Corporate management is a corporate version of business management. It is a system that includes policies, processes, and practices regarding the strategic direction and control of companies. The Board of Directors, which is the head of execution in the company and legally the ultimate responsibility for company affairs, is also the main actor in corporate governance practices.
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What is Corporate Management?
It covers the balance of power between the Board of Directors responsible for steering the company, the shareholders who fund the company, and the Management that carries out the business of the company. Institutional management; is based on the principles of fairness, transparency, accountability, and responsibility.
The most important factor in entering into a business relationship with a company in commercial life is "establishing trust." Trust in the company's management system is strengthened by clarifying the authorities and responsibilities through corporate management practices. Corporate Governance is the key to success in companies.
Benefits of Corporate Management
Research has revealed that more than 84% of the investors can pay a plus premium for the shares of a company with the same financial structure and good management, instead of a company with poor management.
A Strong Corporate Management Approach
- It facilitates access to capital and financial markets.
- It establishes an effective internal control system that will ensure accountability and better profit margins.
- It helps the company survive in an increasingly competitive environment.
- It strengthens management and ensures efficient use of resources by creating a solid company strategy that will attract investment.
- Relations with investors and creditors become easier with the transparent management approach created.
- While it facilitates the planning and implementation of the ownership transfer, it also reduces the risk of conflict that may arise.
A Poor Understanding of Institutionalism
- It negatively affects the investor's investment risk appetite, weakens competition, and limits new employment.
- It allows those responsible for the management of the company (appointed directors) to act in line with their own interests rather than shareholders, creditors, and other stakeholders.
- The company cannot realize its value creation potential and creates a significant loss in terms of economic growth.
For these reasons, the implementation of corporate governance
- Board of Directors,
- Company management
- Other stakeholders
It is the main instrument of increasing economic efficiency through mutual and controlled relations between them.
Corporate Management Structure
What Kind of Organization?
Separation of Powers Structure
In organizations where the separation of powers structure is implemented, the Board of Directors and the Executive Board are two separate structures. The Executive Board takes over the management of the operations, while the Board of Directors undertakes the high-level decisions and approvals. In practice, the Executive Board is usually chosen by the Board of Directors.
Board of Directors Responsibilities
- Determining the strategies, defining the company's strategic goals
- Approving policies and observing compliance with internal regulations and established policies
- Determining financial resources, approving the budget
- Management and representation of the company with a risk management approach
The size of the Board of Directors in practice consists of 5-8 members. The collection frequency varies between 1-3 months.
Executive Board Responsibilities
- Ensuring that operations comply with policies and legislation
- Ensuring the optimum distribution of company resources
- Managing company operations with a risk management approach
- Carrying out an effective performance management mechanism to ensure that the company's performance is in line with the agreed plans, policies, and strategies
- Managing operations with a view to creating long-term economic gain and stability for the company
The size of the Executive Board in practice generally consists of 7-10 members. The frequency of collection is usually between 1-2 months.