Levels of Management: Definition, Examples, Functions, Skills, and Importance

What are Levels of Management?

Levels of management are also known as management hierarchy. Levels of management can be simply defined as the arrangement of managers’ positions in organizations based on their roles, responsibilities, and authority.

In every organization there are 3 levels of management 1) Top-Level Management, 2) Middle-Level Management, and 3) Lower-Level Management. They all are categorized based on their strength, knowledge, capability, and authority level.

The top-level manager is responsible for defining the overall objectives of the organization, the middle-level manager is responsible for communicating the goals provided by the top-level manager to the lower-level manager, and lower-level managers are responsible for the day-to-day activities and implementation of plans formulated by the middle-level management.

Levels of management and management hierarchy are similar terms that mean a system with unbroken levels or status from the lowest to the highest and vice versa. For example, an authority or work goes through top-level management to middle or lower-level management as well as through lower or middle to top-level management in a clear hierarchy.

Related: What is Manager? Definition, Roles, Responsibilities, & Skills Required

The 3 Levels of Management

As we have discussed, in business settings there exist three levels of management. Let’s understand what each level of management is, their roles, and with relevant skills required.

Top-Level of Management

Top-level management is the highest level of the managerial hierarchy and is also known as the brain of the organization. The top-level manager directly derives his authority from the owners of the enterprise, elected from the management committee, shareholders, and board of directors.

It determines the overall organizational goals. Preparation of overall plans, policies, and strategies to achieve predetermined goals. Assembling resources (human, capital, technology, and information) and encouraging employees to wise utilization of such resources.

Top managers bear the responsibility of shaping and upholding the future of the organization. They possess the authority to oversee and manage middle and lower-level managers, with the aim of achieving the desired outcomes.

These managers are chosen based on their qualifications and their ability to fulfill assigned duties. Shareholders and management committees appoint them and hold them accountable for the overall success of the company.

Examples of top-level management:

• Chief Executive Officers (CEOs)
• Chairman
• President
• Managing Director
• General Manager, etc.

Functions of top levels of management:

• Top-level managers define the overall objectives of the organization.
• Set up an organizational structure to complete the work in an efficient and systematic manner.
• Preparing strategic plans and policies of the organization.
• Direct, coordinates, and leads all the subordinates.
• Appoint departmental managers and guide them to do their work.
• Evaluate and review the performance of all departments and take the necessary steps to achieve organizational objectives.
• Represent the organization in the outside world, etc.

Skills Required For Top Level of Management:

• Leadership: Inspiring and aligning employees towards organizational goals.
• Strategic Thinking: Developing and implementing effective strategies for future success.
• Decision-Making: Making crucial decisions on policies and plans.
• Communication: Clear and effective communication with employees and stakeholders.
• Adaptability and Continuous Learning: Adapting to change and seeking opportunities for growth and improvement.

Middle-Level of Management

Middle-level management works as the formulation of departmental goals, plans, policies, and strategies for each department on the basis of overall goals.

This level of management consists of departmental heads like human resource managers, production managers, marketing managers, finance managers, operation managers, and other similar positions. The top-level management delegates part of its authority and responsibility to this level.

This level plays the role of mediator between the top and first-line management. Like, such as assigning duties and responsibilities to first-line managers, and recruiting and selecting suitable staff.

Also Read: What is Management Process? Definition, Features, Functions, and Importance 

Some basic functions of middle-level management:

• To play the role of mediator between top-level management and first (lower) line management.
• Implement plans and policies laid down by top-level management.
• Prepare departmental plans and strategies on the basis of guidance and information from the top level.
• Divides work among subordinates and maintains coordination among them.
• Delegate authority and responsibility to the first-line management.
• Make provisions for training, workshop, seminar, and other activities.
• Submit a progress report to the top-level management, etc.

Examples of Middle-Level Management:

• Department Managers
• Project Managers
• Team Leaders
• Operations Managers
• Regional Managers
• Branch Managers
• Production Managers
• Quality Control Managers
• Supply Chain Managers
• Human Resources Managers
• Customer Service Managers

Skills Required For Middle-Level Management:

• Effective Communication and Negotiation: Middle-level managers must possess strong communication and negotiation skills to interact effectively with various stakeholders and collaborate within their departments.
• Functional Expertise: Middle-level managers need specialized skills in their specific department or area of expertise to make informed decisions and address technical challenges.
• Mentorship and Coaching: Middle-level managers should have the ability to mentor and guide employees, providing support, feedback, and opportunities for growth.
• Talent Acquisition: Middle-level managers play a role in recruiting and selecting the right talent that aligns with their department’s needs and the organization’s goals.
• Problem-solving and Decision-making: Middle-level managers must be skilled in problem-solving and decision-making to analyze complex situations, address challenges, and make effective decisions for their department.

Lower Level of Management

The lower level the last of the three levels of management, is also known as first-line or operating-level management. It is directly involved in the actual operation of production, marketing, financing, accounting, etc.

Lower-level managers consist of supervisors, foremen, sales officers, account officers, clerks, and other operational heads.

The lower management level is responsible for the implementation of plans and strategies developed by middle-level management. It works as arranging the necessary tools, equipment, etc. for the workers.

Lower-level managers are mainly responsible to manage working employees and strengthen the workforce of the organization to effectively and efficiently execute given tasks. They further manage the necessary tools and equipment to successfully work to be done.

Also Read: What is Coordination? Definition, Features, Objective, Types, and Importance

Functions of lower-level management:

• Make day-to-day plans and implement plans formulated by middle-level management.
• Assign responsibilities and duties to the employees.
• Provides necessary instructions and guidance to the subordinates.
• Manage resources.
• Maintain a close and harmonious relationship among all the employees.
• Perform an intermediary function between middle-level management and operating-level management.
• Submit a progress report to the middle-level management.
• Operate and create a better environment for work, etc.

Examples of Lower Level Management:

• Shift Supervisors
• Team Leaders
• Department Coordinators
• Forepersons
• Office Managers
• Store Managers

Skills Required For Lower-Level Management:

• Functional Knowledge: Lower-level managers must possess in-depth knowledge of their department’s functions.
• Supervisory Abilities: Lower-level managers need effective supervisory skills to guide and support their team members.
• Task Delegation: Lower-level managers should excel in delegating tasks to ensure efficient completion.

What is the Importance of 3 Levels of Management?

You can be sure that only one manager will not be able to handle all the functions of the organization. The existence of top, middle, and lower levels of management in an organization brings structure, effectiveness, and efficient coordination, leading to improved performance and goal attainment.

The followings are some of the benefits the existence of levels of management in the workplace provides.

Role Clarity

The presence of multiple management levels ensures that roles and responsibilities are clearly defined among organizational members. This avoids confusion and promotes accountability.

Increased Effectiveness and Efficiency

Each management level brings specific skills and expertise to the table, enabling the organization to benefit from a diverse range of knowledge. This leads to improved effectiveness and efficiency in achieving organizational objectives.

Also Read: The 8 Principles of Effective Directing [Explained]

Reduced Burden and Confusion

By dividing responsibilities among different management levels, the workload is distributed, alleviating the burden on individual managers. This reduces confusion and allows managers to focus on their areas of expertise.

Maintaining Hierarchy

Different management levels establish a hierarchical structure within the organization. This hierarchy provides a framework for reporting, decision-making, and communication, ensuring smooth operations and coordination.

Promoting Discipline and Cooperation

The presence of various management levels encourages discipline and cooperation among employees. Each level sets expectations and standards, fostering a sense of order and teamwork.

Effective Goal Achievement

With clear roles, efficient operations, and a well-defined hierarchy, the organization is better equipped to achieve its goals. The coordination and collaboration across different management levels contribute to a focused and united approach toward success.