An employee should be classified as Senior Management based on their decision-making power, regardless of formal title, reporting line, or hierarchical level. The key criterion is whether their actions can execute business on the company’s behalf (e.g., signing contracts, committing resources).
The term Senior Management refers typically to the highest-ranking executives and decision-makers within an organization, including but not limited to C-level executives (e.g., CEO, CFO, CTO), their direct reports (e.g., Vice Presidents, Department Heads), as well all other leaders entrusted with significant strategic, operational, or governance responsibilities. These individuals hold authority to shape company policies, set long-term goals, and act as formal representatives in internal and external matters.
For example, a Head of Compliance who is reporting to the Head of Legal who is reporting to the VP HR, direct report line to the CFO will still qualify as Senior Management, if they autonomously negotiate agreements or make binding decisions.
Further clarification on management levels
Position 1 – No management function
Position 2 – Lowest management: Supervision of work according to precise instructions (supervision of ongoing work, participation in planning and organisation on a case-by-case basis).
Position 3 – Lower management: Execution-oriented management of a subarea, qualified staff functions (responsibility for the realisation of orders in one’s own field of activity, participation in planning and organisation).
Position 4 – Middle management: Head of division, high-level staff functions (responsibility for planning and organisation in a specific business area, involvement in the development of long-term action plans).
Position 5 – Upper management: Management or participation in the board of directors (shaping or participation in shaping the policy at the level of the company as a whole, responsibility or co-responsibility for achieving the company’s objectives, coordination of the various management functions, responsibility for policy and achieving objectives in a specific area of responsibility).