Because no employee wants to be associated with bad news in the eyes of a superior, information about serious problems at lower levels is progressively softened and distorted as it goes up each step in the management hierarchy. The chief executive is, therefore, less well informed about problems at lower levels than are his or her subordinates at those levels.
The conclusion drawn above is based on the assumption that
problems should be solved at the level in the management hierarchy at which they occur
employees should be rewarded for accurately reporting problems to their superiors
problem-solving ability is more important at higher levels than it is at lower levels of the management hierarchy
chief executives obtain information about problems at lower levels from no source other than their subordinates
some employees are more concerned about truth than about the way they are perceived by their superiors