Could you separate the functions a bit more in order to facilitate?
Such as putting the Level 2 Analyst with the supervisory skills in charge of ongoing training and development of your Level 1 analysts (as I assume they were originally Level 1 and know the function); and then put the other Level 2 Analyst with the technical knowledge and lack of supervisory skills in a specialized research role for escalated situations from your Level 1 analysts, as well as constantly reviewing your existing program for deficiencies and then strategizing enhancements?
That way, your Level 2 without the technical knowledge can learn as they're training & developing the others (I've always learned processes and concepts more by having to explain them to others, really makes it stick); and you won't have to worry about your Level 2 without supervisory skills overstepping their boundaries/mishandling other employees (as that's what I'm assuming is the issue is).
Roles could be Supervisor & Specialist related, obviously you could get more technical with the terminology in order to justify the moves & compensation. That's not how my organization is structured but we have less staffing; just a thought that I think may work.
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