A corporate management structure is the basis for the chain of command between a company and its employees. The structure also determines how well an organization is able follow its plan and achieve its business goals. It can also help the company comply with the laws governing labor and other regulations. No matter what type of management structure is used by a company, it must always be evaluating and improving its chain of command to meet the legal requirements of the nation in which they operate.
In most cases the CEO is accountable for all corporate activities. The CEO signs contracts and makes other legally binding decisions. The CEO must keep the board of directors informed of the business, risks and strategic planning.
The board of directors is responsible for setting a company’s broad policies and goals that must be in line with shareholders’ interests. The board must ensure that the company has sufficient funds to reach its objectives and make sound investments. The board must be sure that the company is in compliance with the needs of all stakeholders including customers and local communities.
Corporate boards may be composed of inside directors, who are shareholders or high-level managers from the corporation. Inside directors offer valuable insights into the operations of the company and projects from an internal perspective. Outside directors can also provide valuable perspectives that can complement the experience and expertise of inside directors.
Larger companies could establish two-tier boards. They have a management board in charge of the day-to-day activities, and a supervisory board that is responsible for approving budgets and monitoring core corporate initiatives and projects. Two tiers enable the separation of executive and managerial duties. Limiting the number of directors on the board who have direct management roles within the business can minimize the chance of conflicts of interest.
