DEFINITION of Upper Management
Upper management includes individuals and teams that are responsible for making the primary decisions within a company. Personnel considered to be part of a company's upper management are at the top of the corporate ladder and carry a degree of responsibility greater than lower level personnel. Upper management members are imbued with powers given by the company's shareholders or board of directors. Examples of upper management personnel include CEOs, CFOs and COOs.
BREAKING DOWN Upper Management
Shareholders hold a company's upper management responsible for keeping a company profitable and growing. Because upper management personnel members are often not seen by most employees, they are not expected to engage in day-to-day operations.
How Upper Management Is Held Accountable
The duties, responsibilities, and careers of upper management are often tied directly to the performance and success of a company. Whereas employees typically are measured against daily goals, such as the flow of the sales at their retail location or the number of customers they served, upper management may face a wholly different degree of criteria.
The overall sales across a division or regional market may be used to gauge the job performance of the executive in upper management who oversees said division.
For instance, a scientist or other 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 the tests and reformulations to advance the potential product towards 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 as a whole. 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 the most immediate scrutiny from shareholders. Persistent poor performance of the company could prompt a shakeup of the upper management. This may be focused 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 be done to 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.