A corporate management structure is the foundation for the chain of command between a company and its employees. The structure also determines how well an organization can execute its strategy and meet its business goals. It can also help the company to comply with regulations pertaining to labor and other laws. Regardless of what type of management structure a company uses all companies must examine and improve their chain of command to ensure it is in line with the legal requirements of the countries in which they operate.
In the majority of cases the CEO is accountable for all corporate activities. The CEO is the one who signs contracts and makes other legally binding decisions. The CEO must keep the board of directors apprised of the business, risks and strategic planning.
The board of directors is accountable for setting a company’s broad policy and objectives that must be in line with shareholders’ interests. The board must ensure that the business has sufficient financial resources to meet 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 could be comprised of inside directors who are directors or high-level managers of the corporation. Inside directors can provide valuable insight on company operations and projects from an internal perspective. Outside directors can provide valuable perspectives that complement the experience and expertise of inside directors.
Larger companies could establish two-tier boards, with the management board overseeing the day-to-day activities, and a supervisory committee that is responsible for approving budgets as well as monitoring major corporate initiatives and projects. Two levels permit the separation between executive and managerial duties. It can also decrease using digital rooms effectively the likelihood of conflicts of interest by limiting number of board members that have direct managerial responsibilities with the company.