Much of the earlier work on organizational level culminated in the widely cited systems framework of Katz and Kahn (1978). They presented three different types of leadership based on the different organizational needs at three distinct organizational levels, i.e. ³origination of structure´ WRS-level PDQDJHPHQW ³interpolation of structure´ PLGGOH PDQDJHPHQW DQG ³administration of structure´
(lower management).
30
-DTXHVả(1976) elaborated this work and developed the stratified systems theory (SST) (Jacobs &
Jaques, 1987). The SST highlights the external demands placed on leaders and provided a clear delineation of leadership work and role requirements across organizational levels (Gardner &
Schermerhorn Jr, 1992; Zaccaro & Klimoski, 2001). SST states that top-level jobs include setting strategic direction in a long-term context and the coordination of several discrete business units, linking the internal and external environments. Alternatively, lower-level jobs take place within a single business unit and a single functional domain, according to Jaques (1976), and are focused on the local internal environment with activities in the short term. SST adopted seven specific levels to characterize differences in complexity across organizational levels. In turn, these seven narrowly defined levels can be grouped into three higher-RUGHU OHYHOV ³systems´ ³organizational´ DQG
³production´ 7KHVH GLVWLQFWLRQV FRUUHVSRQG FORVHO\ WR WKRVH PDGH E\ .DW] DQG .DKQ(1978) (i.e.
³RULJLQDWLRQRIVWUXFWXUH´³LQWHUSRODWLRQRIVWUXcWXUH´DQG³DGPLQLVWUDWLRQRIVWUXFWXUH´UHVSHFWLYHO\
Despite the variety in terms of organizational levels, ranging from three to seven, cumulative empirical evidence supports only three general domains where the nature of work within each level is highly similar but qualitatively distinct between organizational levels (Zaccaro, 2001). Hunt and Ropo (1995) also pointed out that for a specific organization, it may be practical to include more than three levels, but for cross-organizational comparisons, three organizational levels are considered sufficient.
3.2.2 TIME HORIZON
Most theories of organizational level differences involve the concept of complexity. The underlying argument is that job complexity increases with organizational level and managerial success depends on cognitive complexity, based on the notion of requisite variety (Ashby, 1952). Jaques (1994) introduced the notion of àtime span of discretionảZKLFKLPSOLHVZLWK PRUHFRPSOH[MREV WKHUHLVD larger time lapse between action and feedback on the consequences of that action. Thus, the primary way to distinguish organizational levels in SST is by the time frame in which managers must consider the feedback on their activities. $FFRUGLQJWR-DTXHVảWKHRU\the time span for lower-level managers is in the order of days or weeks. Top-level managers, however, may experience a time lapse of years before they receive feedback on their actions. Although there is some disagreement on how adequately time span of discretion represents complexity, empirical studies have identified differences in time span of discretion for the three general organizational levels (Hunt, 1991; Zaccaro, 2001),
31 three months to two years for lower-level jobs, two to five years (perhaps as high as 10 years) for middle managers, and 10 to 20 years-plus for top-level leaders (Jacobs & Jaques, 1987).
3.2.3 FUNCTIONAL ACTIVITIES
In line with the traditional idea of division of labor and the nature of bureaucracy (Weber, 1946), activities at different organizational levels were thought to be substantively different. Katz and Kahn (1978) defined the functional activities as follows, at the top level, WKH³RULJLQDWLRQRIVWUXFWXUH´which was the determination of organizational structure and policy. More recently, this has been described as setting strategic direction and creating and maintaining organizational culture (Hunt, 1991). At the middle level, the ³LQWHUSRODWLRQ RI VWUXFWXUH´consisted of middle managers translating the bigger picture into operating goals, implementing policy, and execution. At the lowest level, ³the administration of structure´ was the routine use of operating procedures to deal with problems in execution. A parallel can be drawn with the notion of complexity, origination of structure deals with high levels of complexity in order to identify and define the novel problem of setting direction in an ambiguous context where options are bountiful whereas the administration structure involves the selection from a relatively known set of options to deal with problems in execution that could have been expected. The key activity for lower-level managers was the supervision and direction of the individuals carrying out the core day-to-day work of the organization, distributing resources and assigning specific tasks to the employees who executed the core work.
3.2.4 PRIMARY SKILLS
A somewhat different approach to distinguishing between the three organizational levels involved the identification of the distinct competencies and skills needed at each level. Hodgson et al. (1965) presented a model in which the dimensions of organizational structure, specifically organizational level, moderated the nature of leadership as well as its antecedents and consequences. He argued that performance demands on managers change across organizational levels and hence the critical competencies that form the basis for selection policies and training and development programs, should change as well. While it seems logical that differences in competencies were drawn from the differences in tasks and functional activities, competencies were the firstly discovered distinguishing factor. The skills typology of Katz (1955; Mann, 1965) classified management skills into three general areas: technical skills ± being at ease with specialized methods, processes, knowledge and techniques (for lower-level managers); interpersonal skills ±communication, ability to relate, build and maintain relationships, understand feelings and desires of others (for middle managers); and conceptual skills ± analytic and logical thinking, deductive and inductive reasoning, and mentally representing complex
32
information and drawing connections between pieces of information to form new concepts and anticipate on events (for top-level managers).
3.2.5 BUSINESS RESPONSIBILITY
A final way to describe organizational level differences was more pragmatic. This approach corresponded most closely to how different organizational levels are distinguished in practice (Charan et al., 2001; Freedman, 1998). The lower level is the first level where individuals have responsibility for the performance of others, typically non-managerial employees. Section managers and department managers are typical first-level managers. They worked within a single functional area (e.g.
production, sales, finance) within one and the same organization. The next level was the middle management level. The qualitative distinction was that this position entailed coordination between varied functional units. The individuals who reported to middle managers also tended to be managers themselves or other highly specialized professionals. A key challenge for managers at this level was to manage individuals with expertise in an area of which they knew relatively little about (Freedman, 1998). Middle managers were also likely to have P&L (profit and loss) responsibilities. Middle managers were responsible for the performance of a division of a business unit that produced a particular product or service line. At the top was the executive level. Whereas middle managers coordinated the activities of several different functional areas within one business unit, executives typically were responsible for a portfolio of businesses. Similar to middle managers, top-level managers may have had relatively little prior experience with some aspects of the industries and markets in which their businesses operated. Top-level managers were accountable to key organizational constituents, typically, a board of directors and shareholders in publicly traded firms, owners in the private case, or the government. The differences between the three organizational levels are briefly summarized in Table 3-1.
33 Table 3-1: Summary of work at three organizational levels
The previous section described the ways in which leadership has been distinguished at different organizational levels. The identification of differences however, does not imply that skills and functions dominant for one level are unimportant for the next level. One may assume that top-level managers were middle managers one day, and on an earlier day they fulfilled the role of lower-level manager. Hence, the question arises, how should the movement up the corporate ladder evolve in terms of leadership behavior, i.e. discontinuously in terms of unlearning skills that were useful for a ORZHU OHYHO RU FRQWLQXRXVO\ LQ WHUPV RI LQFUHDVLQJ RQHảV UHSHUWRLUH E\ DGGLQJ QHZ OHDGHUVKLS functions.