A corporate management structure determines the hierarchy of command for a company and its employees. The structure can also determine how an organization will implement its strategy and achieve business goals. It can also help the company comply with labor and other regulatory laws. No matter what management structure is used by an organization, it should always be evaluating and improving its command chain in order to comply with the legal requirements of the nation in which they operate.
In most instances the CEO is accountable for all corporate activities. He or she signs contracts and makes other legally binding decisions. The CEO must inform the board of directors about operations, risks and strategic planning.
The board of directors has the obligation of establishing the policy and goals of a company that must be in line with the needs of shareholders. The board must ensure that the company has sufficient financial resources to achieve its objectives and make wise investments. The board must be sure that the company is fulfilling the requirements of all stakeholders including customers and local communities.
Corporate boards can be made up of shareholders or senior managers who are inside directors. Inside directors can provide invaluable insight into the company’s operations and projects from an internal perspective. Outside directors can provide important perspectives that complement the inside directors’ experience and expertise.
In larger companies two-tier boards are often implemented. A management board will oversee daily activities while a supervisory board will approve budgets, and oversee core corporate initiatives and project. The two tiers can allow for the separation of managerial and executive tasks. Limiting the number of directors on the board with direct management duties within the company could lower the risk of conflicts of interests.
