A corporate management structure forms the basis for the chain of command between a corporation and its employees. The structure can also impact the way an organization is able to execute its business strategy and achieve its goals. It can also assist in helping the company to comply with laws regarding labor and other regulatory requirements. Regardless of what type of management structure an organization employs each organization must analyze and improve their command chain to ensure that it complies with the legal requirements of the countries in which they operate.
In most 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 informed of the business, risks and strategic planning.
The board of directors is responsible to set the company’s broad policies and goals which must be in line with the interests of shareholders. The board must ensure that the company has the financial resources to achieve its goals and invest in sound investments. The board should also make sure that the company is meeting all stakeholder needs, including those of local communities and customers.
Corporate boards may be made up of shareholders or senior managers who are inside directors. These inside directors can provide invaluable insight into the company’s operations and projects from an internal perspective. Outside directors can offer important perspectives that complement the inside directors’ experience and expertise.
Larger companies can establish two-tier boards, which include an executive board that oversees the day-to-day activities, and a supervisory board that is accountable for approving budgets as well as monitoring major corporate initiatives and projects. Two tiers of boards can enable the separation of managerial and executive duties. It can also decrease the possibility of conflicts of interest by limiting number of board members that are directly responsible for managing the company.
