Company Hierarchy

[Jinx180]

Hello!

We've been incorporated for about a year now. Our company is really starting to take off and I'm a little lost in terms of the Hierarchy.

I've read that we need three board members? Is this true or just nonsense. We have only two at the moment, myself and my business partner.

What is the difference between a board member and the Director?

Its why I've always found the American terms a little easier to get as its

Shareholders
Board Of Directors
CEO
and so on but in the UK I'm a little lost on where people stand.

We both share the position of Director at the moment but we are talking of him stepping down from the position and into a lesser role. It was always my understanding that in the UK the Director was the equivalent to the USA's CEO?

Would it be a little childish for us to adopt the American Hierarchy?
Is the Chairman above the Director?

Sorry for this asinine questions, I wanted to get all of this sorted out as we move forward.

 

[arnydnxluk]

There's no straight forward answer. The structure will depend on variables such as personal preference, the culture you want within your company, how many employees you have, how you want to manage your employees etc.

Some companies have a traditional hierarchy, others have a more "flat" structure.

You definitely don't need three board members.

The typical equivalent to "CEO" in the UK would be "Managing Director" although the CEO title is sometimes used here too.

How many employees do you have?

 

[Ian J]

I've read that we need three board members? Is this true or just nonsense.

My company just has one - me

 

[Noah]

I think you have it arse-about-tit : the structure should come from the company's needs, not from arbitrary concept of a proper hierarchy. You do not NEED a board. With only 3 director's, it should be simple; if you have one who does most of the work and makes most of the decisions, that's probably your managing director (MD). Otherwise, you should consider your functional roles and relationships and perhaps then the roles of board members will be clear.

Remember, "director" is more of a title than a job description (MD probably the exception); as a director you may also be Operations Manager or similar.

If you go the USian route, you'll end up having to appoint supervisors as Vice Presidents - probably not very useful.

 

[billmccallum1957]

A fundamental or "traditional" structure.

Shareholders - fund the business and appoint directors to deliver the operational aspects of the business.

Directors - decide on operational strategy and delivery - these can be executive appointment (work as employees within the company) or non-executive (just attend board meetings and advise on strategy). One of the directors will be elected as chairperson, that role is to ensure board meetings are effectively run (and usually has a casting vote in the event of a tied resolution).

For larger companies, its not unusual to have nominated directors - Financial Director, Sales Director, Marketing Director, Human Resources Director.....etc

 

[Jinx180]

Thank you very much.

The past few months there has been a lot of things I've forgotten or not known about and an adviser had asked if we had one person or another person with such and such title.

I didn't want to look like some stupid kid so I didn't email back, just yet.

We have 13 employees at the moment. Going up to 15 come new year.

 

[Annoying Donkey]

One thing about having an even number of directors is how to break a deadlock. 1 for and 1 against can cause difficulties...
I think the default in Table A is for the chairman to have a casting vote, however this is often overridden in the Articles.
Maybe this is why someone suggested 3 directors...? Legally you only need 1.

 

[Jinx180]

Maybe that is why it was recommended, but the article was wrote as if it was a legal need.

I never knew about an executive Director, I also thought a director and the board of directors were different things. Like the board was made up of directors of certain divisions of the company. I’m not really sure.

 

[Ian J]

I never knew about an executive Director, I also thought a director and the board of directors were different things. Like the board was made up of directors of certain divisions of the company. I’m not really sure.

Sometimes the title of director is given to people who aren't members of the board of directors but they aren't real directors. Often football clubs have directors of football and in my industry every salesman seems to be a sales director

 

[Jinx180]

Still confusing! I’ll see what the advisor has to say. Just didn’t want to seem completely clueless to him, so thought it best to ask on here first.