Management:
The lower management level consists of foremen and supervisors or office superintendents. Being placed at the bottom of the hierarchy of management they are directly in touch with rank and file of workers. The workers look to them for guidance and direction and they have the important job of interpreting the mind of the middle management to the workers. Being in close direct contact with the workers, those constituting lower management have a direct responsibility for maintaining high morale among the workers.
Levels of Management – On the Basis of Level Managers
All the managerial and operative functions are performed by managers. The management can be classified on the basis of activities performed by managers. A hierarchy or a scalar chain is created by the levels.
On the basis of level managers and accordingly management can be classify as follows:
1. Top level Management.
2. Middle level Management.
3. Lower level Management.
The authority, responsibility and nature of function performed by managers are the base of such distinction.
1. Top Level Management:
The managers working at the highest level of organizational hierarchy are known as top management. Few managers belong to this group and they are responsible for the management of the whole organization. Generally chief executive officers, ‘president,’ ‘vice president’, ‘managing directors etc. Belongs to this ‘level’.
The main functions of top management are as follows:
i. To determine the plans, policies and procedures for the organization.
ii. To Analyse and interpret the changes taking place in the external environment.
iii. To integrate and coordinate the activities of different department and divisions of the organization.
iv. To control and review the financial and operating results of the company.
v. To carry out overall management of the organisation.
vi. To take the financial decisions regarding budget, profit etc.
vii. To ensure smooth functioning of the organization.
2. Middle Level Management:
Generally, middle level managers are the departmental heads and they serve as a link between top and lower level management. Departmental managers, plant managers, Assistant managers are included in this level. Finally large number of middle level managers is found in the big sighed organizations.
The functions performed by middle level managers are as follows:
i. To explain and interpret the plans and policies formulated by top management to lower level managers and guide to implement them.
ii. To make the balance between demands of the supervision with the capabilities of the subordinates.
iii. To monitor and control organization day to day operations.
iv. To direct and watch the activities of lower level management and report them to top managers.
3. Lower Level Management:
The lower level of management is called as lower management. This is also called as first level of management in the organization. They facilitate as a link between middle level management and non-managerial employees. The activities of non-managerial employees are supervised by lower management. Lower management also makes coordination between operating at higher level of hierarchy and non- managerial employees. The foremen, supervisors, office managers, operating manager etc., belongs to the lower management.
Levels of Management – 3 Levels of Management (With Functions)
The process of dividing authority and responsibility among the various executives is called the creation of levels of management. In other words, it is concerned, with the classification of superior-subordinate relationship in an organisation. There is no-fixed number of management levels prescribed for particular organisation and this depends, to a certain extent on how they are defined and classified, the nature of organisation, size of enterprise, etc.
Further, there is no unanimity among the writers in this respect. Keith Davis has classified various management levels as trusteeship management, general management, departmental management, middle management and supervisory management.
Piffner and Shorword have classified management levels into four parts, viz., corporate management, top management, middle management and supervisory management. Koontz, O’Donnell and Brech have classified the levels into two, viz., top-level management and supervisory-level management. Joseph Litterer has suggested three supervisory levels, viz., institutional level, general management and departmental management.
Prof. J.B. Batty has classified management and department into five levels, viz., top management, upper middle management, middle management, supervisory management and operating force. Thus there is no unanimity among the writers.
For the convenience of study, the levels of management may be classified into three groups:
1. Top management,
2. Middle management and
3. Lower or supervisory management
Level # 1. Top Management:
Top management is at the head of the organisation. It consists of the Board of Directors and its Chairman, the Chief Executive (e.g., Managing Director or General Manager) and the Senior Executive (viz., Deputy General Manager). In the operation of the enterprise, top management is the ultimate level of authority.
Functions of Top Management:
The main functions of top management are as follows:
(a) Determine objectives for the organisation – Objectives may relate to profit, business growth, survival, prestige, competitive pricing, marketing method, widening the area of sales, relations with workers, customers, public etc.
(b) Frame the Policy – To frame the policies and chalk out the plans to carry out the objectives and policies. Policies may relate to different aspects of the organisation. For example, production policy deals with the quality, product variety, scheduling of production to meet the market demand etc. Marketing policy deals with such matters as advertising and sales promotion techniques, pricing the product, channel of distribution, commission, discounts, placement, training, remuneration, promotion, appraisal of performance etc. of the personnel.
Financial policy relates to the procurement of funds, source of finance, management of earning etc.
(c) Organisational Framework – Top management determines the organisational structure for the purpose of executing the plans that have been laid down. Execution of plans is necessary to carry out the objectives and policies.
(d) Assemble the Resources – For the purpose of executing the plans, the resources of men, machines, materials and money have to be assembled. This again is the task of management.
(e) Control the Operations through Organisation – Top management also controls operations through budget, cost, and statistical quality control and accounting devices.
Level # 2. Middle Management:
Middle management consists of departmental, divisional or sectional heads and other executive officers attached to the different departments. This level of management is responsible for implementing the policies and plans decided by the top management. Middle management comes between the top management and the supervisory management.
According to Mary C. Niles, middle managers have pressures from the comers, viz., (a) from above by his chief in the top management with whose ideas, policies and attitudes he must agree; (b) from below by the supervisors who press for counsel, guidelines, decisions etc. and (c) sideways by colleagues whose departments or functions or activities are interrelated with his own.
Functions of Middle Management:
According to Mary C. Niles, middle management acts with and under the top management to accomplish the following broad objectives of administration:
(i) To execute the various functions of organisation so that the top management gets enough time to look after their responsibilities.
(ii) To co-operate among themselves, with the top management and the supervisors so that the organisation functions smoothly.
(iii) To understand the interlocking of departments in major policies.
(iv) To achieve co-ordination between the different parts of the organisation.
(v) To develop and train employees in the organisation for better functioning and for filling up vacancies that may arise in future.
(vi) To build company spirit where all are working to provide a product, or service wanted by the public.
Level # 3. Supervisory Management (Lower Level Management):
Supervisory management consists of senior supervisors, intermediate supervisors and frontline supervisors. Supervisory management is above the operatives but below the middle management in the organisation. The executives at this level are in direct touch with the rank and file of workers and have to see that the work is properly carried out. The personnel employed at this level play an important role in the organisation.
The effective implementation of the plans and policies, the quality of workmanship, quality of output and-overall success of the organisation very much depend on the hard labour, discipline and loyalty of the personnel at this level of management. Further, this level of management represents the workers before the higher management and the higher echelons of management to the workers.
As the supervisor is the immediate boss of the workers, the workers look to him for orders, policies, instructions, guidance, encouragement, increased pay etc. The success of the supervisor depends on the preference of the workers, their co-operation, their ungrudging effort, their satisfaction and their loyalty to him. The supervisor in turn look to his superior in middle management for orders, policy information, help and guidance.
The various functions of a supervisor are as follows:
(i) To issue orders and instructions to the workers and to supervise and control their work.
(ii) To plan the activities of his section.
(iii) To classify and assign jobs to the workers.
(iv) To direct and guide the workers about work procedure.
(v) To arrange for the necessary tools, equipment, materials etc for the workers.
(vi) To arrange for providing on-the-job training to the workers.
(vii) To look after the proper maintenance of tools, machinery etc.
(viii) To solve the problems of workers.
(ix) To inform the management about the problems of workers which are not solved at this level.
(x) To advise middle management about the working environment and to act as liaison between the middle management and the rank and file workers.
(xi) To maintain discipline among the workers and to develop in them the right approach to work.
(xii) To maintain good human relations.
(xiii) To build a high group morale among the workers.
Effectiveness of a supervisor is judged by how he is contributing to his organisation by his work for achieving the organisational objectives.
Some of the important elements of effective supervisory practices are – (a) leadership, (b) closeness of supervision, (c) employee orientation of human relations, (d) group cohesiveness, (e) delegation, (f) satisfying the needs of subordinates for promotion and recognition, (g) providing work-centered benefits to subordinates, (h) providing on-the-job training to the subordinates, (i) informing the subordinates about their duties and relevant organisational matters, and (j) presenting model behaviour to the subordinates.
Due to the increased complexity in business operations, today we notice the mix of both horizontal and vertical systems and a blended system is in operation in many of the complex organisations.
Levels of Management – Top Level, Upper Middle Level, Middle Level and Lower Level
The term ‘levels of management’ refers to a line of demarcation between various managerial positions in an organisation. The number of levels of management increases when the size of the business and workforce increases. There is a limit to the number of subordinates a person can supervise. Levels of management are increased so as to achieve effective supervision.
The number of levels of management cannot be increased to an unlimited extent because it may create many problems. It may complicate the communication process and make coordination and control difficult. Therefore, it is desirable to restrict the number of levels of management. But the feasible span of control should not be widened to restrict the number of managerial levels.
According to Urwick, “In determining the number of levels which are necessary, prime regard should be given to the span of control and not vice-versa Forcing managers to exceed their feasible span of control merely in order to a reduce the number of levels will increase administrative and social distance”.
In most of the big organisations, there are generally four levels of management, namely, top management, upper middle management, middle management and lower level or first line management.
1. Top Level Management:
Top management of a company consists of the Board of Directors and the Chief Executive or the Managing Director. It is the ultimate source of authority and it establishes goals and policies for, the enterprise. It devotes more time on the planning and coordinating functions. It is accountable to the owners of the business for the overall management. Top management also approves the decisions of the middle level management. It can issue orders and instructions and lay down guidelines which must be followed by the lower levels.
The responsibilities of the chief executive position include the interpreting of organisational policies and communicating the goals of the organisation. The chief executive thinks and takes decisions for the long-run welfare of the enterprise. He puts into effect the policy decisions for the long run welfare of the enterprise. He puts into effect the policy decisions taken by the Board and maintains effective coordination in the organisation.
The functions performed by the top management are stated below:
(i) Top management lays down the objectives of the enterprise.
(ii) It prepares strategic plans and policies for the enterprise.
(iii) It issues necessary instructions for the preparation of departmental budgets, schedules, procedures, etc.
(iv) It appoints the executives for the middle-level.
(v) It coordinates the activities of different departments.
(vi) It controls the activities of all departments with the help of reports, memoranda, etc.
(vii) It builds and maintains relations with the outside public.
2. Upper Middle or Intermediate Management:
Upper middle management consists of heads of various divisions. As shown in figure, Production Director, Finance Director and Marketing Director comprise the intermediate or upper middle management. The heads of functional divisions are in constant touch with the top management. They are responsible for the effective performance of their functional divisions. They pursue the policies and programmes laid down by the top management.
They perform the following functions:
(i) Upper middle management lays down plans and policies for the middle management.
(ii) They put the top management’s plans into practice.
(iii) They coordinate the functioning of their divisions.
(iv) They appraise and control the functioning of middle management.
(v) They give directions and guidance to the lower levels.
(vi) They prepare reports about the progress of their divisions for use by the top management.
3. Middle Level Management:
Middle level management generally consists of heads of functional departments. They are responsible to the top management for the efficient functioning of their departments. They devote more time to the organisation and direction functions of management. The middle level managers include branch managers, superintendents and heads of various sections.
Mary C. Niles, in her book ‘Middle Management’, has laid down the seven functions of middle management, which are as follows:
(i) To run the details of the organisation, leaving the top managers as free as possible of their responsibilities.
(ii) To cooperate in making a smoothly functioning organisation.
(iii) To understand the interlocking of departments in major policies.
(iv) To achieve the coordination between the different parts of the organisation.
(v) To build up a contented and efficient staff where reward is given according to capacity and merit and not according to chance or length of service.
(vi) To develop leaders for the future by broad training and experience.
(vii) To build a team spirit where all are working to provide a product or service wanted by the society.
Middle management may be upper middle management and lower middle management. In small organisations, there is only one layer of middle management. But where both these exist, it is the upper middle management that gets authority direct from the top management.
4. Supervisory or Lower Level Management:
Supervisory management refers to those executives whose work is to oversee and direct operative employees. This level includes supervisors, foremen, finance and accounts officers, sales officers, etc. The Essential feature of this level is that managers at this level are in direct contact with the operative employees.
They are more concerned with direction and control functions of management, as compared to planning and organizing. They implement the policies of top management communicated to them by the middle level managers.
Managers at the lowest level are also known as first line supervisors. They represent a link between the management and the workers.
The important functions of a supervisor or lower level executive are listed below:
(i) To plan and organize the activities of the group,
(ii) To arrange for necessary materials, machines, tools, etc. for workers and to provide them the necessary working environment,
(iii) To provide training to the workers,
(iv) To supervise and guide the subordinates,
(v) To solve problems of the workers, and
(vi) To communicate workers’ problems to the higher level management.
Levels of Management:
Top Management:
It is the highest level of authority in the organisation engaged in taking key decisions.
Top management consists of:
(i) Board of directors.
(ii) Chairman or President.
(iii) Chief executive or Managing director.
Middle Management:
It is the second level in command concerned with implementation of top management policies and decisions. It also gives direction to the lower level managers.
Middle management consists of:
(i) Divisional heads.
(ii) Departmental heads.
Lower Level Management:
It is the lowest level of management concerned with overseeing the activities of the workers.
Lower level management includes:
(i) Senior supervisors.
(ii) Front-line supervisors.
(iii) Foremen.
(iv) Section officers.
From the above discussion, it can be concluded that all managers’ top, middle and first line perform the same managerial functions. The main difference between their jobs in terms of management functions is emphasis. The top management spends more time on planning and organising than does the middle and first line management.
The middle management spends more time on directing and controlling than the top management. The first line managers devote less time on planning and organising and more time on directing and controlling. Thus, the time and effort spent on different functions will depend on the level on which the manager is placed in the managerial hierarchy.