What is Governance Structure?

Governance structure refers to the framework and processes that an organization uses to direct and control its operations. It includes the distribution of rights and responsibilities among different stakeholders, such as shareholders, board members, and management.

Examples of Governance Structures

1. Unitary Board Structure: All decision-making authority is vested in a single board, which includes executive and non-executive directors.
2. Dual Board Structure: This structure separates the decision-making authority between an executive board and a supervisory board. The executive board is responsible for day-to-day operations, while the supervisory board oversees and advises the executive board.
3. Committee Structure: This structure involves the formation of various committees, such as audit committees, compensation committees, and governance committees, to focus on specific areas of governance and provide recommendations to the board.
4. Advisory Board Structure: An advisory board is established to provide guidance and expertise to the organization, but it does not have decision-making authority.
5. Federated Structure: This structure is often used in large organizations with multiple subsidiaries or divisions. Each subsidiary or division has its own board, but there is also a central board that oversees the entire organization.

Further Reading

• Why Does Corporate Governance Matter in a Company?
• 5 Most Common Nonprofit Governance Models
• Nonprofit Board Governance: 8 Best Practices