This paper investigates how firms allocate employees with different skills in its hierarchy, and the consequences on within firm inequality. Since Ricardo, economists have recognized the gains from specialization and the division of labor. In order to take advantage of such specialization, the firm has to produce many task outputs and aggregate them into different final products. Each firm has to decide which tasks to do, who to hire to do them and to coordinate the production and aggregation of these different task outputs. Builiding on Chandler (1993), this paper provides an analytic framework which shows who does what in the organization which, in the end, produces different task outputs to be aggregated into different final products. The two level hierarchy, consisting of a supervisor and their subordinates, is the building block of this organizational perspective. Complex hierarchies are obtained by concatenating multiple two level hierarchies. Transfer pricing provides a mechanism to coordinate each two level hierarchy to produce its efficient level of task output. The CEO chooses tasks and executive managers to do those tasks. Given the CEO choices, each executive manager chooses other tasks and subordinates to do those, and so on. The choice of tasks by the CEO affects the productivity of executive managers and propagate further down the chain of command. In this way, strategic and communicational skills of higher level managers have large productivity effects on the firm than the skills of lower level managers, explaining why the growth of managerial earnings increase with the level of the hierarchy