The proper corporate structure is crucial for efficient business operations. A business must decide which structure is most suitable to its business goals and industry. It should also evaluate its current structure and make any necessary adjustments. All changes should be communicated to the employees, especially when the company is going through restructuring. Otherwise, it can result in employee cynicism.

The top tier of a corporation is made up of the executive officers and the board, including the chief executive (CEO). The CEO is accountable for the daily operations of a business and has control over the majority of legal business activities. Shareholders also play a role in the corporate structure, though they are not directly involved in day-to-day business. They are accountable for budgets and are able to vote on major decisions.

Below the board of directors are staff managers who collaborate with the higher-level executives to implement policies. Staff managers can be divided into functional departments, which allows departments to operate on their own and optimizes efficiency for a specific business function. They can also be organized in divisional departments. This is ideal for businesses with a variety of products and need to respond quickly to market shifts.

A circular structure is similar in concept to a functional or divisional structure. However, instead of the chain of command that runs vertically, this structure functions horizontally across departments. It is a great way to encourage communication and collaboration among using digital rooms effectively departments. It also helps to build trust among employees and create the idea of a team-oriented culture.