A Research on Corporate Structures
Abstract
For everything practicable to human, the starting point is always the “frame or sketch”, this denotes the same meaning as “structure ‘. It is the foundation, basis upon which everything is built, the Corporate World as an entity is inclusive of this foundational element. This, a Company cannot function effectively toward achieving its vision and mission if it lacks an upright structure through which it routines are executed. In a nutshell, structure is the directional component of any company. This research work is basically on the preview of Corporate Structures particularly in Nigerian context.
Introduction
On the formation and incorporation of a business, there’s every need to strategize and implement a suitable structure on which the affairs of the business is paddle, therefore a business goes for a structure in accordance with the objects, purpose, vision and mission of the business. When an incorporated business (Company) adopts a structure for effective running of it affairs, it said to have a ‘Corporate Structure ‘, this aids hierarchical discharge of function within the company, creation of effective communication flow, easy identification of problems and profer solutions to them. This, the managerial routines of the company become less cumbersome and seeminglessly executed.
What is Corporate Structure?
A system is made up of units or components which work together toward a sole goal, this context is likened with corporate structure. Simply put, a corporate structure is nothing but compartmentalization of a company into different segments or units, these compartments work for the sole purpose and goals of achieving the company mission and vision. Inferably, the breakdown of a company activities into departments is know as corporate structure.
A company selects and adopts a structure that best suits it purpose of formation and size, it maybe vertical or horizontal structure. Traditionally, we shall be looking at corporate structures as it relates to corporate governance which is almost the same across the globe, the structures encompass the followings:
1. The Board of Directors (BOD)
This is the organ (department) of a company saddled with the responsibilities of making decisions which could make or mare the objectives of the company. It’s the apex decision making of a company. The shareholders select the board of directors who strategize, implement and supervise the activities of the company, the implementation of the company policies, schedule of meetings, appointment and removal of the secretary, declaration of dividend as well as performing oversight function over the CEO are duties and responsibilities of the BOD.
The size of BOD depends on the size and type of the company, while some categories of directors are mandatory for public companies, reverse is the case in private companies. Directors could either executive (those that involve in day-to-day affairs of the company) or, non executive directors, the non executive directors involve only in the high level decision making of the company (e.g a shadow direction).
Meanwhile, as powerful as the BOD appears, their powers are checkmate by the Commission (Corporate Affairs Commission or other regulatory bodies). The credence to this is found in he dictum of Lord Dennigs M.R: “ Who will guard the guards themselves “. Also, the shareholders (general meeting) may veto the decision of the BOD via resolution or with support of dues process of law.
2. Corporate Officers
The C- Suit or C- Level executive are officers whose duties and responsibilities is managing of low level management in the performing of day-to-day functions of the company, it is the upper management level of a company. The positions include but not limited to the followings:
a. Chief Executive Officer (CEO): Appointed by the BOD in a public company, and mostly the founder in a private company, the CEO is the top managerial decision making organ of the company, the work toward achieving the objective of the company, they make sure the value of the shareholders are met, and the are the final decision authority of the company. The operational unit of the company is subjected to wimps and capris of the CEO.
b. Chief Operations Officer: As the name implies, the operational unit of the company is exclusively under the tenant of this arm, they are into daily routines of the company and it entails experts and professionals. They’re answerable to the CEO or the BOD.
c. Chief Technical Officer: The technical know how of a company which is mostly technical inclined is left to the core jurisdiction of the chief technical officer, even when the objects of the company is not purely tech oriented, there may still be every need for the company to have the CTO whose duties is the handling of tech related routines.
d. Chief Financial Officer: Every financial undertakings of the company must as a matter of procedures and practices go through the vigor scrutiny of this unit, it formulates, supervises and defend the budgets of the company which are ratifiable by the top level management. All financial records are prepared and kept by this unit, it an expert based organ, it has experts such as accountant, economist, auditor, etc.
Important of Corporate Structures
Corporate Structures to every goals aspiring company is as pivotal as the company itself, it provides effective running of the company functions, dictates responsibilities, duties and extent of powers accrue to designated components of the company. It is the lifeline and pillars on which the operational system of the company is built. The followings are some of the functions of Corporate Structures:
1. Stipulation of cadres ( hierarchy : Corporate structure give a clear strata of managerial functions with each stratum having it clear and precise duties and responsibilities , this help in effective decision making, problem solving and easy communication within the compan. It also give room to expertise and professionalism, each level is maned by people who are experts and with this, there will be no flux of functions.
2. Avoidance of function duplicity: With corporate structure, functions of each unit is clearly enlisted and as such there would be no duplicity of function, each unit performs its function with interference of others.
3. Effective result: As the common saying goes that: ‘ everybody’s work is nobody’s work’, a situation where there is not stipulation as to who does what will certainly lead to poor outcomes, this is because nobody will be held responsible for any irregularities, all these deficiencies are taken care by corporate structure as it assignes functions to each units which works collectively to the company goals.
4. Easy and smooth management: A unit is solely responsible for it’s deficiency or failure and as such it’ll be very direct and easy to manage any shortfalls within the company as every action is traceable to a particular unit.
Conclusion
The principle of corporate structures is an inseparable phenomenon of a company, be it a small or big company. The objective of the company would nothing but a mere illusion if there are no structures toward implementation of the company functions. It keeps the company on track and alignment for the purpose of goals achieving. The corporate structures is equate to the architectural sketch in a building construction, it provides the paths towards having a habitable house. With corporate structures, the running of affairs of a company is guaranteed and established.
References
Career development: www.uk.indeed.com accessed 25th August, 2024
