A corporate management structure determines the hierarchy of command for a corporation and its employees. The structure also influences how an organization can implement its business plan and achieve its objectives. It can also assist the firm in complying with regulations pertaining to labor and other laws. No matter what management structure a company uses every organization must review and improve their chain of command to ensure it meets the legal requirements of the countries where they operate.
In the majority of instances the CEO is accountable for all corporate activities. The CEO signs contracts and makes other legally binding decisions. The CEO is required to inform the board of directors about the operation and risks, as well as strategic planning.
The board of directors is responsible for establishing a company’s overall policies and goals which must align with the interests of shareholders. The board of directors must ensure that the business has enough financial resources to meet its objectives and make 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 can be comprised of shareholders or senior managers who are inside directors. Inside directors provide invaluable insight into company operations and projects, from an internal perspective. Outside directors can offer valuable perspectives that complement inside directors’ experience and knowledge.
In larger companies two-tier boards can be implemented. A management board will oversee daily activities while a supervisory board will approve budgets, and oversee key corporate initiatives and projects. Two tiers permit the separation between the managerial and executive roles. It also helps reduce the chance of conflicts of interest by limiting number of board members who have direct management responsibilities with the company.
