Optimum Corporate Structure

OPTIMUM CORPORATE STRUCTURE
OPTIMUM CORPORATE STRUCTURE
Student’s Name
Instructor’s Name
Course Number
Date

OPTIMUM CORPORATE STRUCTURE
Introduction
An organizational structure is a system that describes how activities are performed and directed
in order to achieve the objectives of the organization. Companies in Ireland and more so in the
jewelry sector operate in a competitive environment hence an optimum corporate structure is
vital if any company is to survive in the long term. They also operate in a heavily legislated
environment where business laws keep on changing from day to day and lack of compliance may
lead to heavy penalties (Ireland, 2012). Need for Good corporate governance has risen in recent
years hence firms have to make sure they maximize the value of shareholders while taking into
account other stakeholders (Kumar and Zattoni, 2015). Areas of corporate governance that must be
considered include board of directors, internal control system and governance system. This
report suggests an optimum corporate structure for a company in Ireland operating in the jewelry
sector.
I) Board structure

OPTIMUM CORPORATE STRUCTURE
The board should be structured in such a way that it is economical and in conformity with the
companies act. Seven directors would be an ideal number given that the jewelry sector is not so
much developed in Ireland. It should comprise of four executive and three directors who are non-
executive. The executive directors should be employed by the company on a full-time basis no
other major income sources (Bekiris, 2013). They should serve in senior capacities such as
finance, marketing, information technology among others and receive the highest remuneration
packages. The finance director and chief executive officer should be executive directors and be
engaged on fixed-term contracts if possible. The non-executive directors are not directly
involved in the daily operations of the firm and they have a major source of income elsewhere
(O'Higgins, 2012). They should be engaged in a service contract and receive a flat fee for their
services. The main aim of including the non-executive directors is to minimize conflict of
interest. However, they play other roles such as; contributing to the strategic plan and providing
an external view of risk management. They should be independent and not hold a significant
amount of shares in the company. They should also be people of integrity and uphold high
ethical standards.
A unitary board structure would be ideal for a company in the jewelry sector. Both the
executive and non-executive directors should serve together in the same board to enhance
coordination and for economic purposes. There should also be a provision for a shadow director;
an individual who is not connected to the company but gives instructions to a member of the
board. This is meant to enhance decision making by obtaining independent views from outside.
The appointment of directors should be done by shareholders in consideration of age, skills,
competence, and industry experience. The board should contain the chairman, company
secretary, managing director, chief executive officer, and other directors. The chairman provides