A Quick & Dirty Guide to Corporate Hierarchy (And How It Affects You)
The Modern Survival Guide #51
This is the Modern Survival Guide, a guidebook I’m writing for things I think people need to know about living in the modern world. The views expressed here are mine, and mine alone. And I know what you’re thinking — this dude is about to trash the Corporate Man and all of His followers who run around wearing T-shirts that say CONSUME when you put on the special glasses. Right?
Well, no, not really. See, corporations can be evil, sure, but you still have to deal with them in between the No Blood for Oil rally and the WalMart class action lawsuit. They’re pretty much the bedrock of modern living, for better and worse. And step one in dealing with them is understanding how they work and how that affects you.
An Intro to Corporate Organization
Look, here’s the thing: all corporations are bureaucracies. Some are little tiny bureaucracies; some rival national governments in their complexity. All of them have their own local cultures, traditions, and outlooks. But they all more or less work the same way, and understanding this structure gives you power.
Corporate organizations, like all bureaucracies, are divided into tiers of work and authority — line workers, line managers, middle managers, upper managers, and executives. Good (or at least well-organized) corporations tend to be organized in a pyramid structure, with large numbers of line workers and decreasing personnel counts as you climb the ranks of management. Let’s look at these tiers of work, what they do, and what you can expect from them.
Line workers are the productive end of the organization. They operate the assembly lines, answer the phones, write the programs, make the graphics, and deal with the customers. They do all (or at least most) of the actual work that makes the organization money.
Line workers are focused (to greater and lesser degrees) on WORK. Line workers have no, or very limited, authority. They can’t spend much corporate cash, they aren’t anyone’s boss, and they can’t make decisions outside of their immediate work. They are also typically the worst-paid people in the organization (although there are some exceptions for very technical positions).
If you are a customer dealing with a line worker, you are probably talking to a sales person or help desk technician. In these situations, you should understand that they really can’t deviate from their script, whatever their script is. It doesn’t do any good to get mad at them or yell at them for any reason,¹ because they don’t really have much autonomy to make decisions. It’s their job to sell you things, take your information, and/or help you through problems within the scope of their job; anything outside of that and you are not their problem.
A line manager is a position that oversees line workers. These are your call center supervisors and shift managers, for example. They are typically given responsibility but not much authority or autonomy. Line managers are responsible for ensuring that their workers do their jobs with the maximum efficiency and minimum fuss. They typically have no or very limited budget authority, and cannot make corporate policy.
Line managers make sure that WORK GETS DONE, and their authority is usually limited to their team’s operations. They may be able to fire personnel, for example, but they quite often won’t have hiring authority. They typically manage employees’ daily tasks, assign priorities for work, and deal with small-scale issues and personnel problems.
If their workers are customer-facing, they are also responsible for dealing with customers who ask for things the line workers can’t provide. This includes deals on products, escalated help requests, and complaints or demands for services.
If you are a customer dealing with a line manager, you should understand that they can only help you within the remit of their authority, which is, again, very limited. They may be able to offer you a small deal, or prioritize your request for referral to a different part of the corporate bureaucracy, but that’s about it. It does no good to yell at them about corporate policy, because they don’t make it and can’t change it.
Middle management positions are largely responsible for overseeing an office or program (we’re starting to climb the pyramid here). Middle managers are usually not directly responsible for line workers; instead they coordinate teams, direct the line managers, collect metrics, enforce standards, and deal with escalated or team-level issues. Middle managers typically have some budget authority and hiring authority, but do not have the authority to alter corporate policy, and do not have much autonomy to deviate from that policy. Middle managers are often the highest tier of personnel at a non-headquarters corporate office or sales location.
Middle managers care about three things: WHAT GETS DONE, HOW IT GETS DONE, and HOW MUCH IT COSTS. Middle management positions are interesting because they’re usually the last positions in a corporate hierarchy that are actually concerned with work. That is to say, the middle managers are typically the highest people on the org chart who have a view into, and can directly affect, things that the line workers are doing. Everyone above them is acting on second- or third-hand information at best.
Middle managers also straddle the line of creating and enforcing policy. They don’t have the authority to create it on their own, but most policies are written by middle managers and approved by someone higher on the food chain.
At the same time, middle management positions usually have just enough autonomy to rapidly resolve problems at the line level. They are typically the final stop on a customer escalation request; if you get higher than a middle manager by asking to speak to the boss, you’re probably either a reporter, an investor, a law enforcement official, or involved in a lawsuit. Middle managers exist in part to shield upper management from the customers.
The good news is that, if you’re a customer and you can get in touch with a middle manager, they can usually resolve your problem. The bad news is that middle managers suffer from the Peter Principle at a high rate; this is typically where untrained but talented careers go to die, absent intervention by an on-the-ball training manager in HR.²
A bloated population of middle managers is usually a clear sign of organizational decline in a large corporation, indicating that some degree of favoritism, nepotism, or just basic ignorance of requirements has infected the hiring/promotion process.
Upper managers are the lower tier of the senior personnel in any corporate entity or bureaucracy. They are responsible for sectors of business, groups of regional offices, or large programs within a business. Upper managers are your vice presidents and director-level people, and they have both responsibility and authority over their areas of operation. They also have a high degree of autonomy in deviating from and creating corporate policy.
A common fallacy in dealing with upper managers is to assume they are concerned with or interested in the work being performed by their subordinates. They usually are not. They are concerned with two things: RESULTS and MONEY. They do not care how things get done, they care about what completed work means for the company and how much profit it produces. “How” is a middle management word. “How much” is upper management talk.
Upper managers approve policies, make goals, and contribute to the overall strategy of an organization. They are responsible for the middle managers in their territory. They do not deal with customers unless the customers are very rich or very powerful. They are typically the last tier on the totem pole who know what is actually going on, if not what actual work is being done, in an organization. They also work to shield executives from most incoming issues.
Upper managers are vulnerable to errors of data analysis, because they are in high enough positions that they don’t see actual work being performed, and they aren’t a part of lower-level reporting chains. Upper managers often only see the data generated by these reporting chains, which makes them susceptible to “garbage in/garbage out” decision failures.³ Similarly, upper managers are under constant threat of being bamboozled by dishonest middle managers.
The Peter Principle tends to fade out amongst upper management, though; these are people who passed the test of middle management and demonstrated sufficient skill, dedication, and/or raw cunning to get themselves promoted. Upper managers tend to be skilled, educated workaholics. There’s also a higher-than-normal incidence of sociopathy in upper managers, which can be a good thing or a bad thing depending on your point of view.
If you are within an organization and you want to change things, you should target the upper managers. This won’t win you any friends in middle management, but this is the tier at which decisions actually get made that can change corporate practices and policies for lower-level employees.
The highest tier⁴ of a corporate entity is its executives — the people with C-level titles (e.g. Chief Executive Officer, Chief Financial Officer). Executives are responsible for business operations across the organization. They have both responsibility and authority, but oddly enough not typically as much raw influence within the company as upper management because they tend to have a shallower list of direct reports.⁵ However, they make up for it with maximum autonomy — an executive is like royalty within their domain, and their word is the way it’s going to be.
Executives care about three things: STRATEGY, IMAGE, and MONEY. Specifically, it’s their responsibility to give a company its direction, ensure it looks good, and make sure it’s earning a profit. They do this by making large-scale decisions, consuming data, using the bullhorn of the press, and leaning on upper management. They are far divorced from the actual work being performed at the line level in any large organization, and in many cases do not understand it. They are almost as far from the details of what the company is actually spending money on, but the good ones keep an eye on this area.
Executives are even more vulnerable to data analysis errors than upper management. They get most of their information on the company from third-hand sources and automated reports, and are typically deeply enmeshed in corporate politics, which can skew their views. Many executives also tend toward risk aversion and conservative modes of organization, for obvious reasons.⁶ As a result, they are often taken by surprise by major accidents or market shifts, because these are the kinds of things subordinates are incentivized to hide from the Big Boss.
The Peter Principle often gets dragged back into play with executives. This is because being an executive is, once again, a different skill set from being a lower-tier manager. It also happens because, at the largest corporations, executives tend to bounce from one company to the next, and what works in one environment doesn’t necessarily work in another (and I don’t care what the PMP⁷ cult says to the contrary on that subject).
If you are outside an organization and you want to change how it works or its fundamental goals, you should target the executives. Part of their job is to handle large-scale crises, policy, and media relations; this is their territory, and they are the only ones in the company in the correct authority position to address major shifts in corporate culture or policy. Be aware that if you want to walk this path, you need an organization and/or lawyers behind you; executives don’t make time for little people as a general rule.
What This Means for You
Knowing this basic structure helps you by showing you where to request (or demand) different things. Whether you’re inside or outside of a company, this should help you save time (and sanity) at some point in your life. It’s useful to know, for example, that yelling at a help desk person will not improve a tech company’s design philosophy, and I think it’s somewhat helpful to have some good expectations on what is possible when you ask to speak to a manager.
This is a quick, dirty guide; it says so in the title. Not every company is going to follow this exact structure. In really small companies, all the management positions north of a line manager may be compressed into one person. In really large companies, there might be six layers of middle management between the line managers and upper management.
Finally, an important thing to remember is that this is a guide to corporations; many businesses are not large enough to meet this qualification, and you can totally expect to speak to the owner if you walk into the shop. But when dealing with corporate entities you can’t, and to get anything done you have to play the game. Now you know some of the rules.
¹Other than them being a jerk, of course. It’s ok to have a low tolerance for jerks.
²The Peter Principle refers to the tendency of organizations to promote people to the level at which they become incompetent. Middle management has a lot of Peters because it’s a position at which competent technical workers run out of room in their line-work skill set and have to learn how to be managers. This is a whole different skill set, and not everyone can do it; even fewer people can do it without training.
³“Garbage in/garbage out” is data analysis shorthand for saying that if your data quality isn’t good, any decision you make based on that data will be flawed.
⁴You may notice I’m not counting the Board of Directors or Investors in a company. This is because these are not actually management positions, but rather oversight positions (in the case of the Board) and people with their hands in the company’s pockets (in the case of investors). They have a role in corporate politics and direction, but not necessarily in day-to-day management of the corporate bureaucracy.
⁵Direct Reports: business-speak for people who report to a manager.
⁶Innovation is a risk; risks may not pan out; risks that don’t pan out lose money; losing money is bad. Therefore innovation is sometimes NOT the order of the day.
⁷Project Management Professional (PMP): an international management certification that emphasizes common best practice standards and processes in project management. Famous for demanding an ivory-tower worldview in practitioners.