Organizational levels or Levels of management

The term “Levels of Management’ refers to a line of demarcation between various managerial
positions in an organization. The number of levels in management increases when the size of the
business and work force increases and vice versa. The level of management determines a chain
of command, the amount of authority & status enjoyed by any managerial position. The levels of
management can be classified in three broad categories:

1. Top level / Administrative level

2. Middle level / Executory
3. Low level / Supervisory / Operative / First-line managers

Managers at all these levels perform different functions. The role of managers at all the three
levels is discussed below:

1. Top Level of Management

It consists of board of directors, chief executive or managing director. The top

management is the ultimate source of authority and it manages goals and policies for an
enterprise. It devotes more time on planning and coordinating functions.

The role of the top management can be summarized as follows -

a. Top management lays down the objectives and broad policies of the enterprise.
b. It issues necessary instructions for preparation of department budgets, procedures,
schedules etc.
c. It prepares strategic plans & policies for the enterprise.

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 d. It appoints the executive for middle level i.e. departmental managers.
e. It controls & coordinates the activities of all the departments.
f. It is also responsible for maintaining a contact with the outside world.
g. It provides guidance and direction.
h. The top management is also responsible towards the shareholders for the
performance of the enterprise.

2. Middle Level of Management

The branch managers and departmental managers constitute middle level. They are
responsible to the top management for the functioning of their department. They devote
more time to organizational and directional functions. In small organization, there is only
one layer of middle level of management but in big enterprises, there may be senior and
junior middle level management. Their role can be emphasized as -

a. They execute the plans of the organization in accordance with the policies and
directives of the top management.
b. They make plans for the sub-units of the organization.
c. They participate in employment & training of lower level management.
d. They interpret and explain policies from top level management to lower level.
e. They are responsible for coordinating the activities within the division or
department.
f. It also sends important reports and other important data to top level management.
g. They evaluate performance of junior managers.
h. They are also responsible for inspiring lower level managers towards better
performance.

3. Lower Level of Management

Lower level is also known as supervisory / operative level of management. It consists of

supervisors, foreman, section officers, superintendent etc. According to R.C. Davis,
“Supervisory management refers to those executives whose work has to be largely with
personal oversight and direction of operative employees”. In other words, they are
concerned with direction and controlling function of management. Their activities
include -

a. Assigning of jobs and tasks to various workers.

b. They guide and instruct workers for day to day activities.

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 c. They are responsible for the quality as well as quantity of production.
d. They are also entrusted with the responsibility of maintaining good relation in the
organization.
e. They communicate workers problems, suggestions, and recommendatory appeals
etc to the higher level and higher level goals and objectives to the workers.
f. They help to solve the grievances of the workers.
g. They supervise & guide the sub-ordinates.
h. They are responsible for providing training to the workers.
i. They arrange necessary materials, machines, tools etc for getting the things done.
j. They prepare periodical reports about the performance of the workers.
k. They ensure discipline in the enterprise.
l. They motivate workers.
m. They are the image builders of the enterprise because they are in direct contact
with the workers.

Span of Management:

Span of management is the limitation of the number of subordinates who can be

effectively supervised by a manager in the discharge of his or her management duties.
The incapacity of human beings restricts the number of persons who can be managed
effectively.

Actual spans in business organization indicate that there is no single best number that can
be universally applied. However, all management experts agree that there is a definite
span limiting the number of subordinates who can be managed effectively by one execu-
tive.

To co-ordinate the activities of the people involved in the organization's functions for
which there needs to be certain levels established to facilitate the cooperation effective.
There are two types of spans,

1. Wide span

2. Narrow span

WIDE SPAN:

 Wide span of management has fewer organizational levels with more number of sub-
ordinates reporting to a superior. Though it proves advantageous for the superior as

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 delegation becomes part of the process and hence work is shared, care must be taken in
selecting the right people for completion of tasks and clear policies must be made to
avoid confusion.

 There is this tendency of overloaded superiors to become decision bottlenecks and there
exists the danger of superior’s loss of control too.
 This kind of management needs exceptionally qualified managers to lead the respective
groups.

MERITS

Economical

Direct contact with Subordinates

Opportunities for Subordinates Development

Demerits

Reduces quality of Performance

Highly qualified and well experienced staff is Needed

zeal and initiative of the workers is killed

NARROW SPAN:

 Narrow span of management involves many organizational levels with fewer number of
employees reporting to a superior.

 This facilitates close supervision, close control and fast communication between
superiors and subordinates.

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  On the contrary, superiors tend to get too involved in subordinates’ work and this kind of
management incurs higher costs due to many levels in the organization and there is
excessive distance between the lowest and top most levels.

Merits

Offers tight control and Supervision

Personal contact Between managers

Managerial efficiency is increased

Demerits
 Creates more levels of Management which is Expensive as well as time Consuming
 Creates complexity in Communication
 Leads to excessive Administrative and Overhead cost
 Problems in coordination and control,
 Reduce opportunities for management development.

The factors responsible for wide span may be identified as follows:

(i) Trend towards decentralization

(ii) Improved communication technology

(iii) Increasing size of organizations

(iv) New pattern of leadership evolving from a growing acceptance of group processes

While deciding span, advantages and disadvantages of these two situations should be carefully
examined in terms of tangible as well as intangible factors, and actual span should be determined
keeping in view all the pertinent factors in a particular situation and at a given time.

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Factors Determining Span:
The determination of span depends upon the number of relationships that can be managed by a
superior. As such, the important determinant is the manager’s ability to reduce the frequency and
time impact of superior- subordinate relationships, though this ability itself is determined by
several other factors.

Factors that determine the optimum span may be stated as follows:

Ability of executives:
The supervisory ability of executives is composed of the capacity to comprehend problems
quickly, to get along well with people, and to command respect and loyalty from subordinates. In
addition, the communicative skill, decision making, leadership ability, and controlling power are
important determinants of supervisory ability. Accordingly, executives differ from each other in
their ability to supervise others. When the ability is high, a larger number of subordinates can be
supervised. In contrast, a poor ability results in limiting the span of supervision.

Capacity of subordinates:
Efficient and trained subordinates can discharge their duties satisfactorily without much help and
direction from the superiors. In such a case, the span may be larger because a superior will be
required to devote less time in managing them. Similarly, changes in subordinates make the span
narrower.

Nature of work:
When the work involves routine, repeated efforts or where the executive manages similar
functions, he/she becomes well versed with jobs and can handle a larger number of subordinates.
On the contrary, activities and functions with a degree of variability and probably more complex
in nature increase inter-relationships and consume more time of the executive to dispose them of
and thus warrant a fewer number of persons to be handled by the supervisor.

Time required to be spent on supervision:

Every manager needs time for contacting/attending to various persons, for doing administrative
jobs of planning and policy making, and also for the other processes. These functions are not
directly related to guiding the subordinates. Hence, the span to a great extent depends on the
availability of time for supervision.

Delegation of authority:
Ambiguous or inadequate authority delegation consumes disproportionate time of the manager in
counselling and guiding subordinates. Where subordinates are delegated with authority sufficient
to carry out the assigned duties and their authorities are clearly defined, they would considerably
reduce the time and attention of the senior and thus help to increase the span of the executive
provided they are trained enough.

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Degree of decentralization:
An executive operating under a decentralized set up is relieved of much of the burden of making
programmed decisions and can afford to supervise a relatively larger number of subordinates.

Use of objective standards:

Reviewing the performance of subordinates can either be done by personal observation or
through use of objective standards. In the latter case, a manager is saved of many time-
consuming relationships and can therefore concentrate on points of strategic importance, thus
widening the span of supervision.

Territorial continuity of functions supervised:

Where functions are geographically separated, supervision of components and personnel
becomes more difficult and time consuming. The manager must spend considerable time in
visiting the separate units and make use of a more time consuming formal means of
communication. Geographic continuity of functions supervised by the manager, therefore,
operates to reduce the span of control.

Availability of staff assistance:

When an organization is equipped with staff services, subordinates gain much of their guidance
on methods, schedules, and personnel problems from staff experts and, thus, require fewer
contacts with line managers. The manager normally gets involved when the staff fails to run the
show. Thus, provision of staff assistance helps the executives to supervise a large number of
subordinates.

Additional factors that determine span in an organization can be listed as follows:

1. Training of the manager

2. Capacity and the mind-set of the subordinates

3. Dynamic and complex nature of activities

4. The degree to which objective standards are established

5. The extent of delegation and the clarity of delegation

6. Existence of a good communication system

7. Degree of decentralization.