A corporate structure is essentially the layout of the various departments, divisions, and job positions that interact to conduct the business of the company. Generally, such a structure is necessary in order to ensure that all-important tasks are conducted according to the guidelines of the corporation, as well as providing lines of communication and authority for the overall function of the company. Even the smallest of businesses have a corporate structure, although the exact format for the structure may be extremely simplistic.
A corporate structure usually helps to accomplish three things. First, the corporate layout helps to define all the areas of responsibility within the company. The accounting department is understood to handle all financial matters, such as paying the bills of the company and also 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. Provisions for executive, managerial, and administrative matters are also normally accounted for in the structure, so that everyone in the organization knows where a given issue should be addressed.
Along with providing reference points for the handling of various functions, a corporate structure also helps to establish a line of communication for employees to utilize. This makes it possible for comments, questions, and ideas to flow easily from anywhere in the organization to someone with authority to act on the information effectively. By establishing this line of communication, the structure helps to ensure effective interaction and also minimize time wasted by information moving through the company in a disorganized manner.
Lastly, the corporate structure helps to establish a working chain or line of authority. Corporations often require responsible persons placed at various points in the structure to ensure tasks are handle properly and in accordance with company bylaws. By granting specific levels of authority to persons all along the corporate structure, including making persons accountable to other persons for their competency in exercising authority, it provides a checks and balance system to keep the company on an even keel. Employees who are disgruntled with immediate supervisors have someone who can hear their grievances, while overseers may step in and conduct the tasks assigned to an employee when needed.