Management Levels PDF

MANAGEMENT LEVELS 2 Top managers in most organizations have a great deal of ma- Management levels nagerial experience and have moved up thro...

MANAGEMENT LEVELS 2 Top managers in most organizations have a great deal of ma- Management levels nagerial experience and have moved up through the ranks of man- agement within the company or in another firm. An exception to this Managers are organizational members who are responsible for is a top manager who is also an entrepreneur; such an individual the work performance of other organizational members. Managers may start a small company and manage it until it grows enough to have formal authority to use organizational resources and to make support several levels of management. Many top managers pos- decisions. In organizations, there are typically three levels of man- sess an advanced degree, such as a Masters in Business Adminis- agement: top-level, middle-level, and first-level. These three main tration, but such a degree is not required. levels of managers form a hierarchy, in which they are ranked in Some CEOs are hired in from other top management positions order of importance. In most organizations, the number of manag- in other companies. Conversely, they may be promoted from within ers at each level is such that the hierarchy resembles a pyramid, and groomed for top management with management development with many more first-level managers, fewer middle managers, and activities, coaching, and mentoring. They may be tagged for promo- the fewest managers at the top level. Each of these management tion through succession planning, which identifies high potential levels is described below in terms of their possible job titles and managers. their primary responsibilities and the paths taken to hold these posi- tions. Additionally, there are differences across the management levels as to what types of management tasks each does and the Middle-level managers roles that they take in their jobs. Finally, there are a number of changes that are occurring in many organizations that are changing Middle-level managers, or middle managers, are those in the le- the management hierarchies in them, such as the increasing use of vels below top managers. Middle managers’ job titles include: Gen- teams, the prevalence of outsourcing, and the flattening of organi- eral manager, Plant manager, Regional manager, and Divisional zational structures. manager. Middle-level managers are responsible for carrying out the goals set by top management. They do so by setting goals for their de- Top-level managers partments and other business units. Middle managers can motivate and assist first-line managers to achieve business objectives. Mid- Top-level managers, or top managers, are also called senior dle managers may also communicate upward, by offering sugges- management or executives. These individuals are at the top one or tions and feedback to top managers. Because middle managers two levels in an organization, and hold titles such as: Chief Execu- are more involved in the day-to-day workings of a company, they tive Officer (CEO), Chief Financial Officer (CFO), Chief Operational may provide valuable information to top managers to help improve Officer (COO), Chief Information Officer (CIO), Chairperson of the the organization’s bottom line. Board, President, Vice president, Corporate head. Jobs in middle management vary widely in terms of responsibili- Often, a set of these managers will constitute the top manage- ty and salary. Depending on the size of the company and the num- ment team, which is composed of the CEO, the COO, and other ber of middle-level managers in the firm, middle managers may department heads. Top-level managers make decisions affecting supervise only a small group of employees, or they may manage the entirety of the firm. Top managers do not direct the day-to-day very large groups, such as an entire business location. Middle activities of the firm; rather, they set goals for the organization and managers may be employees who were promoted from first-level direct the company to achieve them. Top managers are ultimately manager positions within the organization, or they may have been responsible for the performance of the organization, and often, hired from outside the firm. Some middle managers may have aspi- these managers have very visible jobs. rations to hold positions in top management in the future. 3 MANAGEMENT LEVELS MANAGEMENT LEVELS 4 First-level managers ers. The amount of planning, organizing, and controlling decreases down the hierarchy of management; leading increases as you move First-level managers are also called first-line managers or su- down the hierarchy of management. pervisors. These managers have job titles such as: Office manager, Shift supervisor, Department manager, Foreperson, Crew leader, Store manager. First-line managers are responsible for the daily management of line workers—the employees who actually produce the product or offer the service. There are first-line managers in every work unit in the organization. Although first-level managers typically do not set goals for the organization, they have a very strong influence on the company. These are the managers that most employees interact with on a daily basis, and if the managers perform poorly, em- ployees may also perform poorly, may lack motivation, or may leave the company. In the past, most first-line managers were employees who were promoted from line positions (such as production or clerical jobs). Management roles Rarely did these employees have formal education beyond the high school level. However, many first-line managers are now graduates In addition to the broad categories of management functions, of a trade school, or have a two-year associates or a four-year ba- managers in different levels of the hierarchy fill different managerial chelor’s degree from college. roles. These roles were categorized by researcher Henry Mintzberg, and they can be grouped into three major types: deci- sional, interpersonal, and informational. Management levels and the four managerial functions Decisional roles. Decisional roles require managers to plan strategy and utilize resources. There are four specific roles that are Managers at different levels of the organization engage in dif- decisional. The entrepreneur role requires the manager to assign ferent amounts of time on the four managerial functions of planning, resources to develop innovative goods and services, or to expand a organizing, leading, and controlling. business. Most of these roles will be held by top-level managers, Planning is choosing appropriate organizational goals and the although middle managers may be given some ability to make such correct directions to achieve those goals. Organizing involves de- decisions. The disturbance handler corrects unanticipated problems termining the tasks and the relationships that allow employees to facing the organization from the internal or external environment. work together to achieve the planned goals. With leading, manag- Managers at all levels may take this role. For example, first-line ers motivate and coordinate employees to work together to achieve managers may correct a problem halting the assembly line or a organizational goals. When controlling, managers monitor and middle level manager may attempt to address the aftermath of a measure the degree to which the organization has reached its store robbery. Top managers are more likely to deal with major goals. crises, such as requiring a recall of defective products. The third The degree to which top, middle, and supervisory managers decisional role, that of resource allocator, involves determining perform each of these functions is presented in Exhibit 1. Note that which work units will get which resources. Top managers are likely top managers do considerably more planning, organizing, and con- to make large, overall budget decisions, while middle managers trolling than do managers at any other level. However, they do may make more specific allocations. In some organizations, super- much less leading. Most of the leading is done by first-line manag- visory managers are responsible for determining allocation of salary 5 MANAGEMENT LEVELS MANAGEMENT LEVELS 6 raises to employees. Finally, the negotiator works with others, such environment, from advertising the company’s goods and services, as suppliers, distributors, or labor unions, to reach agreements to informing the community about the direction of the organization. regarding products and services. First-level managers may nego- The spokesperson for major announcements, such as a change in tiate with employees on issues of salary increases or overtime strategic direction, is likely to be a top manager. But, other, more hours, or they may work with other supervisory managers when routine information may be provided by a manager at any level of a needed resources must be shared. Middle managers also negotiate company. For example, a middle manager may give a press re- with other managers and are likely to work to secure preferred pric- lease to a local newspaper, or a supervisor manager may give a es from suppliers and distributors. Top managers negotiate on presentation at a community meeting. larger issues, such as labor contracts, or even on mergers and acquisitions of other companies. Interpersonal roles. Interpersonal roles require managers to Management skills direct and supervise employees and the organization. The figure- head is typically a top or middle manager. This manager may Regardless of organizational level, all managers must have five communicate future organizational goals or ethical guidelines to critical skills: technical skill, interpersonal skill, conceptual skill, employees at company meetings. A leader acts as an example for diagnostic skill, and political skill. other employees to follow, gives commands and directions to sub- Technical skill. Technical skill involves understanding and ordinates, makes decisions, and mobilizes employee support. demonstrating proficiency in a particular workplace activity. Tech- Managers must be leaders at all levels of the organization; often nical skills are things such as using a computer word processing lower-level managers look to top management for this leadership program, creating a budget, operating a piece of machinery, or example. In the role of liaison, a manager must coordinate the work preparing a presentation. The technical skills used will differ in each of others in different work units, establish alliances between others, level of management. First-level managers may engage in the ac- and work to share resources. This role is particularly critical for tual operations of the organization; they need to have an under- middle managers, who must often compete with other managers for standing of how production and service occur in the organization in important resources, yet must maintain successful working relation- order to direct and evaluate line employees. Additionally, first-line ships with them for long time periods. managers need skill in scheduling workers and preparing budgets. Informational roles. Informational roles are those in which Middle managers use more technical skills related to planning and managers obtain and transmit information. These roles have organizing, and top managers need to have skill to understand the changed dramatically as technology has improved. The monitor complex financial workings of the organization. evaluates the performance of others and takes corrective action to Interpersonal skill. Interpersonal skill involves human rela- improve that performance. Monitors also watch for changes in the tions, or the manager’s ability to interact effectively with organiza- environment and within the company that may affect individual and tional members. Communication is a critical part of interpersonal organizational performance. Monitoring occurs at all levels of man- skill, and an inability to communicate effectively can prevent career agement, although managers at higher levels of the organization progression for managers. Managers who have excellent technical are more likely to monitor external threats to the environment than skill, but poor interpersonal skill are unlikely to succeed in their are middle or first-line managers. The role of disseminator requires jobs. This skill is critical at all levels of management. that managers inform employees of changes that affect them and Conceptual skill. Conceptual skill is a manager’s ability to the organization. They also communicate the company’s vision and see the organization as a whole, as a complete entity. It involves purpose. understanding how organizational units work together and how the Managers at each level disseminate information to those below organization fits into its competitive environment. Conceptual skill is them, and much information of this nature trickles from the top crucial for top managers, whose ability to see “the big picture” can down. Finally, a spokesperson communicates with the external have major repercussions on the success of the business. Howev- 7 MANAGEMENT LEVELS MANAGEMENT LEVELS 8 er, conceptual skill is still necessary for middle and supervisory Changes in management hierarchies managers, who must use this skill to envision, for example, how work units and teams are best organized. There are a number of changes to organizational structures that Diagnostic skill. Diagnostic skill is used to investigate prob- influence how many managers are at each level of the organiza- lems, decide on a remedy, and implement a solution. Diagnostic tional hierarchy, and what tasks they perform each day. skill involves other skills—technical, interpersonal, conceptual, and politic. For instance, to determine the root of a problem, a manager may need to speak with many organizational members or under- stand a variety of informational documents. The difference in the use of diagnostic skill across the three levels of management is primarily due to the types of problems that must be addressed at each level. For example, first-level managers may deal primarily with issues of motivation and discipline, such as determining why a particular employee’s performance is flagging and how to improve it. Middle managers are likely to deal with issues related to larger work units, such as a plant or sales office. For instance, a middle- level manager may have to diagnose why sales in a retail location have dipped. Top managers diagnose organization-wide problems, and may address issues such as strategic position, the possibility of outsourcing tasks, or opportunities for overseas expansion of a business. Political skill. Political skill involves obtaining power and pre- venting other employees from taking away one’s power. Managers use power to achieve organizational objectives, and this skill can often reach goals with less effort than others who lack political skill. Flatter organizational structures. Organizational structures Much like the other skills described, political skill cannot stand can be described by the number of levels of hierarchy; those with alone as a manager’s skill; in particular, though, using political skill many levels are called “tall” organizations. They have numerous without appropriate levels of other skills can lead to promoting a levels of middle management, and each manager supervises a manager’s own career rather than reaching organizational goals. small number of employees or other managers. That is, they have a Managers at all levels require political skill; managers must avoid small span of control. Conversely, “flat” organizations have fewer others taking control that they should have in their work positions. levels of middle management, and each manager has a much wid- Top managers may find that they need higher levels of political skill er span of control. Examples of organization charts that show tall in order to successfully operate in their environments. Interacting and flat organizational structures are presented in Exhibit 2. with competitors, suppliers, customers, shareholders, government, Many organizational structures are now more flat than they were and the public may require political skill. in previous decades. This is due to a number of factors. Many or- ganizations want to be more flexible and increasingly responsive to complex environments. By becoming flatter, many organizations also become less centralized. Centralized organizational structures have most of the decisions and responsibility at the top of the or- ganization, while decentralized organizations allow decision-making and authority at lower levels of the organization. Flat organizations 9 MANAGEMENT LEVELS MANAGEMENT LEVELS 10 that make use of decentralization are often more able to efficiently jobs that were previously performed by American workers are now respond to customer needs and the changing competitive environ- performed overseas. Thus, this has reduced the need for many ment. first-level and middle-level managers, who may not be able to find As organizations move to flatter structures, the ranks of middle- other similar jobs in another company. level managers are diminishing. This means that there a fewer op- There are three major levels of management: top-level, middle- portunities for promotion for first-level managers, but this also level, and first-level. Managers at each of these levels have differ- means that employees at all levels are likely to have more autono- ent responsibilities and different functions. Additionally, managers my in their jobs, as flatter organizations promote decentralization. perform different roles within those managerial functions. Finally, When organizations move from taller to flatter hierarchies, this may many organizational hierarchies are changing, due to changes to mean that middle managers lose their jobs, and are either laid off organizational structures due to the increasing use of teams, the from the organization, or are demoted to lower-level management flattening of organizations, and outsourcing. positions. This creates a surplus of labor of middle level managers, who may find themselves with fewer job opportunities at the same Marcia J. Simmering level. Increased use of teams. A team is a group of individuals with complementary skills who work together to achieve a common goal. Further reading: That is, each team member has different capabilities, yet they col- laborate to perform tasks. Many organizations are now using teams DuBrin, Andrew J. Essentials of Management. 6th ed. Peterbo- more frequently to accomplish work because they may be capable rough, Ontario: Thomson South-Western, 2003. of performing at a level higher than that of individual employees. Jones, Gareth R., and Jennifer M. George. Contemporary Man- Additionally, teams tend to be more successful when tasks require agement. 4th ed. New York, NY: McGraw-Hill Irwin, 2006. speed, innovation, integration of functions, and a complex and ra- Mintzberg, Henry. “The Manager’s Job: Folklore and Fact.” Harvard pidly changing environment. Business Review, July-August 1975, 56–62. Another type of managerial position in an organization that uses — The Nature of Managerial Work. New York: Harper & Row, teams is the team leader, who is sometimes called a project man- 1973. ager, a program manager, or task force leader. This person man- Rue, Leslie W., and Lloyd L. Byars. Management: Skills and Appli- ages the team by acting as a facilitator and catalyst. He or she may cations. 10th ed. New York, NY: McGraw-Hill Irwin, 2003. also engage in work to help accomplish the team’s goals. Some Williams, Chuck. Management. Cincinnati, OH: South-Western teams do not have leaders, but instead are self-managed. Mem- College Publishing, 2000. bers of self-managed teams hold each other accountable for the team’s goals and manage one another without the presence of a Read more: specific leader. http://www.referenceforbusiness.com/ Outsourcing. Outsourcing occurs when an organization con- management/Log-Mar/Management-Levels.html#ixzz3CGS78ZUo tracts with another company to perform work that it previously per- formed itself. Outsourcing is intended to reduce costs and promote efficiency. Costs can be reduced through outsourcing, often be- cause the work can be done in other countries, where labor and resources are less expensive than in the United States. Additional- ly, by having an out-sourcing company aid in production or service, the contracting company can devote more attention and resources to the company’s core competencies. Through outsourcing, many