What are Levels of Management?

Introduction to Contents:


An enterprise may have different levels of management. Levels of management refer to a line of demarcation between various managerial positions in an enterprise. 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 an implementation of policies and directing the operations to attain the objectives of the enterprise.

But in actual practice, it is difficult to draw any clear-cut demarcation between thinking function and doing function. Because the basic/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.

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(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.

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 enterprise.

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

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

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

(E) To exercise effective control of the operations.

(F) To provide overall leadership to the enterprise.

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 for 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:

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

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

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

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

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

(I) To report to top management.

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

3) Lower or operative management: It is placed 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 are 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 a lot 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.

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