Director (business)
The term director is a title given to the senior management staff of businesses and other large organizations.
The term is in common use with two distinct meanings, the choice of which is influenced by the size and global reach of the organization and the historical and geographic context. Further to this, the term is also used in reference to various technical (legal) definitions specific to corporate governance legislation in individual countries.
Thus, a director can be any of:
Within companies that use this term in the latter (American English) sense it would be normal to have directors spread throughout different business functions or roles (e.g. director of human resources).[2] In such a case, the director usually reports directly to a vice president or to the CEO directly in order to let them know the progress of the organization. Large organizations may also have "assistant" or "deputy" directors. In this context, Director commonly refers to the lowest level of executive in an organization, but many large companies use the title of associate director more frequently.
When used by a firm which uses the title director in the British English sense, being termed as an "executive director" would generally imply that the holder is appointed to the board of directors in a legal sense, and holds significant responsibility and/or a financial stake in the business. By contrast in the American English context "executive director" is roughly equivalent to vice president or senior director in some businesses.
Such companies may also have "regional" and/or "area directors", with regional director titles tending to be used by companies that are organized by location and have their departments under that, indicating near total responsibility for the operations for their particular country.
Corporate titles (commonly known as business titles) are titles given to individuals within a business depending on the role they have and which also portray the duties and responsibilities within that specific role. The larger the business, the more titles that are present, such as CEO, COO and executive directors.
People with higher roles within a company are often referred to as "chief" and those who have lower roles within the company are employees who carry out day-to-day tasks. There are many titles within a company such as executive director, managing director, company director and chairman.
The corporate structure consists of four key areas:
Structuring a board of directors[edit]
Depending upon the size of an organization or a company, the number of directors can vary. Start-up companies can have a single director, which is the minimum for a private limited company according to the law. However, as organizations and businesses expand, the number of directors can increase because more tasks and responsibilities become present. For example, if the company expands and has more than one department, such as finance, sales, marketing, production and IT, then the business may form a board of directors, with each director overseeing a department and maintaining full responsibility within that department.
A board of directors ensures that a clearly outlined structure is in place which will help the business to work much more efficiently.
Larger businesses and organizations will form a clear board structure as the following:
Chairman - This particular role within the company is often a non executive role that also has the task of overseeing the entire business or organization.
Managing Director (MD)[4] - A managing director is employed by the business, often by the chairman. Other roles include running the business and producing salaries. The managing director works along with the board of directors and oversees the performance of the business, thus reporting back to the chairman.
Executive Directors - A group of executive directors who each play a significant role within the company. They maintain full responsibility over their respective departments such as Finance, Marketing and Sales. Each director manages their department ensuring that tasks and objectives are being met. Executive directors also sit on the board.
Non-executive directors - These advise the business by proposing different forms of strategy and also decide remuneration of the executive directors.
Having a clear structure within the business has a positive impact on the employees and it also helps to organize the business. By having a team of executive directors, employees can report to their executive directors if a problem or an issue occurs.[5]