4. Levels of Management

You will:

• Understand different levels of management
  • Top-level managers
  • Middle-level managers
  • First-level managers
• Understand the different roles of individuals at each level of management
• Understand the time spent by different levels of managers

In many small business enterprises, the owner is the only member of the management team. But, as the size of an organization increases, a more sophisticated organizational structure is required. It is a normal practice to categorize management into three basic levels: (1) top-level management, (2) middle-level management, and (3) supervisory or first-level management. Following figure illustrates the levels of management. The duties and responsibilities at these three levels of management vary from organization to organization, depending upon the size, technology, culture, etc. prevailing in your organization.

The number of managerial positions at each level varies from organization to organization. In most of the organizations, there are more positions at the first-level, fewer in the middle, and very few at the top. Many describe this kind of an organizational structure as a pyramid, as the managerial positions gradually decline as one progresses towards the higher levels of management. The various activities performed at each of these levels of management are illustrated below.

Levels of Management

Managerial Levels and Areas

Top-Level Managers

As a top-level managers are usually appointed, elected or designated by the organization’s governing body. They are few in number, and they include job classifications such as the “Chief Executive Officer” (CEO), “President”, “Vice President”, “Senior Vice President” and “Executive Director.” As a top-level manager, you are responsible for taking major decisions for the organization as a whole. You are responsible for the overall activities of the business and are accountable for its impact on the society at large. You work to some extent with the middle-level managers in implementing the plans, and maintaining overall control over organizational performance.

In public limited companies, top-level managers report to the Board of Directors. Members of the board are selected by shareholders. Depending on the size of the company, the number of board members vary from 15 to 25. When a board comprises a majority of individuals who have close ties with the management, they essentially act as “rubber stamps”. But, on the other hand, boards with more outsiders operate more independently and are more proactive. Though it is a usual practice to elect the CEO as the chairperson of the board, a study has suggested that companies having an outsider as a board chairperson perform better, as he/she helps the board to monitor the performance of the top management objectively.

Functions at Various Levels of Management

Top Management:

• Develops and reviews long-range plans and strategies.
• Evaluates overall performance of various departments and ensures cooperation.
• Involved in selection of key personnel.
• Consults subordinate managers on subjects or problems of general scope.

Middle Management:

• Makes plans of intermediate-range and prepares long-range plans for review by top management.
• Analyzes managerial performance to determine capability and readiness for promotion.
• Establishes departmental policies.
• Reviews daily and weekly reports on production or sales.
• Counsels subordinates on production, personnel or other problems.
• Selects and recruits personnel.

Supervisory Management:

• Makes detailed, short-range operational plans.
• Reviews performance of subordinates.
• Supervises clay-to-day operations.
• Makes specific task assignments.
• Maintains close contact with employees involved in operations.

General Responsibilities of a Chief Executive

The Chief Executive bears the following responsibilities:

Leader:

• Acts as an adviser to the board
• Formulates a mission for the organization and incorporates change and innovation
• Supports organizational programs to improve organizational effectiveness

Visionary

• Ensures availability of relevant information to the board members
• Anticipates future trends and looks out for opportunities
• Acts as an interface between the board and the employees
• Acts as an interface between the organization and the community and functions as a spokesperson for the organization

Decision-maker:

• Formulates the mission, policies and procedures for the smooth functioning of the organization
• Devices action plans for the staff

Manager:

• Ensures the running of an organization without any bottlenecks
• Oversees the implementation of plans
• Manages the material, financial and human resources of the organization

Board Developer:

• Helps in selecting and evaluating board members
• • Keeps the board updated regarding the organization’s activities

A Guide to Middle Manager Survival

In today’s world, restructuring and downsizing have led to the emergence of flatter organizations. Middle managers have been the most affected by these changes. You will find that many management writers consider middle managers as “excess organizational baggage.” Ironically, middle managers are the most potential assets of the organization. Many organizations have the false notion that by removing these managers, they can restructure themselves better. To ensure continued survival of middle managers, a number of individual and organizational actions can be undertaken. These are listed below:

1. Focus on important strategic issues: Middle managers should move away from the day-to-days operations (which can be delegated to the first-line managers) and devote their attention to the more important strategic issues.
2. Think like senior managers: They should use their extensive knowledge to deal with more substantive issues that would lead to organizational benefit.
3. Analyze why change is needed: They must understand the underlying causes for introducing change and how the organization should adapt itself in the light of opportunities and threats.
4. Ensure greater participation: Middle managers have a great deal of technical expertise and good knowledge of organizational processes. This knowledge should be disseminated throughout the organization.
5. Manage change and people together: Middle managers should take the initiative for implementing change in the organization. They should act as mentors for those with lesser work experience.
6. Utilize their role as intermediaries: Middle managers can comprehend the internal and external pressures faced by the organization. They can resolve conflicting issues by negotiating with the parties concerned.
7. Implement the vision: Middle managers must attempt to convert top-level strategies into workable actions. They should take up the responsibility to implement the vision of the organization.
8. Incorporate change into the organization: Middle managers must understand how to implement change in the organization. They should introduce work practices that bring in innovation and “shifts in thinking.”

In the words of Rory Chase, Managing Director of IFS International in Bedford, “The new role of the middle manager embraces three key areas; team leadership, change maker and facilitator.” There is no doubt that in order to survive in this rapidly changing era, middle managers have to make themselves indispensable.

Middle-Level Managers

Middle-level managers deal with the actual operation of various departments in an organization. As a middle-level manager, you are directly responsible for the performance of managers at lower levels. The typical titles include “manager”, “director”, “chief”, “department heads and “divisional head.” The number of middle-level managers in complex organizations is far higher than other managers. In the capacity of a middle-level manager, you are responsible for implementing the plans and strategies developed by top management for the accomplishment of organizational goals. You look to the top management for direction and guidance and are answerable to them. In many organizations, middle-level managers serve as a source of innovation and creativity. Thus, you play a vital role in the success of the organization.

Due to the advent of information technology, online technical assistance has become available to first-level managers. This has resulted in making middle-level managers redundant and has thus reduced the number of middle-level managers in many organizations.

The Role of the Supervisor

The first-line supervisor (irrespective of the formal designation “foreman”, “chief clerk” or “section engineer”), can ensure that his employees perform the best. A worker’s ability to perform depends on the capacity of the first-line supervisor to plan, organize well. The training that a supervisor provides to his employees will determine the worker’s performance. It is the responsibility of a supervisor to ensure that the workers have the necessary materials and equipment to do the work. He should create a good working environment for all his employees. The supervisor sets goals in accordance with the organization’s plans and makes sure that each worker achieves the determined targets.

For a supervisor to perform his job well, he needs to have crystal clear objectives. These objectives must be in line with the organizational goals. He should have adequate information about the company’s operations, its structure, its goals and its performance.

Secondly, the supervisor should have a thorough understanding of promotional opportunities and performance benchmarks. Promotional opportunities would determine the motivation levels of the supervisor. It is essential for the supervisor to know that there are better chances for a person who performs well. In the words of Peter Drucker, “Manager development must begin with supervisors.” This means that today’s supervisors can be the managers of tomorrow. The supervisors must be considered for positions in middle management as they have both technical and interpersonal skills. In other words, they are aware of the way in which the organization functions as well as the needs of the workers.

Finally, the job of a supervisor should give him satisfaction. He must be accorded a status that will make him feel important. He must he in a position to direct employees and get the management, to listen to him.

It is imperative that a supervisor’s job is properly planned so that, over a period of time, they can be promoted as managers. The supervisor has to assume greater responsibilities and therefore, he has to be prepared to set objectives, to organize and to plan. Proper organization of a supervisor’s job will lead to conceptual and analytical integration and will prepare him to take up larger responsibilities in future.

First-Level Managers

First-level managers are directly responsible for the performance of employees involved in operations. They are usually called supervisors. If you are a first level manager, you may be addressed by different names. In a manufacturing plant, you may be called a foreman, in a research department — the technical supervisor, and in a large office — the clerical supervisor. As a first-level manager, you implement the operational plans developed by middle managers and take corrective actions, when needed. You are responsible for output variables like number of units produced, labor costs, inventory levels, and quality control. Since you act as a link between the management and the rest of the workforce, you often confront conflicting demands. In recent times, the power of first-level managers have gradually decreased because of union influence, the increasing educational level of workers, and the growing use of computers to track many activities formerly monitored by first-level managers.

Time Spent in Carrying Out Managerial Functions

Though all managers perform all managerial functions, the time spent by individual managers for each activity differs. The importance of managerial functions – planning, organizing, leading and controlling, varies depending on the manager’s level in the organization. Following figure shows the relative time spent by managers at different levels for each function.

From the figure, you will find that it is evident that the time spent by top-level managers on planning and organizing is much more than that spent by lower-level managers. In contrast, leading is substantially more important for first-level supervisors than for managers at higher levels. Hence first-level supervisors need to spend more time in communicating, motivating, and directing the employees involved in operations. Time spent on controlling is similar at all three hierarchical levels. You will find that this similarity reflects a common degree of emphasis at various levels on identifying negative deviations and taking corrective measures.

How Managers Spend Their Time?

Summary:

1. Top Level Managers are responsible for taking major decisions for the organization as a whole.
2. Middle Level Managers are responsible for the performance of managers at lower levels.
3. First Level Managers are responsible for the performance of employees involved in operations. They are usually called supervisors.
4. Time spent in carrying out managerial functions varies as per the different levels of management.