The correct corporate structure will allow you to manage your business efficiently. A business must decide the structure that is most appropriate to its objectives and industry. It should also review its current structure and make any necessary adjustments. Any changes should be carefully made clear to employees, especially when the company is going through a reorganization. It can lead to cynicism among employees.

The top level of a corporation is made up of the board and executive officers including the chief executive (CEO). The CEO is in charge of the day-to-day business operations and has power over virtually all lawful business operations. The shareholders also play a part in the corporate structure, even when they aren’t a part of the daily operations. They are accountable for budgets and have the power to vote on major decisions.

Under the board of directors are the staff managers, who work with higher-level executives to establish policy. Staff managers are organized into functional departments. This allows each department to operate independently and improve efficiency. They could also be put into divisional departments, which is ideal for businesses with multiple product lines and needs quick thorough due diligence for startups responses to market changes.

A circular structure is similar in concept to a functional or divisional structure. However, instead of the chain of command running vertically, this structure functions horizontally across departments. It’s a great strategy to promote collaboration and communication within departments. It can also help build trust among employees and create an environment that is team-oriented.