The Basics of Corporate Structure.
The Basics of Corporate Structure.
You always heard about CEOs, CFOs, presidents and vice presidents, but do you know the difference among these corporate heads,what are the roles they play, what are the tasks they perform in the corporate world,are you curious to know, so let’s start.
Board of Directors
Board Of Directors is elected by the shareholders, the board of directors is made up of two types of representatives. The first type involves inside directors chosen from within the company. This can be a CEO, CFO, manager or any other person who works for the company daily. The other type of representative encompasses outside directors, which are chosen externally and are considered to be independent from the company. The role of the board is to monitor a corporation’s management team, acting as an advocate for stockholders. In essence, the board of directors tries to make sure that shareholders’ interests are well served.
Board members can be divided into three categories:
- Chairman – Technically the leader of the corporation, the board chairman is responsible for running the board smoothly and effectively. His or her duties typically include maintaining strong communication with the chief executive officer and high-level executives, formulating the company’s business strategy, representing management and the board to the general public and shareholders, and maintaining corporate integrity. The chairman is elected from the board of directors.
- Inside Directors – These directors are responsible for approving high-level budgets prepared by upper management, implementing and monitoring business strategy, and approving core corporate initiatives and projects. Inside directors are either shareholders or high-level managers from within the company. Inside directors help provide internal perspectives for other board members. These individuals are also referred to as executive directors if they are part of company’s management team.
- Outside Directors – While having the same responsibilities as the inside directors in determining strategic direction and corporate policy, outside directors are different in that they are not directly part of the management team. The purpose of having outside directors is to provide unbiased and impartial perspectives on issues brought to the board.
As the other tier of the company, the management team is directly responsible for the company’s day-to-day operations and profitability.
- Chief Executive Officer (CEO) – As the top level manager, the CEO is typically responsible for the corporation’s entire operations and reports directly to the chairman and the board of directors. It is the CEO’s responsibility to implement board decisions and initiatives, as well as to maintain the smooth operation of the firm with senior management’s assistance. Often, the CEO will also be designated as the company’s president and therefore be one of the inside directors on the board (if not the chairman). However, it is highly suggested that a company’s CEO should not also be the company’s chairman to ensure the chairman’s independence and clear lines of authority.
- Chief Operations Officer (COO) – As its name implies Chief Operations Officer (COO) Responsible for the corporation’s operations, the COO looks after issues related to marketing, sales, production and personnel. Often more hands-on than the CEO, the COO looks after day-to-day activities while providing feedback to the CEO. The COO is often referred to as a senior vice president.
- Chief Financial Officer (CFO) – Also reporting directly to the CEO, the CFO is responsible for analyzing and reviewing financial data, reporting financial performance, preparing budgets, and monitoring expenditures and costs. The CFO is required to present this information to the board of directors at regular intervals and provide it to shareholders and regulatory bodies such as the Securities and Exchange Commission (SEC). Also usually referred to as a senior vice president, the CFO routinely checks the corporation’s financial health and integrity.
The Organisational Structure Hierarchy Pyramid.
With Coordination of Lower management the board of directors have the ultimate goal of maximizing shareholder value.
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