Upper Management: What it is, How it Works

What Is Upper Management?

Upper management includes individuals and teams responsible for making primary decisions within a company.

Key Takeaways

• Upper management includes individuals and teams responsible for making primary decisions within a company.
• Shareholders hold a company’s upper management responsible for keeping it profitable and growing.
• C-level management positions include the most important upper managers, such as CEO and CFO.

Understanding Upper Management

Personnel considered part of a company’s upper management are at the top of the corporate ladder and carry greater responsibility than lower-level personnel. Upper management members are given powers by the company’s shareholders or board of directors. Examples of upper management personnel include CEOs, CFOs, and COOs.

Shareholders hold a company’s upper management responsible for keeping it profitable and growing. Shareholders do this by exercising their voting power to install boards of directors that will fire underperforming or disapproved managers. Because upper management personnel are often not seen by most employees, they are not expected to engage in day-to-day operations.

The duties, responsibilities, and careers of upper management are often tied directly to the direction, performance, and success of a company.

Managers and supervisors relay upper-management directives to junior staff and employees. Employees are typically measured against daily goals, such as sales flow or customer service. Upper management may face different criteria.

The overall sales across a division or regional market may gauge the job performance of the executive in upper management who oversees said division.

For instance, a scientist or researcher working for a drug company can be expected to take a direct, hands-on role in the development of new drug candidates. They will conduct tests and reformulations to advance the potential product toward submission to regulators. A middle manager might lead their team working on the project, but an executive from upper management will have the prevailing authority on the direction the team takes and bear responsibility for how their efforts affect the company. If the drug development is a success and furthers the company’s strategic plans, the executive who heads the division may be assigned similar projects in the future.

If a company performs below its targeted goals, loses traction compared to its rivals, or its market valuation declines, members of upper management may face immediate scrutiny from shareholders. Persistent poor performance of the company could prompt a shakeup of upper management. This may focus on one or more individuals such as the CEO or could be a sweeping removal of the executive leadership. The removal of upper management may salvage a company’s business and operations and introduce a new direction to follow. A new upper management team might be brought in to correct the course of the company and prepare it to pursue a new direction, which may include a sale of the business.

C-Suite Roles

C-suite, or C-level, is widely-used vernacular describing a cluster of a corporation’s most important senior executives. C-suite gets its name from the titles of top senior staffers, which start with the letter C, for "chief", as in chief executive officer (CEO), chief financial officer (CFO), chief operating officer (COO), and chief information officer (CIO). The main C-suite executives are:

• Chief Executive Officer (CEO): Invariably the highest-level corporate executive, the CEO traditionally serves as the face of the company, and frequently consults other C-suite members for advice on major decisions. CEOs can come from any career background, as long as they have cultivated substantial leadership and decision-making skills along their career paths.
• Chief Financial Officer (CFO): In the financial industry, the CFO position represents the top of the corporate ladder for financial analysts and accountants striving for upward mobility. Portfolio management, accounting, investment research, and financial analysis are prime skills that CFOs must have learned over the years. CFOs have global mindsets and work closely with CEOs to source new business opportunities while weighing the financial risks and benefits of each potential venture.
• Chief Information Officer (CIO): A leader in information technology, the CIO usually gets his or her start as a business analyst, then works towards C-level glory, while developing technical skills in disciplines such as programming, coding, project management, MS Office, and mapping. CIOs are usually skilled at applying these functional skills to risk management, business strategy, and finance activities. In many companies, CIOs are referred to as the Chief Technology Officers.
• Chief Operating Officer (COO): The Human Resources (HR) C-level executive, the COO ensures a company’s operations run smoothly in areas such as recruitment, training, payroll, legal, and administrative services. The COO is usually second in command to the CEO.
• Chief Marketing Officer (CMO): CMOs typically work their way up to the C-suite from sales and/or marketing roles. These execs are skilled at managing social innovation and product development initiatives across both brick-and-mortar establishments and electronic platforms – the latter of which is highly essential in today’s digital era.

Other C-Suite officers include the Chief Compliance Officer (CCO), Chief Human Resources Manager (CHRM), Chief Security Officer (CSO), Chief Green Officer (CGO), Chief Analytics Officer (CAO), Chief Medical Officer (CMO), and Chief Data Officer (CDO).

The number of C-level positions varies, depending on variables such as a company’s size, mission, and sector. While larger companies may require both a CHRM and a COO, smaller operations may only need a COO to oversee human resources activities.