- The 'operations people' / 'workers' ('the competent' in the post I was replying to) are the actual work-doers who create the company's product or provide the company's services.
- The 'money people' are the people in financial and managerial positions who deal with money coming into and out of the company, and who make the financial decisions.
Usually the latter, who know how much people are paid and how much the company makes, take considerable pains to withhold this information from the former, who have specialist skills but are often not business savvy. This is because the company's profit comes from creating as large a gap as possible between the income that the company makes and the wages and other expenses that they pay.
In a small company this information is directly withheld from the staff, but they tend to have some idea. This is part of why small companies tend to either pay better than, or have smaller margins than, large companies.
In a large company, part of the purpose of middle management is to isolate the money people from the operations people so that the operations people don't find out how much they're actually worth to the company. If you find out that you're getting paid $100 to make $10,000 for the company, you're going to be pissed, and either demand a pay raise or leave.
Edit: To be clear, I don't mean to say that middle management are stupid, by any means. Part of their role is, however, ignorance (wilful or imposed, feigned or genuine) of the company's financials.
This model doesn't quite make sense to me. The layer of idiocy is extremely expensive-- not only do you have to pay their salaries and associated operations costs, but they also introduce enormous inefficiencies. Everything moves slower. It's hard to find important information because it's lost in a sea of bullshit. People make locally optimal decisions that are suboptimal for the company.
The costs of all this are enormous. Is maintaining this army really cheaper than just handing the reigns to ops people and paying them more in proportion to their increased leverage?
It's not a layer of idiocy - that's a common misconception (which I didn't help with, tbf) and unfair to good middle management. What it is is a layer of isolation. And they do also serve another real organisational need, to help coordinate the workforce. Without such a structure, organisation cost is O(N^2). When your business model is paying smart people $X to build a thing, then selling the thing for 10 * $X, you can't let the smart people know that the thing is sold for that much or they'll start demanding more money (or quit and start their own competing company selling a better product for 4 * $X.)
Yes, because it also makes the ops people easily replaceable. On a small scale you can have a tyrant sys admin controlling a company, but on a company scale, nothing is more terrifying than someone other than the CEO being in control
- The 'operations people' / 'workers' ('the competent' in the post I was replying to) are the actual work-doers who create the company's product or provide the company's services.
- The 'money people' are the people in financial and managerial positions who deal with money coming into and out of the company, and who make the financial decisions.
Usually the latter, who know how much people are paid and how much the company makes, take considerable pains to withhold this information from the former, who have specialist skills but are often not business savvy. This is because the company's profit comes from creating as large a gap as possible between the income that the company makes and the wages and other expenses that they pay.
In a small company this information is directly withheld from the staff, but they tend to have some idea. This is part of why small companies tend to either pay better than, or have smaller margins than, large companies.
In a large company, part of the purpose of middle management is to isolate the money people from the operations people so that the operations people don't find out how much they're actually worth to the company. If you find out that you're getting paid $100 to make $10,000 for the company, you're going to be pissed, and either demand a pay raise or leave.
Edit: To be clear, I don't mean to say that middle management are stupid, by any means. Part of their role is, however, ignorance (wilful or imposed, feigned or genuine) of the company's financials.