A corporate management structure forms the basis for the chain of command between a company and its employees. The structure can also impact the way an organization is able to implement its business strategy and achieve its goals. It can also assist the company in complying with labor laws and other regulatory laws. No matter what type of management structure is used by an organization, it should always evaluate and improve its chain of command in order to comply with the legal requirements of the nation where they operate.
Typically, the CEO holds the sole responsibility for corporate activities and sign off on contracts and other legally binding actions. The CEO must keep the board of directors informed of operations, risk and strategic planning.
The board of directors have the responsibility of establishing a company’s policy and goals that must be in line with the interests of shareholders. The board should ensure that the company has enough financial resources to achieve its objectives and make wise investments. The board must be sure that the company is meeting the requirements of all stakeholders, including customers and local communities.
Corporate boards can be comprised of shareholders or senior managers who are inside directors. Inside directors offer invaluable insight into company operations and projects from an internal perspective. Outside directors can also contribute valuable perspectives that can complement the knowledge and experience of inside directors.
In larger companies two-tier boards can be implemented. A management board oversees daily activities while a supervisory committee will approve budgets and oversee the most important corporate initiatives and projects. The two tiers can permit the separation of executive and managerial duties. Limiting the number of directors on the board with direct management duties within the company could reduce the likelihood of conflicts of interest.
