While there might be slight variations in the way a corporation is set up, the corporate structure does follow a basic pattern. How a corporation is owned – public or private – will also dictate the corporate structure. To someone unfamiliar with the inner workings of the corporate world, it can be seem very confusing.

A Two-Tiered System

Stockholders are the owners of publicly owned corporations. Allowing each stockholder a vote or say on every matter would be unwieldy, so corporations set up a Board of Directors. The members of the Board of Directors are elected and voted on by the stockholders. Members of the Board of Directors come from within the corporation’s management structure (oftentimes the CEO or other top executives will be members of the Board), and they come from high-powered business, political, and academic leaders who are not otherwise affiliated with the corporation. The Board of Directors is run by a chairman who is elected to the position by the other members of the Board. The chairman is, technically, the top person within the corporation’s management structure.

The other tier in the system is the management system within the corporation. These are the people who run the company on a daily basis. The top three positions in a typical corporation are the Chief Executive Officer (CEO), the Chief Operating Officer (COO), and the Chief Financial Officer (CFO). The CEO is responsible for the overall business operation and directly reports to the chairman of the Board of Directors. The COO is the hands-on management position, looking after sales and production activity and personnel. The CFO is responsible for tracking the financial well-being in the company, as well as providing regular reports to the Board of Directors, to the stockholders, and to the Securities and Exchange Commission. These three positions also carry other titles. The CEO can also be the president of the company; this title is designated depending on his position within the Board of Directors. The COO and CFO are usually senior vice presidents.

Corporate Ladder

Everyone in the company ultimately reports to the Chairman of the Board of Directors. Within the management structure, the COO and CFO report to the CEO directly. From that point, the corporate structure widens to the vice presidents who oversee particular production or location areas, to managers who oversee a smaller region, and finally to the employees who make up the bulk of the corporation’s workforce.