Corporate governance is a complex and sometimes confusing mechanism, in which several interrelated levels can be distinguished. At the same time, experts point out that such levels of governance exist both vertically and horizontally. At first glance, it may seem that the levels of governance are too complex, but in fact, this opinion is wrong, because the levels of governance have a clear structure and hierarchy. We offer to learn a little more about the features of the organization of the management system, which can be useful for managers of different companies.
What is corporate governance: a brief description
In order to distinguish the levels of corporate governance, it is first necessary to determine what it is in general terms. Corporate or organizational management is a system of theoretical and practical approaches to the organization of the company’s work, in the process of implementation of which the set development goals are achieved. Corporate governance cannot be defined purely as a theoretical or practical concept – it includes different characteristics that determine its focus and effectiveness for the entire company.
In the theory of management, there are many models of organization of management, which are successfully applied in various companies. The choice of a concrete management model often depends on the company’s needs, the specifics of its activity, and goals for its further development. However, this does not mean that the director must always adhere to only one chosen management tactic. The goals of the company may change as it develops, therefore it is normal practice to change the model of corporate governance.
What are the levels of the governance process?
Since corporate governance is a complex system, several basic levels can be distinguished. These include:
- Governing structures. They are responsible for making decisions about the company’s operations and development, and for the direct management of subordinate units. As a rule, this level of management concerns the processes of planning and control of the activity of all participants of the working process and the activity of the company as a whole.
- Executive level. This is the main working level of the company and most of the company’s employees belong to it. Their duties include the fulfillment of the duties specified in the statute and the achievement of the company’s development goals. At this level, there are not only performers but also their direct supervisors, who monitor the fulfillment of clearly defined work tasks.
- Control level. Sometimes this level includes the controlling bodies of the company, but more often this level denotes external control. The control level is necessary to monitor the quality of the entire company’s work, identify mistakes and weaknesses in the promotion strategy, as well as comply with the company’s work with applicable legal regulations. Direct executives also have access to internal control, but it covers only a small segment of the company’s work, while the level of control covers the entirety of the company’s activities.
Depending on the specifics of the company’s activity there can be additional levels of corporate governance – they, as well as the total number of levels of governance, is determined by the specifics of the company’s activity. However, the above levels of management represent the basic model, which is inherent to all companies without exception.
Each management level is a combination of theoretical and practical management techniques. There is no concrete guideline as to how many employees are involved in each level – it all depends on the needs and capabilities of each particular company.