In the Escalation Hierarchy we have the option of creating the escalation towards Supervisor / Manager in Person Record.

And then start considering the positions mentioned in the hierarchy.

I have added the Manager Sequence as well to make sure that escalation is created towards Manager first and only on Supervisors approval that escalation should be going towards any other person in hierarchy. However this is not happening and creating the escalation directly to the position, could you please confirm what setup is going wrong?

Note: The escalation is not for approvals but process escalations.