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A corporate management structure establishes the chain of command for a company and its employees. The structure can also determine how well an organization can carry out its strategy and reach its goals in business. It also assists in helping the company to comply with labor and other regulatory laws. No matter what type of management structure is used by the company, it must constantly evaluate and improve its chain of command in order to comply with the legal requirements of the nation where they operate.
In most instances the CEO is accountable for all corporate activities. He or she signs contracts and takes other legally binding decisions. The CEO must keep the board of directors apprised of risks, operations and strategic planning.
The board of directors has the responsibility to set a company’s policy and goals which must be in line 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 make sure that the company is meeting the needs of all stakeholders, including those of local communities and customers.
Corporate boards are comprised of shareholders or senior managers who are inside directors. Inside directors can provide invaluable insight into the company’s projects and operations from an internal perspective. Outside directors can offer valuable perspectives that complement the inside directors’ expertise and experience.
Larger companies can establish two-tier boards. There is a management board in charge of daily activities and a supervisory body that is accountable for approving budgets as well as monitoring major corporate initiatives and projects. The two tiers may allow for the separation of managerial and executive duties. It can also reduce the possibility of conflicts of interest by limiting number of board members who are directly responsible for managing the company.