The hierarchy of objectives indicates that managers at different levels in the hierarchy of the organization are concerned with different kinds of objectives according to the authority they are delegated with.
As the figure below indicates, managers at different levels in the hierarchy are concerned with different kinds of objectives.
The directors and managers at the top level are involved in determining the purpose, the mission and the overall objectives of the company, as well.
Middle-level managers are involved in the setting of key-result-area objectives and division objectives. The concern of lower-level managers is setting objectives of departments and units as well as of their subordinates (i.e., individual objectives).
There is a controversy about whether the top-down or the bottom-up approach in setting objectives should be followed.
Proponents of the top-down approach suggest that the total organization needs direction through corporate objectives provided by the top-level managers.
Advocates of the bottom-up approach, on the other hand, argue that top management needs to have information, from lower levels in the form of objectives.
In addition, subordinates are likely to be highly motivated by and committed to, goals that they initiate.
However, the approach to be followed depends on the situation, the size of the organization, the organizational culture, and the leadership style followed.
