Corporate Management Structure

A corporate management structure is the base for the chain of command between a corporation and its employees. The structure also influences the ability of an organization to follow its business plan and achieve its objectives. It can also help the company to comply with labor and other regulatory laws. Whatever management structure a company uses each organization must analyze and improve their chain of command to ensure it meets the legal requirements for the countries they operate in.

In most instances the CEO is responsible for all corporate activities. He or she also signs contracts and takes other legally binding decisions. The CEO is required to keep the board of directors informed of risk, operations and strategic planning.

The board of directors is accountable to set the company’s broad policies and goals, which must be consistent with the interests of shareholders. The board must ensure that the business has the financial resources needed to meet its goals and make prudent investments. The board must also ensure that the company is meeting the requirements of all stakeholders including customers as well as local communities.

Corporate boards may be composed of shareholders or senior managers who are inside directors. These inside directors provide invaluable insight into company operations and projects, from an internal perspective. Outside directors can also contribute crucial perspectives that compliment the knowledge and experience of inside directors.

Larger companies could establish two-tier boards, which include an executive board that oversees the day-to-day activities, and a supervisory board which is responsible for approving budgets as well as monitoring the most important corporate initiatives and projects. The two tiers allow for the separation of management and executive duties. It can also reduce the possibility of conflicts of interest by limiting number of board members that are directly accountable to management of the company.

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