Financial Clarity for Entrepreneurs

5 Levels of Employees


I had a chat with a client the other day and he laid out his thoughts concerning the levels of employees in an organization. He was attempting to evaluate the value of continuing the relationship with his business partner.

I thought his observations were very insightful and my readers might learn something from him. Thanks, BC!

You show up on time and do what you’re told

It may sound harsh, but not necessarily inaccurate to say Level 1 employees are those people without skills, but fill a need anyway. They may have a future after learning the skills necessary for the job, or maybe the job doesn’t require skills.

The minimum performance measure is to show up on time, every time, and do what the supervisor says to do.

These people don’t have a lot of long-term value unless they climb up to the next level. If your work requires only Level 1 employees, be prepared for lots of turnover.

You can do your “craft”

Level 2 employees are sufficiently skilled in their craft to be able to work with minimal close supervision. You should be able to give a Level 2 employee a simple goal and expect them to complete the task, or series of tasks, without having to direct each step in the process.

You can supervise Level 1’s and Level 2’s

Level 3 employees have enough knowledge of the tasks that 1’s and 2’s are responsible for to direct and supervise their activities. Level 3’s don’t need to be as skilled in the actual performance of the tasks, but they need to know enough not to be fooled when an employee says “that can’t be done” or “there’s not enough time.”

You can manage a project

Level 4 employees can see the big picture enough to be able to manage resources (people, material, time, money, etc.) toward the completion of a project with minimal assistance from higher-ups.

These employees are experienced in their occupations, have a measure of business savvy and are capable of managing and motivating employees. They are also extremely valuable to your organization.

You can manage an enterprise

A Level 5 is generally the owner (although not all owners reach this level) or a trusted senior leader in the business. They can see the whole picture and are capable of developing and implementing strategy, deploying capital, recruiting and managing Level 4’s and creating the culture of the organization.

Ideally, if you’re going to pick a business partner it should be a Level 5 person. However, they are few and far between and may not be available to a small business or startup company. Level 4, project manager, is the lowest level I’d recommend for a business partner. The difficulty arises when neither/none of the business owners are Level 5’s. In that case it’s vitally important that the business owners engage with outside advisors or mentors who can help them with managing the enterprise.

After some serious thinking, my client arrived at the conclusion that his partner was no higher than a Level 2. A very skilled Level 2, but not valuable as a partner and leader of the organization. He decided to end the partnership.

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