A corporate management structure determines the chain of command for a corporation and its employees. The structure can affect the way an organization is able to implement its business plan and achieve its goals. It also assists the firm in complying with labor laws and other governing laws. No matter what management structure is employed by an organization, it should constantly review and improve its command chain to ensure that it meets the legal requirements of the country in which they operate.
In the majority of cases, the CEO is responsible for all corporate activities. He or she signs contracts and makes other legally binding decisions. The CEO is required to keep the board of directors apprised of risk, operations and strategic planning.
The board of directors is responsible for establishing the company’s general policy and goals, which must be consistent with the interests of shareholders. The board must ensure that the business has sufficient funds to reach its goals and invest in sound investments. The board must also be sure that the company meets the needs of all stakeholders such as those of customers and local communities.
Corporate boards may be composed of shareholders or senior managers who are inside directors. Inside directors can provide valuable insight on company operations and projects, from an internal perspective. Outside directors can offer important perspectives that complement the inside directors’ expertise and experience.
Larger companies may enact two-tier boards. They have a management board overseeing daily activities and a supervisory board which is accountable for approving budgets and monitoring key corporate initiatives and projects. The two tiers can facilitate the separation of managerial and executive duties. Limiting the number of board directors who have direct management responsibility within the company can minimize the chance of conflicts of interests.
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