THE BASICS OF CORPORATE STRUCTURE

CEOs[**], CFOs[††], presidents and vice presidents: what’s the difference? With the changing corporate horizon, is has become increasingly difficult to keep track of what people do and where they stand on the corporate ladder. Should we be paying more attention to news relating to the CFO or the vice president? What exactly do they do?

Corporate governance is one of the main reasons that these terms exist. The evolution of public ownership has created a separation between ownership and management. Before the 20^th century, many companies were small, family owned and family run. Today, many are large international conglomerates that trade publicly on one or many global exchanges.

In an attempt to create a corporation where stockholders’ interests are looked after, many firms have implemented a two-tier corporate hierarchy. On the first tier is the board of governors or directors: these individuals are elected by the shareholders of the corporation. On the second tier is the upper management: these individuals are hired by the board of governors. Let’s begin by taking a closer look at the board of governors and what its members do.

Board of Directors

Elected by the shareholders, the board of directors is made up of two types of representatives. The first type involves individuals chosen from within the company. This can be a CEO, CFO, manager or any other person who works for the company on a daily basis. The other type of representative is chosen externally and is considered to be independent from the company. The role of the board is to monitor the managers of a corporation, acting as an advocate for stockholders. In essence, the board of directors tries to make sure that shareholders’ interests are well served.

Board members can be divided into three categories:

- Chairman - Technically the leader of the corporation, the chairman of the board is responsible for running the board smoothly and effectively. His or her duties typically include maintaining strong communication with the chief executive officer and high level executives, formulating the company’s business strategy, representing management and the board to the general public and shareholders, and the maintaining corporate integrity. A chairman is elected from the board of governors.

- Inside Directors – These directors are responsible for approving high-level budgets prepared by upper management, implementing and monitoring business strategy, and approving core corporate initiatives and projects. Inside directors are either shareholders or high-level management from within the company. Inside directors help provide internal perspectives for other board members. These individuals are also referred to as executive directors if they are part of company’s management team.

- Outside directors – While having the same responsibilities as the inside directors in determining strategic direction and corporate policy, outside directors are different in that they are not directly part of the management team. The purpose of having outside directors is to provide unbiased and impartial perspectives on issues brought to the board.

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THE JOB OF MANAGEMENT

A strong management is the backbone of any successful company. This is not to say that employees are not also important, but it is management that ultimately makes the strategic decisions. You can think of management as the captain of a ship. While not physically driving the boat, he or she directs others to look after all the factors that ensure a safe trip.

Management Career Paths

A management career path is not a straight line. Nor is it the same for everyone. Yet all management career paths have a starting point. All have milestones along the way. Each paths leads managers to what they need to know based on where you are in your career and where your interests lie. On each visit you can go further along the path retrace steps along the same path, or start down a new path. Five paths are listed below

1. Considering Management

This person wonders whether a management career if for them. Maybe someone has suggested it. Maybe they just feel they can do it better than their current boss. Take this path to learn more about what management does and whether management might be for you.

2. Just Starting Management

This person has just started or is about to start, their first management job. This path will guide you through those first confusing challenging days and months. It takes you through the basic knowledge needed to be a manager and how to deal with the problems that crop up.

3. Going for it

This person has decided to try the management career path. They have no management experience yet, but are interested and motivated. This path leads to the knowledge and skill needed to land that first management job.

4. Experienced manager

This manager has had several years experience in management. He or she has had time to make mistakes and achieve some successes in the real world and now want to improve. This path leads to the resources to improve their skills and their promotion potential.

5. Management Pros and Consultants

These are veteran managers interested in increasing and sharing their professional knowledge and experience. They have managed different and difficult opportunities, but they know there is always more to learn. This path connects them with their peers and to cutting-edge theory.

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LONDON AND FINANCE

London, the capital of the United Kingdom, is a political, cultural, commercial, industrial and financial centre of the country. At the same time London is one of the world’s financial capitals. The business centre of London is the City, where numerous banks, various exchanges, insurance offices, shipping and other companies have their head offices.

London is also the headquarters of many prominent international banking and insurance concerns which deal in foreign shares, insurance and bonds and handle English investments in other countries.

The central feature of government finance is the Bank of England, founded under a royal charter as a private company in 1694 to provide loans to the Government and nationalized in 1946 by Act of Parliament. The Bank of England is the country’s national bank, it carries out government monetary policies and acts as the ‘banker’s bank’ for privately owned banks and other Commonwealth nations.

Most domestic banking operations of the United Kingdom are carried on by the commercial clearing banks. The main commercial banks are Lloyds Bank, Barclays Bank, Midland Bank and National Westminster Bank, often referred to as ‘the Big Four.

Paper currency in circulation is issued by the Bank of England. The monetary unit is the pound sterling equal to 100 pence.

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THE LONDON STOCK EXCHANGE

At the heart of the City is the London Stock Exchange where millions of shares and securities are traded daily. There are also exchanges in several other cities of the United Kingdom but the London Stock Exchange is the most important. Here through the Exchange members the investor can buy or sell shares in any of the thousands of companies which are quoted on the Exchange and many more companies which are quoted on recognized exchanges overseas. The London Stock Exchange offers the largest range and number of securities quoted on any Stock Exchange in the world. In volume of business it ranks third to New York and Tokyo.

London is also the headquarters of many prominent international banking and insurance concerns which deal in foreign shares, insurance and bonds and handle English investments in other countries.

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