A corporate management structure determines the chain of command for a company and its employees. The structure also determines how an organization will carry out its strategy and reach the business objectives. It also helps the company to comply with regulations pertaining to labor and other laws. No matter what management structure is employed by a company, it must constantly review and improve its chain of command to meet the legal requirements of the country where they operate.
Typically, the CEO is the one with the sole responsibility for corporate activities and is the one who approves contracts and other legally binding actions. The CEO must keep the board of directors informed of risks, operations and strategic planning.
The board of directors is charged with the obligation of establishing the policy and goals of a company, which must be in line with the interests of shareholders. The board must ensure that the company has sufficient financial resources to meet its goals and invest in sound investments. The board must also make sure that the company is meeting all stakeholder needs such as those of local communities and customers.
Corporate boards may be made up of directors from inside the company, who are either directors or high-level managers of the company. Inside directors can provide valuable insights into the operations of the company and projects, from an internal perspective. Outside directors can provide crucial perspectives that compliment the knowledge and experience of inside directors.
Larger corporations may establish two-tier boards, which include a management board in charge of the day-to-day activities, and a supervisory committee that is responsible for approving budgets and overseeing core corporate initiatives and projects. The two levels allow for the separation of executive and managerial duties. It can also reduce the risk of conflicts of interest by limiting the number of board members that are directly responsible for managing the company.