3 Levels of Management

Work is defined as moving objects at or near the surface of the earth, or telling others to do so. The first is uncomfortable and ill paid, the second is more enjoyable and better paid. ~ Old Joke (which isn’t as funny in the ​​information age).

Management is actually the job of coordinating effort so that an organization can perform better as a group than the individuals can working on their own. It is getting work done through other people.

If you think about that definition, you’ll discover that the point of management is performance, in other words the goal is results. And you’ll see that the tools at management’s disposal are the tools of coordination: prioritization, allocating resources, communication, support. You’ll also see that a lot hinges on your definition of the word “better.”

Briefly, the three levels of management are these:

Team Leader
In factories or construction work it used to be called a foreman (when it was mostly men). In retail it’s often called a supervisor, in other places a team leader. It’s a person in charge of a small crew who is also a worker on that crew. It addition to doing the work, the team leader is responsible for leadership and intra-crew decisions such as scheduling, making sure the crew has enough supplies, etc. But they usually cannot change the direction or makeup of the crew nor can he/she make major decisions about the crew’s assignments. The team leader is usually given a task for the crew to perform – then helps organize the crew to accomplish the task, but can’t modify the task in any significant way.

Executive or Middle Management
These managers are responsible for organizing others to accomplish tasks. They are usually given (or help define) goals and they decide / prioritize the tasks needed to accomplish those goals. Then they work to assign ways that the tasks can be accomplished within constraints of budget, staffing levels, equipment etc. Middle management is often responsible for coordination between groups. In practice many managers (especially in technical fields) divide their time between actually doing management work and being workers or team leaders (doing other work that needs to be done).

Upper Management
This level is responsible for setting strategic direction, and also is concerned with how to best utilize funds, new product decisions, how to read and address trends in the market place. Profitability goals and long term vs short term trade offs are the purview of this level of management, as are exit strategy decisions.

1st level managers tend to ask When? What? and Where? because they are responsible for getting stuff done. Middle managers ask How? and Who? because they are given a goal and have to muster resources and assign them often within budgetary constraints. Top level management asks WHY? because they are responsible for the strategic purpose of what is being done.

Takeaways:

• In small companies people wear many different hats. The same person may wear hats at each level of management. This can be confusing.
• Too often, the owner is mostly doing team leader work. Middle or Executive management is only done in response to a problem or crisis and Upper level strategic work done almost never. This is a mistake.
• The tools of the executive (middle and upper management) are meetings and reports. Many small business owners don’t know how to use these tools or believe they are not needed because of the small number, or close proximity of employees. They are wrong.

UPDATE: September 2020. I saw this quote on the internet that I think sums up the concept. It was from someone who had been working as a supervisor and had recently become the business owner. “The supervisor’s job it to keep the crew on task. The project manager’s job is to keep the project on budget.” I’ll add that the job of the owner or the CEO is to determine which projects to take on.

In a company, all three levels are necessary. In a stage one company they’re usually all done by the same person. As the company grows, 1st level managers are hired before 2nd level ones. But I’ve seen things go sideways when CEOs expect their 1st level managers to make 2nd level decisions without any training or oversight.

UPDATE: April 2021. Levels vs Layers vs Output. I use the term “levels” to indicate that there’s a different output for management at each level. In retrospect I should have called these the 3 outputs of management, because levels can be confused with “layers” which typically means how many bosses there are between a non-management worker and the CEO. It’s possible to have multiple layers performing similar types of work hence actually being at the same level.