A corporate structure is necessary for any company, defining areas of responsibility, establishing communication lines, and creating a chain of authority to ensure proper management. It provides a system of checks and balances to keep society in balance.
A corporate structure is essentially the layout of the various departments, divisions and job positions that interact to conduct the business of the company. In general, such a structure is necessary to ensure that all important tasks are performed according to company guidelines, as well as provide lines of communication and authority for the general function of the company. Even the smallest companies have a corporate structure, although the exact format for the structure can be extremely simplistic.
A business structure usually helps accomplish three things. First, the corporate layout helps define all areas of responsibility within the company. The accounting department is responsible for handling all financial matters, such as paying company bills and issuing invoices for services rendered. The sales department works to ensure there are efforts to market the goods and services produced to the consumer market. Arrangements relating to executive, managerial and administrative issues are also normally considered in the framework so that everyone in the organization knows where to address a given issue.
In addition to providing points of reference for managing various functions, a corporate structure also helps establish a line of communication that employees can use. This allows comments, questions and ideas to flow easily from anywhere in the organization to someone with the authority to take effective action on the information. By establishing this line of communication, the structure helps ensure effective interaction and also minimizes time wasted by information moving around the enterprise in a disorganized manner.
Finally, business structure helps establish a chain of work or line of authority. Companies often require responsible people placed at various points in the structure to ensure that the activities are managed properly and in accordance with the articles of association. Granting specific levels of authority to people throughout the corporate structure, including accountability of people to other people for their competence to exercise authority, provides a system of checks and balances to keep society in balance. Employees who are disgruntled with immediate supervisors have someone who can listen to their complaints, while supervisors can step in and carry out an employee’s assigned duties when needed.
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