Types of Management

Management Levels: A Hierarchical View

An organization can have many different managers, across many different titles, authority levels, and levels of the management hierarchy.

Learning Objectives

Recognize the difference between low-level, middle-level and top-level management

Key Takeaways

Key Points

  • The three levels of management typically found in an organization are low-level management, middle-level management, and top-level management.
  • Top-level managers are responsible for controlling and overseeing the entire organization.
  • Middle-level managers are responsible for executing organizational plans which comply with the company’s policies. These managers act at an intermediary between top-level management and low-level management.
  • Low-level managers focus on controlling and directing. They serve as role models for the employees they supervise.

Key Terms

  • hierarchy: Any group of objects ranked so that every one but the topmost is subordinate to a specified one above it.
  • manager: A person whose job is to manage something, such as a business, a restaurant, or a sports team.
  • board of directors: A group of people, elected by stockholders, to establish corporate policies, and make management decisions.
  • top management: company employees responsible for controlling and overseeing the entire organization
  • middle management: company employees that are accountable for controlling and overseeing a department

Management Levels: An Overview

Most organizations have three management levels:

  • Low-level managers;
  • Middle-level managers; and
  • Top-level managers.

These managers are classified in a hierarchy of authority, and perform different tasks. In many organizations, the number of managers in every level resembles a pyramid.

Below, you’ll find the specifications of each level’s different responsibilities and their likely job titles.

Top-level managers

The board of directors, president, vice-president, and CEO are all examples of top-level managers.

These managers are responsible for controlling and overseeing the entire organization. They develop goals, strategic plans, company policies, and make decisions on the direction of the business.

In addition, top-level managers play a significant role in the mobilization of outside resources.

Top-level managers are accountable to the shareholders and general public.

Middle-level managers

General managers, branch managers, and department managers are all examples of middle-level managers. They are accountable to the top management for their department’s function.

Middle-level managers devote more time to organizational and directional functions than top-level managers. Their roles can be emphasized as:

  • Executing organizational plans in conformance with the company’s policies and the objectives of the top management;
  • Defining and discussing information and policies from top management to lower management; and most importantly
  • Inspiring and providing guidance to low-level managers towards better performance.

Some of their functions are as follows:

  • Designing and implementing effective group and intergroup work and information systems;
  • Defining and monitoring group-level performance indicators;
  • Diagnosing and resolving problems within and among work groups;
  • Designing and implementing reward systems supporting cooperative behavior.

Low-level managers

Supervisors, section leads, and foremen are examples of low-level management titles. These managers focus on controlling and directing.

Low-level managers usually have the responsibility of:

  • Assigning employees tasks;
  • Guiding and supervising employees on day-to-day activities;
  • Ensuring the quality and quantity of production;
  • Making recommendations and suggestions; and
  • Upchanneling employee problems.

Also referred to as first-level managers, low-level managers are role models for employees. These managers provide:

  • Basic supervision;
  • Motivation;
  • Career planning;
  • Performance feedback; and
  • Staff supervision.
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Management Levels: Hierarchical view of management in organizations

Management Areas: A Functional View

Organizational management is often approached by identifying business functions and assigning leadership to those functions.

Learning Objectives

Understand management areas and why they are often viewed from a functional perspective

Key Takeaways

Key Points

  • Organizations are essentially a group of different functions, aligned to create a specific product or service. Assigning managers to different functional areas is a popular approach to business management.
  • Viewing organizational management from this perspective is useful in ensuring each function has a specialist in place with the knowledge and expertise to make sound decisions.
  • Some common management areas include marketing, finance, IT, sales, human resources, and legal.
  • Taking a look at an organizational chart is useful in understanding how management areas are commonly identified from a functional view.

Key Terms

  • best practices: The specific professional activities that produce near optimal results.
  • organizational chart: A chart outlining the structure of an organization and the way in which the different roles, functions, and departments interact with one another.

Understanding Functional Management Areas

Businesses are comprised of a variety of different tasks which, when coordinated properly, create value through producing products and/or services. Each of these different tasks, or functions, require management and alignment. One approach to management is assigning leadership roles with authority and accountability over these different tasks, or management areas.

This view creates management positions with authority over a given functional department. These management areas can span a wide variety of skills and functions, but the most recognizable and common include marketing, finance, human resources, operations, software development, and IT.

This functional view emphasizes managers who are specialists in their fields who are also capable of leading teams, balancing budgets, and thinking tactically (and sometimes strategically, at the upper levels).

The Role of a Functional Management

Functional management is focused on the execution of a specific organizational task within functional areas, through organizing and leading an organization’s talent in a given field. Functional managers have a high level of technical knowledge and skills relative to the area they manage and focus their efforts on achieving best practices.

Let’s quickly explore an example of a functional manager to clarify the role and responsibilities. A human resources manager in an organization would be expected to oversee all operations within the scope of human resources. At a medium or larger sized organization, this could include managing specialists in payroll, recruitment, talent development, legal, and a variety of other specializations within the scope of a human resources team.

The manager shouldn’t execute each specific task, but instead understand what is required to complete these tasks. The manager must have the broad technical knowledge required to ensure each individual within that functional team has the skills, resources, and alignment necessary to effectively carry out these functions.

Illustrating Functional Management

A simple way to understand how this all plays out in an organization is a simple organizational chart (org chart, as they are commonly referred to). By taking a look at how the departments are divided, it becomes fairly easy to assume what types of management areas exist from a functional view. As a result, it’s fairly common to receive an org chart when you start a job (particularly at larger companies), to understand who reports to whom, and regarding what tasks.

This is a simple example of an organizational chart, in this case at an advertising agency. Through looking at each functional area, and considering how they interact with broader functional areas, it becomes clear how management areas are divided from a functional perspective.

Organizational Chart: This is a simple example of an organizational chart, in this case at an advertising agency. By looking at each functional area, and considering how it relates to broader functional areas, it becomes clear how management areas are divided from a functional perspective.