A corporate management structure is the chain of command for a company and its employees. The structure also determines how well an organization can implement its strategy and achieve the business objectives. It can also help the company to comply with the laws governing labor and other regulations. No matter what type of management structure is employed by an organization, it should always be evaluating and improving its chain of command in order to meet the legal requirements of the country in which they operate.
Typically, the CEO bears ultimate responsibility for corporate activities and sign off on contracts and other legally binding actions. The CEO must inform the board of directors on operations as well as risks and strategic planning.
The board of directors is responsible for establishing the company’s general policy and objectives which must align with the interests of shareholders. The board must make sure that the company has enough financial resources to reach its goals and make prudent investments. The board must also make sure that the company is meeting the needs of all stakeholders including those of its local communities and customers.
Corporate boards can be composed of inside directors who are directors or high-level managers of the corporation. These inside directors can provide valuable insights into company activities and projects from an internal perspective. Outside directors can also provide crucial perspectives that compliment the knowledge and experience of inside directors.
In larger firms two-tier boards could be implemented. A management board oversees daily activities while a supervisory committee will approve budgets and oversee core corporate initiatives and project. The two tiers can facilitate the separation of executive and managerial tasks. Limiting the number of directors on the board who have direct management duties within the company could reduce the likelihood of conflict of interests.
