Everything you need to know about the levels of management. Levels of management refer to a line of separation between different positions held by seniors and juniors drawn with a view to distinguish each other in respect of their duties, responsibilities, rights and authority.

In an organization, there are levels among managers according to a chain of command. This scalar chain is made up of superior-subordinate relationships. The lev­els of management denote a series of managerial posi­tions and hierarchy of command. These levels determine the authority, role and status of managers. The number of managerial levels depends upon the size of the concern and complexity of operations.

Two broad levels of management are in common use: (1) Administrative Management (2) Operating Management. The levels of management may be subdivided into:- 1. Board of Directors 2. Executive Committee 3. Top Management 4. Middle Order Management 5. Lowest or Supervisory Management.

Additionally, learn about the functions of various levels of management in an organization with examples.

Levels of Management: With Functions and Examples

Levels of Management – Administrative Management and Operating Management

Levels of management refer to a line of separation between different positions held by seniors and juniors drawn with a view to distinguish each other in respect of their duties, responsibilities, rights and authority.

Classification:

Two broad levels of management are in common use:

(1) Administrative management; and

(2) Operating management.

The upper level of management is known as administrative management and the lower level is usually known as operating management.

Sometimes these two levels are referred to as:

(a) Thinking managements, and

(b) Executing management respectively known as head and hands of the management. Levels of management are decided mainly on the basis of fundamental functions assigned to at different levels.

Current thinking on the issue has now undergone a little change particularly with the advent of the school of thought which believes that both management and administration are more or less synonymous.

This school designates the level as:

1. Top Management

2. Middle Order Management

3. Lowest or Supervisory Management

In fact the supervisory management is constituted of foreman and supervisor.

Precisely their functions are also – (i) to plan, (ii) organise, (iii) to direct, and (iv) to control in varying degrees. There arose, therefore, a necessity to distinguish various levels of management. Designation, status and position held by different personnels in the organisation do help in distinguishing different levels of management.

Level # 1. Top Management:

Top management is usually made responsible for the following functions:

(i) To define the purpose of the management, organisation and the enterprise. In fact, it is the purpose which defines the management and organisation and which these two different wings of the enterprise strive to attain.

(ii) To frame different policies for the enterprise within the framework of which the whole enterprise works.

(iii) To set out schedules and programmes.

(iv) To give general direction.

Level # 2. Middle Order Management:

Middle order management occupies a central place in the hierarchy and is generally responsible for implementing the policies enunciated by the top management under its direction and supervision. Middle order management is answerable to top management. Its main functions are – (i) to provide plan, (ii) to guide, (iii) to supervise, (iv) to co-ordinate, (v) to exercise control over the lowest level of management.

Middle order management sometimes functions in an advisory capacity also. It advises the top management and guides the lowest. If often functions as a link between the two.

Level # 3. Supervisory Management:

This is classed as the lowest level of management. It functions under the control and direction of the middle order management. This level is also called upon – (i) to plan, (ii) to guide, (iii) to supervise, and (iv) to exercise control. But all these functions performs to get the work done from the operating staff. Supervisory management is also asked to render advice to the middle order.

This levels of management takes orders from the middle order and explains them to the workers at operating level. In fact this level of management is accredited with the responsibility of getting the work done and is made accountable to those who occupy the middle order management.

Level # 4. Operating Management:

This level, though, strictly does not come under the management hierarchy, but ultimately it is this level which is responsible to accomplish the given task by carrying out the instructions and orders of all the levels in the hierarchy hither to be explained.

This level is the actual performer, it is this level which is engaged in production and carries out all the policies and programmes to their logical ends.The level is directed, supervised controlled and led at different stages by different levels of management either directly or indirectly.

National Productivity Council:

National Productivity Council of India conducted a survey to determine the number and percentage of personnel employed at different levels of management. The survey revealed that in India 10 per cent personnel are employed at Top Management level while 20 per cent are employed at Middle Order level and 70 per cent at Operating Level.

Corresponding figure in industrially – advanced countries is 10 per cent, 80 per cent and 10 per cent respectively. In India the operating level personnel are in abundance and for middle order management personnel are not proportionately available. This accounts for lower productivity-rate in this country as compared to those of industrially advanced nations.

The Chief Executive of the Enterprise and His Functions:

Top management is responsible for policy making and general administration. Top management is represented by the Board of Directors. The Board is directly responsible to shareholders. But in real life it is the Chief Executive who is responsible to the shareholders. In the eyes of law he is a servant of the organisation.

But in practice he holds the reigns of the organisation on behalf and risk of this masters – the Board of directors directly and the shareholders indirectly. He is answerable to the Board from where the authority flows. In the management hierarchy he occupies an important position.

Forms of Chief Executives:

The following are the main forms of the Chief Executives with which we usually come across:

(1) Chief Executive alone, (2) Chief Executive and Chief Operating Officer, (3) Chief Executive, Chief Operating Officer and Chief of the Staff, (4) Executive group – Sub­committees of the Board of Directors such as Finance Committee, Labour Committee, Audit and Accounts Committee, Policy and Progamme Committee etc.

Functions of a Chief Executive:

The important functions of a Chief Executive may be enumerated as follows:

(1) Functions of Guidance and Direction:

The following functions are performed by a chief Executive under this category in which he functions as a representative of the Board of Directors:

(a) To explain the policies and programmes of the enterprise.

(b) To frame rules etc., in order to get the policies and programmes implemented.

(c) To issue instructions etc., and to see that they are being followed in the interest of the enterprise.

(d) To accord sanction, discuss, revise the plans and other advice to the middle level management.

(e) To see that the organisation runs smoothly and on proper lines in accordance with the objectives the achievement of which is the ultimate goal of all working in and for the organisation.

(2) Function of Co-Ordination:

The Chief Executive has a responsibility to plan the organisation where in the authority flows in such a manner which leaves little room for any friction anywhere and at any level. He has a duty to ensure that human relations are in good state.

He also ensures utmost co-operation. In implementing the policies and porgrammes of the top management he tries to secure co-operation in a manner in which it comes automatically from each one to all and from all to each one.

For co-ordinating the functions, he has a duty to provide:

(a) Adequate working facilities to his subordinate executive;

(b) An adequate explanation of duties and responsibilities to the entire working force; and

(c) Good atmosphere and working conditions which are helpful in developing a cordial relation between different levels of management and the operating staff.

(3) Function of Leadership:

The leadership function includes all functions which a chief Executive performs in order to encourage his sub-ordinates to give their best in the achievement of the objectives of the enterprise. His function is of seeking co-operation for the accomplishment of the tasks ahead from the main part of his leadership duties and responsibilities.

(4) Function of Review and Control:

The Chief Executives is an eye and two hands of the top management. He, therefore, has to enlarge his activities so as to enable him to lay his hands on the trouble spots. His duty is to review the working and offer suggestions. He is also to effect control over the entire working of the organisation.

Under this category the Chief Executive is expressed to perform the following functions:

(a) To call and preside over the meetings from time-to-time for – (i) discussions on plans, policies and programmes and for their (ii) implementation so that the objectives may be made clear and goals achieved.

(b) To ask for periodical progress reports, analyse them and issue instructions accordingly.

(c) To prepare reports – progress, control and implementation – for the Board of Directors.

(d) To acquaint his sub-ordinates about the enterprise, its problems, achievements and aspirations.

(e) To acquaint the Board about the employees, their actions, experiences and aspirations.

(5) Other Functions:

Among other functions the Chief Executive has to see:

(a) That the Government, Business Organisation, Trade Union and other related organisations know of the policies and programmes of the organisation of which he is the head. The Chief Executive, in fact, functions as a Public Relations Officer so far as the outside world is concerned.

(b) That the officers and workers are properly trained according to the requirement of the enterprise and tasks they are assigned.

The Chief Executive, thus is the pivot around whom all functions of the organisation cluster. Nothing moves without him. Everyone in the organisation depends on him. He inspires all in the organisation with the sole aim of getting best out of them. He is the mind who thinks, plans, takes decisions and inspires all those who comes in his contact.

The Manager and his Job:

Any person who performs the functions of planning, organising, staffing, directing and controlling for the accomplishment of organisational goals is called a manager. Every manager is concerned with ideas, things and people. Management is a creative, process for integrating the use of resources to accomplish certain goals. In this process ideas, things and people are vital inputs which are to be transformed into output consistent with the goals.

Management of ideas refers to the need for practical philosophy of management and is under distinct and scientific process and it further refers to the planning phase of management process which deals with creativity and innovation. Creativity refers to generation of new ideas,and innovation refers to transforming ideas into viable realities and utilities. A manager must be imaginative to plan ahead and to create new ideas.

Management of things deals with the design of production system, and acquisition, allocation and conversion of physical resources to achieve certain goals.

Management of people is concerned with the procurement, development, maintenance and integration of manpower working in the organisation. Every manager has to direct his sub-ordinates to put the organisational plans into practice.

The primary job of a manager is the management of people. It is his duty to handle all the productive resources, but human factor is more important. The greatest problem before any manager is how to manage the personnel to get the best possible results. In the present age, the manager is the person who has to deal efficiently with the people who are to contribute for the achievement of organisational goals.

Peter Drucker is of this opinion that – “Every job should be designed as an integrated set of operations which are varied enough to reduce boredom. The workers should be given a sufficient measure of freedom to organise and control their work environment. It is the duty of every manager to educate, train and develop people below him so that they may use their potentialities and abilities to perform the work allotted to them.

He has also to help them in satisfying their needs and aspirations through incentives and other things. For getting best contribution from the people working under him, he must provide them with proper environment. A manager must create a climate which brings in and maintains satisfaction and discipline among the people.”

To conclude it can be safely said that a manager’s job is very much complex. It requires some qualities of head and heart and it cannot be performed by everybody. Any person who is to be offered a manager’s job must have the capacity and capabilities to meet the challenges of this job.

Managerial Skills:

Managerial skills are the ability of a manager to make a smooth functioning team of people working under him. Skills required in management are different in nature at different managerial levels. Manager is to reconcile, co-ordinate and appraise the various viewpoints and talents of people working under him towards the organisation goals,

Skills required by a manager are of three types:

(1) Technical,

(2) Human relations,

(3) Conceptual skill.

(1) Technical Skill:

It refers to proficiency in handling methods, processes and techniques of a particular kind of business. It can be learnt easily.

(2) Human Relations Skill:

It refers to the ability to work effectively with others and build co-operative group relations to achieve organisational goals.

(3) Conceptual Skill:

It is the ability to see the organisation as a whole, to recognise inter-relationship among different functions of the business and external forces and to guide effectively the organisational efforts.

Fayol put the qualities required by managers into the following categories:

(a) Physical — health, vigour, address.

(b) Mental-ability — to understand and learn’ judgment, mental, vigour and adaptability.

(c) Moral — energy, firmness, willingness to accept responsibility, initiative, loyalty, tact and dignity.

(d) Educational — general acquaintance with matters not belonging exclusively to the function performed.

(e) Technical — peculiar to the function.

(f) Experience — arising from the work proper.


Levels of Management – With Functions of Various Levels of Management in an Organization

Levels of management refer to a line of demarcation between various managerial positions in an organization.

In most of organizations, there are generally three levels of management in the organization namely:

(1) Top management

(2) Middle level management and

(3) Lower or operating management.

The number of levels of management increases when the size of the business and work force increases.

The functions of various levels of management are discussed here under:

(1) Top Level Management:

Top management in a company consists of the Board of Directors and the chief executives or the managing Director. They are the ultimate source of authority in the company.

The main functions of top management include:

(a) Determining the objectives or goals of the enterprise.

(b) Framing policies and making plans to achieve the objectives laid.

(c) Setting-ups an organizational framework.

(d) Assembling the resources of money, men, material. Machines and methods.

(e) Exercising effective control.

(f) Providing overall leadership.

(2) Middle Level Management:

This level acts with and under top management to accomplish the objectives of the organization. It works as a necessary link between the top management and the lower level or operative management.

Mary C. Niles in her book ‘Middle Management’ has laid down the seven functions of this level, which is as follows:

1. To run the details of the organization, leaving the top officers as free as possible of their responsibilities.

2. To cooperate in making a smoothly functioning organization.

3. To understand the inter locking of department in major policies.

4. To achieve the co-ordination between the different parts of the organization.

5. 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.

6. To develop leaders for the future by broad training and experience.

7. To build a company spirit where all are working to provide a product or service wanted by others.

Anyhow, the important functions of middle management are enlisted hereunder:

(a) Interpreting the policies framed by top management.

(b) Preparing the organizational set up in their respective departments.

(c) Selecting suitable operative and supervisory personnel.

(d) Assigning duties and responsibilities for timely execution of the plans.

(e) Compiling and issuing instructions to the supervisors under their control.

(f) Motivating personnel to achieve higher productivity.

(g) Co-coordinating with other departments so as to ensure a smooth running of the entire organization.

(h) Collecting information and reports on performance.

(i) Reporting to top management.

(j) Making recommendations to top management for the better implementation of plans and policies.

(3) Lower or Operating Management:

It consists of superintendents, supervisors and foremen who are in direct touch with the rank and file of workers. They pass on the instructions of the middle management to the workers and translate the plans of the management into short range operating plans.

They are also involved in the process of decision making. They have to get the work done through the workers. They assign specific jobs to the workers, evaluate their performances and report to the middle level management. They perform all function of management.


Levels of Management – Board of Directors, Executive Committee, Top Management, Middle Management and Lower Management

The organisational pyramid gives us a vertical hierarchy (dimension). Delegation of authority based on span of control creates multiple levels of management or organisation. Nar­row span of control creates more levels in the organisational hierarchy and the numerous levels in the hierarchy are centra­lised, or closely controlled.

We also have a tall organisation pyramid when there are multiple levels of management. On the other hand, when we have a wide span of control, there are fewer levels of management and the organisation is de­centralised, or loosely controlled. Wide span of control also gives us a flat organisation pyramid.

The process of delegation and re-delegation continues until all work, both administrative and operative, is assigned to em­ployees having time and ability to perform it well. Each time an executive delegates, he forges a new link in the chain of command. The bottom man has his boss, who in turn has his boss, and so on upto the chief executive.

We have given three broad levels of management. In practice, we may have many levels of management even upto ten or more. The span of con­trol and the size of the business are the two important factors in determining the levels of management in the organisation structure.

The shorter the span of control, the longer will be the chain of command and we shall have a tall organisation struc­ture with multiple levels of management. But it will create difficulty of proper co-ordination as well as effective commu­nication which are the sine qua non of good management.

In a huge and complex organisation, we may have many levels in the organisation pyramid and each succeeding level represents decreasing authority and status. The practice of delegation of authority creates a ‘chain of command’ (Scalar principle).

The government of a large corporation has a representa­tive type of management. At the top are thousands of share­holders who are the owners but not the managers of the cor­poration.

Board of Directors:

The board of directors is a group of around 12 or 15 men elected by shareholders or nominated by certain special interests, e.g. financial institution, labour or government. The Board is the supreme policy-framing and decision-making organisation in charge of overall supervision and control of the affairs of the enterprise.

Executive Committee:

Next to the board of directors in the hierarchy, we have the executive or working committee of a few directors to transact business more quickly. It usually transacts urgent business. It also finalize matters for board consideration and decisions. A proposal from the exe­cutive committee is usually accepted by the other directors.

Top Management:

The board appoints the chief executive, e.g., president or managing director or general manager who is delegated the task of running the entire business. We have other few senior executives, e.g., vice-presidents, deputy gene­ral managers or divisional managers to assist the chief execu­tive.

The small body of executives, i.e., managing director and a few senior executives constitutes the top management in charge of all managerial functions and power. The chief executive, i.e., managing director or general manager, operates the business in order to accomplish objectives set by the gover­ning board. He is accountable to the board and enjoys all necessary management powers.

He is the head of the organi­sation. Since the chief executive cannot do all the work him­self, he delegates large blocks of duties to senior executives or divisional managers. The senior executives are the deputies of the chief executive and they are the functional heads res­ponsible to co-ordinate activities in their areas to attain the company objectives. They are top managers working under the chief executive.

Functions of Top Management:

i. Determination of goals or objectives.

ii. Policy-framing.

iii. Formation of plans to carry out objectives and policies.

iv. Building up an Organi­sation — a framework for executing plans.

v. Mobilisation of resources to implement the plans — 5 M’s.

vi. Motivating personnel for effective performance through appropriate leader­ship.

vii. Co-ordination and communication.

viii. Controlling operations to ensure realisation of set goal’ or objectives.

Middle Management:

Similarly, divisional managers in turn delegate to their subordinates, e.g., departmental man­agers. Then we have a large group of middle managers consis­ting of heads of departments and superintendents. They are the assistants to senior executives and act as their deputies. Middle management includes heads of specialised sections.

Middle managers are also called junior, executives or adminis­trators. Co-ordination is the central problem of management and the middle management provides the key people in achi­eving effective co-ordination upward, downward and also side­ways in the managerial hierarchy.

Lower Management:

At the bottom of the managerial hierarchy, we have the lower management group called super­visory management consisting of supervisors or foremen and office superintendents.

It is the lower management group who puts the plans of management into effective action, allocating individual work and seeing that it is accomplished as per sche­dule. It is a large group of first line supervisors and these managers at the lower level are directly in charge of the ope­ratives or employees.


Levels of Management: Four Levels of Management

1. Top Management:

Top management of a company comprises of Chair­man, President, Chief Executive, Board of Directors etc. This is the policy-making group responsible for the overall direction and control. Top management is held responsi­ble for the overall management of the concern. It is the ultimate source of authority. It establishes overall goals, plans, strategies, and broad operating policies and guide­lines of the company.

2. Upper Middle Management:

Various divisional and departmental heads consti­tute the upper middle management. These functional, managers such as works manager, marketing manager, personnel manager, finance manager etc. are responsible for the efficient functioning of their units within the framework of the goals and policies decided by the top management.

Upper middle management is mainly con­cerned with realising short term goals and day-to-day management of their departments. It acts as buffer be­tween the top managers and subordinate managers. Its responsibilities are to translate executive orders into operation, implement plans, and directly supervise lower level managers.

3. Middle Management:

This level of management consists of heads of depart­ments, sectional officers, plant managers, office manag­ers, branch managers, area sales managers, chief ac­countant, purchase officer etc. These managers have to keep a constant watch on the day-to-day performance. They deal with operations. They interpret and explain the policies decided by top managers. They issue detailed and specific instructions regarding operations. They also take problems, difficulties, and suggestions upward. They develop and train operative personnel.

4. Supervisory or First-Line Management:

First line management consists of plant superinten­dent, senior foreman, clerical supervisor, lab supervisor, accounts officer, etc. They deal with technical routine and day-to-day problems. They are a link between the rank and file and higher levels of management. Their job is concerned with the management of workers, resources, and actual operations. They possess technical skills. They explain work procedures, send reports, supervise and control workers and maintain discipline. They also harmonize interdepartmental relationships.


Levels of Management – With Examples

Levels of management refer to a line of demarcation or a hierarchy that reflects the degree of relationships or association between superiors and sub-ordinates. The levels of management however, vary in terms of scale of operations. The levels increase with the increase in size of the business and employees.

The level of management determines the chain of command, the extent of authority and status enjoyed by any individual in that managerial level. The chain of command links every individual in an organisation to someone at one level higher than the level at which an individual works. For example, a worker is linked or reports to a supervisor in the business unit he/she works, while the supervisor is linked to their department head/manager and the department head reports to the Chairman of the company.

Management levels are broadly categorised into three levels:

1. Top Level Management

2. Middle Level Management and

3. Lower Level Management.

1. Top Level Management:

The top level in management or the “Top level management” can be any of the following -Board of Directors, Chairman, Chief Executive Officer (CEO) or the owner. The top management identifies goals that provide an overall purpose and direction to all activities undertaken in an organisation.

Top management has a macro picture of the overall business and takes strategic decisions that affect the external environment. These strategic decisions are formulated in a generalised manner which affects all levels and business units in a business. Strategic decisions are generally non-programmed in nature.

For example, top management of a large textile company takes a decision to export their readymade garments to countries in Europe.

Role of the top management can be summarised as follows:

1. Top management lays down broad objectives for the organisation.

2. They appoint department managers in middle management and issues necessary instructions for preparation of budgets, procedures, schedules, etc. for the middle management.

3. They control activities of all departments of an organisation.

4. They provide guidance and direction.

5. They are responsible for portraying a sound management and build necessary relationships with all stakeholders especially in the external environment to sustain in the long-run.

2. Middle Level Management

The middle level in management or “Middle level management” makes tactical decisions based on strategic decisions made by the top management. These include department or divisional heads or (senior) managers responsible for the overall workings of their respective departments or business units. In the earlier example on the textile company, the company has different departments for raw materials handling (yarn, fabric, etc.), warping/wefting and weaving units, inspection unit, marketing and distribution unit.

Tactical decisions are specific actions or means to achieve something in a short-term and/or lesser in importance or magnitude. This implies that the middle management determines goals which are specific in different business units in an organisation and are more action oriented.

For example, middle management tactically decides to export cotton shirts and denims to specific countries in Europe like United Kingdom and France.

Middle management’s role is summarised below:

1. Middle management executes the plans in accordance to the overall objectives set by the top management.

2. They make plans for sub-units within a department.

3. They participate in employment and training program of lower level management.

4. They are link between top level management and lower level management and communicate and interpret the policies from the top management to the lower management.

5. They evaluate the performance of the managers in the lower level management and send performance reports to the top management.

6. They are responsible to boost morale of people in the lower management.

3. Supervisory/Operational/Lower Level Management:

The lower management, which comprises supervisors or workers in day-to-day operations, makes operational decisions and is concerned with daily workings of the organisation. These decisions determine the approaches considered for achieving tactical decisions made by the middle management.

They formulate operational goals which are much more specific than the goals designed by the middle management.

Continuing the textile company example, the production head schedules operations in his/her produc­tion unit for producing 1,000 denims and 1,500 shirts by end of the week.

The role of the lower management is summarised below:

1. Lower management is responsible for assigning specific tasks or jobs to various workers.

2. They guide and instruct workers in their day-to-day activities and are responsible for the quality as well as quantity of production.

3. They are entrusted and given responsibility for maintaining good relations with the organisation.

4. They communicate and solve workers’ grievances and problems, suggestions, ideas or appeals to the middle levels in an organisation.

5. They motivate the workers and ensure discipline.

6. They identify and arrange necessary raw materials, machines, tools, etc. for completion of task.

7. They are also image builders of the organisation as they are in direct contact with the workers.

8. They also guide and help the middle level management for selecting and appointing new workers.


Levels of Management – Top Management, Upper Middle Management, Middle Management, Supervisory Management and Operating Force

The process of dividing authority and responsibility among the various executives is called the creation of levels of management. By levels of management we mean the gradual classification of superior—subordinate relationship in an organisation. There is a tendency to regard organisation as an end, its effectiveness is measured in the terms of clearly and completeness of various departments and levels.

The creation of levels is an activity of dividing the authority and responsibility among various executives. In an organisation as many superior subordinate relationships (having downward control) the number of levels of management can be seen there.

There is no definite number of levels of management prescribed for a particular organisation. It depends upon the nature and size of the business organisation. In the Encyclopaedia of Management, three levels of management have been pointed out top- management, middle or departmental managers and first line supervisors.

The different levels of management are as follows:

(1) Top Management:

It refers to the administrative function. It consists of Board of Directors and Managing Directors of President of the company. They constitute the ultimate authority in the organisation. They set the objectives, define the goals, establish the policies and see that policies are being put into effect or not.

(2) Upper Middle Management:

It consists of the various department heads as Personnel Manager, Production Manager, Finance Manager etc. The establishment of an organisation, the selection of best suited assistants, installation of the proper departments, units and selections, etc., the designing of operating policies and routines, the assignment of duties among various departmental members and control of their activities are some examples of functions of this group.

(3) Middle Management:

It consists of Deputy Managers of different departments, i.e. Deputy Manager of production; Deputy Manager of finance etc. Mary C. Niles has described the functions of this group in these words –

“Middle management acts with and under top management to accomplish these broad objectives of the organisation to run the details of organisation, to co­operate in making a smoothly functioning organisation; to understand the policies of organisation, to build up a contented and efficient staff etc.”

(4) Supervisory Management:

This group includes the men who have direct supervision over the working force in office, factory, sales field or other areas of activity of the concern. Actually, they help the middle management in carrying out the work; they are important link between the rank and file and upper levels of management.

(5) Operating Force:

This group includes the rank and file of workers and actually performs the tasks under the guidance and instructions of supervisors or foremen etc. Some experts call it organisation also. Actually this is the group who translates the theory into practice, who realises the dreams of administration and fulfills the ambitions of owners and managers of the business.

Thus, we see that the above classification is not rigid or water-tight compartmentation. No clear or sharp line of demarcation can be drawn between the two levels. As a matter of fact, it is only to facilitate the whole organisation’s work so that the objectives can be realised in a good manner.

According to a survey conducted by the National Productivity Council in India there are three levels of management more common – Top, Middle and Operating force. Their ratio is 10%, 20% and 70% respectively. But in foreign developed countries the practice is quite reverse.


Levels of Management:

An organization may have different levels of management. Levels of management refer to a line of demarcation between various managerial positions in an organization. The levels of management depend upon its size, technical facilities, and the range of production.

We generally come across two broad levels of management, viz.,- (i) administrative management (i.e., the upper level of management) and (ii) operating management (i.e., the lower level of management). Administrative management is concerned with “thinking” functions such as laying down policy, planning and setting up of standards. Operative management is concerned with the “doing” function such as implementation of policies, and directing the operations to attain the objectives of the organization.

But in practice, it is difficult to draw any clear-cut demarcation between thinking function and doing function. Since the fundamental managerial functions are performed by all managers irrespective of their levels or, ranks. For instance, wage and salary director of a company may assist in fixing wages and salary structure as a member of the board of directors, but as head of wages and salary department, his job is to see that the decisions are implemented.

The real significance of levels is that they explain authority relationships in an organization.

Considering the hierarchy of authority and responsibility, one can identify three levels of management, namely:

(i) Top management of a company consists of owners/shareholders, board of directors, its Chairman, Managing Director, or the Chief Executive, or the General Manager or Executive Committee having key officers.

(ii) Middle management of a company consists of heads of functional departments, viz., Purchase Manager, Production Manager, Marketing Manager, Financial Controller, etc., and Divisional and Sectional Officers working under these Functional Heads.

(iii) Lower level or operative management of a company consists of Superintendents, Foremen, Supervisors, etc.

Levels # 1. Top Management:

Top management is the ultimate source of authority and it lays down goals, policies and plans for the enterprise. It devotes more time on planning and coordinating functions. It is accountable to the owners of the business of the overall management. It is also described as the policy-making group responsible for the overall direction and success of all company activities.

The important functions of top management include:

(a) To establish the objectives or goals of the organization.

(b) To make policies and frame plans to attain the objectives laid.

(c) To exercise effective control of the operations.

(d) To provide overall leadership to the organization.

(e) To assemble the resources of money, men, materials, machines and methods to put the plans into action.

(f) To set up an organizational framework to conduct the operations as per plans.

Levels # 2. Middle Management:

The job of middle management is to implement the policies and plans framed by the top management. It serves as an essential link between the top management and the lower level or operative management. They are responsible to the top management for the functioning of their departments.

They devote more time on the organization and motivation functions of management. They provide the guidance and the structure for a purposeful enterprise. Without them the top management’s plans and ambitious expectations will not be fruitfully realized.

The following are the main functions of middle management:

(a) To interpret the policies chalked out by top management.

(b) To prepare the organizational set up in their own departments for fulfilling the objectives implied in various business policies.

(c) To recruit and select suitable operative and supervisory staff.

(d) To collect reports and information on performance in their departments.

(e) To report to top management.

(f) To assign activities, duties and responsibilities for timely implementation of the plans.

(g) To compile all the instructions and issue them to supervisor under their control.

(h) To cooperate with the other departments for ensuring a smooth functioning of the entire organization.

(i) To make suitable recommendations to the top management for the better execution of plans and policies.

(j) To motivate personnel to attain higher productivity and to reward them properly.

Levels # 3. Lower or Operative Management:

It is positioned at the bottom of the hierarchy of management, and actual operations are the responsibility of this level of management. It consists of foreman, supervisors, sales officers, accounts officers, and so on. They are in direct touch with the rank and file or workers. Their authority and responsibility is limited. They pass on the instructions of the middle management to workers.

They interpret and divide the plans of the management into short-range operating plans. They are also involved in the process of decision-making. They have to get the work done through the workers. They allot various jobs to the workers, evaluate their performance and report to the middle level management. They are more concerned with direction and control functions of management. They devote more time in the supervision of the workers.


Levels of Management – Most Common Form of Management Hierarchy

Management Hierarchy:

The form of management hierarchy varies from country to country, depending upon social outlook, political culture and a number of other factors.

However, the most common form of management hierarchy is:

1. Top management

2. Middle management

3. Specialists (engineers, technologists, statisticians, etc.)

4. Front-line supervisors

1. Top Management:

Top management is the keystone in the arch of management. The top manager may be an owner, promoter or a professional manager. His function is to establish the conditions under which other members of the management can achieve their goals by performing the tasks assigned to them. The success of an organisation would depend upon the extent to which he can infuse the whole hierarchy of the organisation with energy, drive and vision, and to the extent of effective communication between the members of the team.

2. Middle Management:

Middle management plays a vital role in communicating the objectives and policies of the top management to the line supervisors. The middle managers are also responsible for providing feedback from line supervisors to the top management.

3. Specialists:

Specialists are those organisational pillars on which rests the responsibility of maintenance of various professional skills and disciplines. They transform ideas into practice, analyse, suggest and improve technology, innovate, devise logistics and strategies for the growth/welfare of the organisation. By virtue of their skill and mental prowess they can be placed in any of the management cadres depending upon their educational background as well as achievements.

4. Front-Line Supervisors:

The line supervisors are responsible for conducting day-to-day operations of a company as per predetermined schedules, and also for achieving targets set by the management. They maintain a close contact with the workers and thus form an important link between the workers and the middle management.

Management is often viewed as:

(a) An economic resource

(b) A system of authority

(c) A class or elite


Levels of Management – According to Modern School of Thought

An organisation may have various levels of management. The term ‘level’ involves persons arranged in a series. Thus, levels of management suggest the arranged managerial positions in an organisation. The number of levels of management in an organisation depends upon its size, technology and the range of production.

Broadly speaking, there are two levels of management, viz., administrative management and the operative management. Administrative management is concerned with ‘thinking function’ such as- policy determination, planning and fixation of standards.

Operative management, on the other hand, is concerned with the ‘doing functions’ which include use of men, materials, machinery and money, implementation of policies laid down by administrative management and directing operations to achieve the objectives of the organisation. But in real life it is very difficult to draw any clear cut line of separation between thinking functions and doing functions.

For example, the executive director of a joint- stock company may be involved in the policy determination as a member of the Board of Directors, but in his executive capacity, he has to see that the decisions are implemented.

Current View:

There is a change in thinking about various levels of management with the advent of a modern school of thought. This school believes that both management and administration are more or less synonyms.

Modern school designates the levels of management as under:

(1) Top Management,

(2) Middle Order Management,

(3) Lower Level Management, and

(4) Supervisory Management.

There is a need to distinguish various levels of management. The designation, status and position held by different personnel in the organisation help in distinguishing different levels of management.

J. Batty has suggested five levels of management.

These levels are:

(1) Top Management – President (Board of Directors), Managing Director, and General Manager.

(2) Top Middle Management – Departmental Heads i.e., General Sales Department, Purchase Department, Materials Department, Production Department, and Finance Department.

(3) Middle Order Management – Regional Managers, Departmental Superintendents, General Accountant, and Cost Accountant.

(4) Supervisory Management – Foreman, First Supervisor, and Second Supervisor.

(5) Operating Staff – Labour, and Assistants etc.

The number of managerial levels may vary from one management to another or from one organisation to the other depending upon the nature and size of the enterprise for which levels are being decided.

The main significance of levels is that they determine authority relationships in an organisation.

On the basis of authority and responsibility we can identify three levels of management:

(i) Top management consisting of owners, the Board of Directors, Managing Director, the Chief Executive and the General Manager.

(ii) Middle Management consisting of Functional Heads; such as- Production Manager, Marketing Manager, Financial Controller, etc., and Divisional and Sectional Officers working under Functional Heads.

(iii) Lower Level or Operating Management consisting of Superintendents, Supervisors and Foremen.

(i) Top Management:

Top Management, which consists of Owners, Board of Directors, Managing Director, Chief Executive and General Manager, establishes policies, plans and objectives. It requires more of conceptual, innovative, decision-making and human skills as compared to the technical skills.

The main functions of top management include:

(a) Determining the objectives or goals of the enterprise.

(b) Framing policies and making plans to achieve the objectives laid.

(c) Setting up an organisational framework.

(d) Assembling the resources of money, men, materials, machines and methods.

(e) Exercising effective control.

(f) Providing overall leadership.

Chief Executive Officer:

The chief executive officer is the person who is overall in charge of the management. He gets his authority from Board of Directors. He comes at number three in the management hierarchy after Shareholders and Board of Directors but in practice he is first in the organisation. He is the main liaison officer between Board of Directors and other personnel in the organisation. He provides adequate information to the Board for taking policy decisions. He is also responsible for executing plans and policies decided at the top.

Forms of Chief Executives:

Following are the main forms of chief executives:

(i) Chief Executive Officer,

(ii) Chief Executive and Chief Operating Officer, and

(iii) Chief Executive, Chief Operating Officer and Chief of the Staff.

Functions of Chief Executive Officer:

The chief executive performs the following functions:

1. Functions of Guidance and Direction:

The chief executive performs the following functions as a representative of Board of Directors:

(a) He is responsible for setting up long-term goals of the organisation.

(b) He explains policies and programmes of the enterprise.

(c) He monitors the progress of executing various plans and policies.

(d) Framing of rules and regulations for implementing policies and programmes.

(e) Issuing instructions and see that these are implemented in the interest of the enterprise.

(f) To accord sanctions and revise plans and give advice to managerial staff.

(g) To ensure that the organisation runs smoothly and the objectives are achieved.

2. Functions of Co-ordination:

Chief executive acts as a coordinator among different departments. He helps various departments in reconciling their objectives with one another. The flow of authority is in such a manner that there is no scope for confusion and overlapping. He helps in creating conducive environment in the organisation so that every function is performed efficiently.

Following functions are essential for proper co-ordination:

(a) Adequate facilities to be created for the smooth working of the subordinates.

(b) Explaining authority and responsibilities of various executives in the organisation.

(c) Helping in creating congenial environment for the smooth working of the organisation.

(d) Providing guidelines for clarifying various issues creating conflict among subordinates.

3. Function of Leadership:

The chief executive is a leader of the enterprise. He guides and motivates people in improving their performance. He is a role model and others follow his example. He creates an atmosphere of co-operation and goodwill and people feel encouraged to contribute more and more.

4. Function of Ensuring Performance:

Chief executing is responsible for the overall performance of the organisation. He regularly reviews performance of various departments and reports it to the Board of Directors. In case the performance is not as per plans then necessary corrective measures are taken. He regularly interacts with in charges of various segments and keeps himself informed about the activities going on in the enterprise.

5. Function of Review and Control:

Since chief executive is head of the management, he is responsible for reviewing the work of the organisation. He is also supposed to control activities of various personnel.

In this case he performs the following functions:

(a) He calls periodical meetings and reviews the performance of various sections of the business.

(b) He analyses performance reports regularly and takes prompt corrective measures in case of need.

(c) He prepares progress reports and other reports for the information of Board of Directors.

(d) He keeps a liaison with subordinates and informs them about the progress and difficulties faced in the organisation.

(e) The Board is informed about the activities of employees and their trade unions.

The chief executive is a pivotal in the organisation about whom every activity revolves. Everything moves with his concest and he is responsible for the overall performance of the organisation.

A review of functions of top management shows that top management is rightly classed as decision-making management where decisions are taken with the following in view:

(i) To establish smooth relationship between the entire workforce of the enterprise.

(ii) To accomplish the overall objectives of the enterprise.

(iii) To ensure efficient and purposeful functioning.

Top management is responsible for the whole enterprise so it has to take decisions in such a way that overall objectives are achieved and the working efficiency of every segment improves.

(ii) Middle Management:

This level of management is, basically, concerned with the task of implementing the policies and plans laid down by the top management. It works as a necessary link between the top management and the lower level or operative management. Middle management can be further classified into (a) senior middle management (consisting of Functional Heads, such as Production Manager, Marketing Manager and Finance Manager) and the junior middle management (consisting of Divisional and Sectional Officers, Deputy Managers and Branch Managers).

The important functions of middle management are enumerated as follows:

(a) Interpreting the policies framed by top management.

(b) Preparing the organisational set up in their respective departments.

(c) Selecting suitable operative and supervisory personnel.

(d) Assigning duties and responsibilities for timely execution of the plans.

(e) Compiling and issuing instructions to the supervisors under their control.

(f) Motivating personnel to achieve higher productivity.

(g) Coordinating with other departments so as to ensure a smooth running of the entire organisation.

(h) Collecting information and reports on performance.

(i) Reporting to top management.

(j) Making recommendations to top management for the better implementation of plans and policies.

Middle management comes between the top and the lower levels of management. It is pressurised by both the sides. Top management pressurises it to run the enterprise according to plans, policies and programmes. It wants that things should be done as per its utmost satisfaction.

The operating level management wants that middle level management should give them full powers to get the things done and there should not be any interference from above. Supervisors also want to get decisions at top, amended through middle level as per the situation and requirement. Although many things may not be done but lower level management keeps pressurising the middle management.

(iii) Lower or Operating Management:

It is the lowest level in the hierarchy of management and actual operations are the responsibility of this level of management. It consists of Superintendents, Supervisors and Foremen who are in direct touch with the rank and file of workers. Although, the work of operating management may be technical, they still carry on the functions of management. They pass on the instructions of the middle management to the workers and translate the plans of the management into short range operating plans.

They are also involved in the process of decision-making. They have to get the work done through the workers. They assign specific jobs to the workers, evaluate their performances and report to the middle level management. All the functions of management, viz., planning, organising, directing and controlling are also performed by lower level management but in varying degrees.

Operating management is a link between the workers and the higher management. The actual execution of plans and policies is done at this level of management. Since supervisors are close to the workers, higher management treats them as persons of workers and workers, on the other hand, treat them as part of management. So this level of management has to perform very cautiously.

Following functions are performed by operating management:

(i) To plan day to day work within the goals prescribed by the higher management.

(ii) To issue orders and instructions for executing the work.

(iii) To arrange materials and equipment for the work force.

(iv) Providing on the job training to workers.

(v) To supervise and control the work of workers and maintain personal contact with them.

(vi) To advise and guide workers about the work procedures and solving their problems.

(vii) To communicate the problems of workers to higher levels of management if these are not solved at lower level.

(viii) To maintain proper discipline in the section and good relations among workers.


Levels of Management – With the Functions Performed by Each Level 

The following illustrates the levels of management:

1. Top Level Management:

In a corporate set up, shareholders who are scattered over a wide geography elect Board of Directors. This elected body is accountable to the shareholders. Board of Directors elect a chairperson. Top management comprises of Board of Directors, CEO, Managing Director, Company Secretary and General Manager.

The CEO is concerned with overall management of the company. He maintains coordination among various departments of the company. This is the policy formulation group responsible for the direction and die success of the company.

The major functions include:

i. Determining corporate plan for the whole organization.

ii. Determining objectives for the organization as a whole.

iii. Designing organization structure.

iv. Formulating strategies.

v. Coordinating the activities of various departments.

vi. Decisions on mergers, acquisitions, etc.

vii. Appointment of the heads of functional departments and appointment of key executives.

viii. Investment decisions.

ix. Distribution of profit.

x. Deciding on matters relating to expansion, modernization, automation and technology absorption, etc.

2. Intermediate Management:

This layer consists of functional heads or chiefs- who are in complete command of the entire, department under his domain. He/she is accountable for the performance of his department under his control and all managerial functions. He/she coordinates and controls all the operations in different segments of his departments. He/she gives detailed instructions regarding the job performance to middle level management.

3. Middle Level Management:

This layer comprises of section heads, plant managers, sales managers, office managers, etc. They are leasing in between intermediate level and operating management level.

The functions performed by this category include:

i. Interpreting plans, policies, rules and regulations devised by top management.

ii. Monitoring and controlling operating management.

iii. Training the operating manager.

iv. Putting in place rules and regulations to be followed by operating managers.

4. Supervisory or Operating Management or Lower Level:

This is the bottom layer in the organizational hierarchy. It includes foreman, sales officer, accounts officer, superintendent, etc. This category deals with non-managerial cadres of employees.

The functions performed under this layer encompass:

i. Getting the work executed by the operatives.

ii. Scheduling the work.

iii. Giving detailed instructions to workers.

iv. Ensuring adherence to quality standards.

v. Assigning work to workers on a daily basis.

vi. Transmitting workers grievances/challenges to upper level management.

vii. Maintaining team spirit among the workers.