Business & Corporate Law Practice

An exposition on Corporate Structure

Nnenna Madu
| August 29th, 2024

Company structure refers to a company's organizational layout of various business sectors.
The sectors together work for the company's mission and fill in to reach targets. It includes departments like marketing, finance, operations management machine learning in human resources IT. These five branches serve as high-level departments of a public business, but there are typically divisions within independent businesses. An official corporate structure can enable businesses to operate at optimal efficiency, establish exactly how employees fit into the hierarchy of the company and also serve as a good tool for improving employee relations and communication between staff members and different levels of management.
True to form, employees were organised into teams and managed by team leaders who reported in turn to their managers or board of directors. This can be vertical or horizontal in corporate structure, depending on how a company wants the chain of command within the organization to look like. An example of a vertical structure is the old-fashioned hierarchical organization where entry-level workers report to managers, who then are supervised by others - this last group may include C-suite and board members. In contrast, horizontal structures often mean there are a smaller number of middle managers and that decisions tend to be more democratic. Even in a horizontal organization, it is critical for each employee to know how decisions are made and who the best person to approach about issues is.

Key Terms in a Corporate structure

The Board of Directors:
This is all of the kind of directors in company. Usually there is a managing director for the team. This is where the key decisions that steer the course of the company are taken. Each of the directors that are making up this board represent different things. Some of them exist to make sure that interests of shareholders protected and the others are more concerned for smooth functioning. Company policy creation and implementation is the responsibility of a board of directors whose annual meetings discuss questions about direction, overall company goals, projects for approval along with budget increases.

Corporate officers
A corporate officer can be defined as the individual who occupies the senior most management position and whose primary activity is in charge of ensuring that employees at lower levels of management are able to meet the daily requirements of the business. These include:

Chief executive officer (CEO)
This person is the one who holds the highest rank in the company and is thus referred to as the chief executive officer of the business. Its primary function becomes addressing the concerns of the owners of the company and the augmentation of the interests of their other stakeholders such as the clients, employees or the region. Usually the CEO is the last person to make any decision in an institution. For smaller corporations it is not unusual to see the inventor of a startup organization and the majority owner being the CEO. In more sophisticated and bigger firms, a Chief Executive Officer is generally designated by the Board of Directors.

Chief operations officer (COO)
The COO reports to the CEO and acts as the effective link between the operational needs of the company and the overall strategy required in the attainment of said goals by the company. Their focus is more towards the operational aspect of the organization and they assist the President of the Company in creating strategies and processes that help achieve organizational objectives. A COO is typically the one who has worked in various sectors including operations, finance and sometimes knows how to manage businesses.

Chief financial officer (CFO)
The CFO is accountable for upholding the company's fiscal health. They are tasked with developing and authorizing budgets and coordinating the drafting of company financial statements. They are in charge of making sure that each and every financial activity of the company is permissible and also within the boundaries of the legal framework. Any substantial financial transactions should be cleared by the CFO before being commenced.

Chief marketing officer (CMO)
His/Her job revolves around the activities and performance of the marketing division of the company in endorsement of the company and its brand in order to establish brand awareness. A CMO usually reports to the chief executive officer or chief operational officer and may be in charge of lower ranking employees involved in high level marketing, such as marketing managers of head of marketing division. A CMO can design strategies to develop new markets for a company’s products or conduct research with customers on their perception of the company and its offerings.

The chief technical officer (CTO)
In companies where the technical part is very important such as in software as a service (SaaS) dealing companies, the chief technical officers have become a part of the scheme of things. For large corporations that would need to have some level of complexity with respect to the technical structure, they would have a CTO even in instances where the products sold by the company have no technological elements. The CTO’s mandate is primarily overseeing the most crucial functions by deciding on the new systems the firm is willing to purchase or any radical changes in the existing product lines of the technology.

Shareholders
Shareholders are defined as the members of a company, who in most cases are stockholders, and each has control over a portion of the company. Shareholders can either be the founders of the organization or outside investors who buy shares in exchange for funds. They may also get dividends from the organization which represents part of its profits, that are paid out every year or throughout each quarter.
Usually the shareholders do not encourage themselves to be liable for the company’s operations; however, sometimes they can participate in the decision making on behalf of the company. This depends on the number of shares a shareholder owns, as the bigger their portion of the company, the more power they have. This pushes them to make steps such as voting for the candidates of members of the board of directors or making decisions about the company’s bylaws or policies.

The establishment of a distinctly articulated corporate organization is pivotal within any establishment as it facilitates operational fluidity as well as elucidates various roles and duties incumbent upon individuals. Presented herein are a selection of rationales underpinning the necessity of an effective corporate organization.

1. Provision of Hierarchical Organization: It delineates a transparent chain of command, thereby ensuring that personnel comprehend their reporting lines and the entities responsible for pivotal organizational determinations.

2. Generation of Equilibrium: Corporate configurations allocate particular roles along with responsibilities, thereby circumventing the risk of managers experiencing excessive workloads and ensuring an equitable distribution of obligations within the collective.

3. Mitigation of Task Redundancy: Through the specification of roles, employees exhibit a diminished propensity for task overlap, consequently reducing redundancy and augmenting operational efficacy.

4. Advancement of Communicative Channels: When personnel and distinct departments are cognizant of their respective roles and their contributions toward collective objectives, communicative processes are rendered more lucid and efficacious, thereby fostering collaborative efforts.

In conclusion, an effectively structured corporate schema amplifies clarity, operational efficiency, and integrative coordination within an organization.


Nnenna Madu
Author

Sign up for our Newsletter

Join our newsletter and get resources, curated content, and design inspiration delivered straight to your inbox.

Related Post