A corporate management structure is the foundation for the chain of command between a company and its employees. The structure can also impact how well an organisation can implement its business plan and reach its goals. It also assists the business in ensuring that it is compliant with labor laws as well as other regulatory laws. No matter what management structure is used by an organization, it should constantly evaluate and improve its command chain to ensure that it meets the legal requirements of the nation in which they operate.
Typically, the CEO holds the responsibility for all corporate activities and sign off on contracts and other legally binding actions. The CEO is required to inform the board of directors of operations, risks and strategic planning.
The board of directors have the responsibility of setting a company’s policy and goals which must be in line with the interests of shareholders. The board must make sure that the company has sufficient financial resources to reach its objectives and make wise investments. The board must also make sure that the company fulfills the needs of all stakeholder groups, including those of customers and local communities.
Corporate boards can be composed of shareholders or senior managers who are inside directors. Inside directors provide an invaluable perspective on the company’s operations and projects, from an internal perspective. Outside directors can offer beneficial perspectives that compliment inside directors’ experience and knowledge.
In larger organizations, two-tier boards may be implemented. A management board oversees daily activities, while a supervisory committee will approve budgets and supervise the most important corporate initiatives and projects. Two tiers permit the separation of managerial and executive responsibilities. Limiting the number of directors on the board that have direct management roles within the business can reduce the likelihood of conflict of interest.
