The proper corporate management structure is critical to running a successful business. A company must determine which structure is best suited to its objectives and industry. It also needs to assess its existing structure and make any necessary changes. All changes must be communicated to employees, particularly when the company is going through changes in its structure. In the wrong circumstances, it could lead to employee cynicism.
The top level of a business is made up of the board of directors as well as the executive officers, including the chief executive officer (CEO). The CEO is in charge of the daily operations of a company and is in charge of the majority of legal business activities. Shareholders are also a part in the corporate structure, though they are not involved in day-to-day business. They are responsible for budgets and have the power to vote on major decisions.
Below the board of directors are the staff managers and work with top-level executives to implement policy. Staff managers can be organized into functional departments, allowing each department to function independently and maximize efficiency for a particular business function. They may also be grouped into divisional departments, which is ideal for companies with a variety of product lines that require quick responses to market shifts.
A circular structure is similar to an organizational and divisional structure however, instead of having the chain of command running vertically, it is run horizontally between departments. It is an effective way to improve communication and collaboration between departments. It also helps to create the spirit of teamwork and trust among employees.