Annual Compliance

Know the Hierarchy of Designations in a Private Company

The organizational structure of any company is critical to its success. It means companies must have an accurate managerial structure. The managerial structure includes executives, officers, investors etc. In this article, we shall discuss the hierarchy of designations in a private company.

Designations in a private company

Corporate or business titles provided to the officials working in an organization is called Designations. Such titles must be related to the roles and duties offered to a concerned official. Thus the organizational structure is significant in the sustainability of a private company.

The titles of executives operating at the top level in a company usually begin with the word Chief. There are three standard executives- CEO, COO and CFO.

The organizational structure is also called the chain of command as it sketches out where decision makers reside. The chain of command of a large and developed company would be more complex and multifaceted than a small company. 

Hierarchy of designations

The hierarchy of designations in a private company has been provided below:

Managing Director

The definition of Managing Director is provided under Section 2(54) of the Companies Act, 2013^[1]. According to this section, Managing Director refers to a person who is appointed either by passing of a resolution at Company’s General Meeting or by virtue of AOA. Moreover, the board of directors of the company can appoint an MD for the company.

An MD represents the top-level management of the company, and such person is entrusted with substantial powers in relation to the management of the company. A Managing Director, along with other directors, may appoint managers and officers. Such person also has the power to assign duties and roles to these officers and managers. 

Different officers and their roles in private company

The board of directors can appoint the officers of the company. Such officers may hold several top level roles and duties in a company. Further, there is no statutory obligation for appointing officers in a private company. However, directors should be appointed compulsorily for all companies by the shareholders.

Some of the prominent officers in a company are discussed below:

• Chief Executive Officer;
• Chief Financial Officer;
• Chief Operating Officer;
• Chief Technology Officer;
• Chief Legal Officer;
• Chief Marketing Officer.

Chief Executive Officer

A CEO is the topmost executive in a corporate entity. Such person is responsible for making managerial decisions. The board of Directors of a company can appoint a CEO.

Moreover, a CEO is responsible for designing and implementing policies and strategies for the organization. The CEO also guides the subordinates in fulfilling the objectives of the company. CEO is a public face of the company and acts as a bridge between the board of directors and operational managers.

Chief Operating Officer

In the hierarchal set up the Chief Operating Officer holds the second place. In some entities, COO is also called the Chief Operations Director or Chief Operations Officer.  COO acts as focal point to execute business plans. Such person assists the company to work effectively and ensures its financial strength. COO is a leader as well as a supervisor of the company, who confirms that employees are executing the plans of the CEO.

Chief Financial Officer

In a corporate setup, a Chief Financial Officer or the CFO does financial planning, monitors the cash flow and does other financial activities. Such person is similar to the controller or treasurer of a company. He checks the accuracy of the financial statements and company’s reports.

CFO also conducts SWOT analysis of the company regularly. SWOT means Strength, Weakness, Opportunities and Threat. Further, the standard duties of a CFO are planning, bookkeeping, accounting, fundraising, budgeting and such other financial/accounting matters. 

Chief Technology Officer

In the designations in a private company, next comes the Chief Technology Officer. A Chief Technology Officer is a senior executive in the technology department of the company. Such person is responsible for managing and supervising maintenance of technology and development aspects.

Moreover, the CTO should oversee the technological process, policies, asset maintenance of the company.

Chief Legal Officer

A Chief Legal Officer acts as a senior legal executive who assists in reducing the legal risks in a company. The main function of a CLO is to advise on regulatory as well as on legal concerns to stakeholders/employees of the company. He reduces the litigation risks.

 The CLO also handles legal matters of a company and acts as a first person for communication with the authorities. There may be more than one manager functioning under the legal departments headed by the CLO.

Chief Marketing Officer

A Chief Marketing Officer is a marketing executive engaged in tasks such as managing marketing campaigns, enhancing brand image etc. Further, the Chief Marketing Officer directly operates with marketing and sales department to execute marketing strategies and policies.

All the managers are required to report to these officers within a private company.

Conclusion

Apart from the above-mentioned designations in a private company, there are other managers as well who execute and head the functional and administrative activities of an organization. When all of them work in tandem, the Company achieves sustainable growth.

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