Company positions and responsibilities that are understood from the very beginning of a business’ creation can help avoid conflict and misunderstandings. They help create a business structure that management can work within, and this is most often accomplished by assigning titles in correlation to job functions. Workers view job titles as a level of professional attainment that they can take pride in and work hard to justify a desired one. Consider the appeal of being a manager as opposed to an assistant manager.

In small businesses, in particular, job titles help workers understand more clearly what expectations are placed upon them. Titles create a business hierarchy, whether a traditional or a matrix organizational structure, that is almost immediately understood, for it is widely accepted that a director of sales would report to a vice president of sales, or that a sales associate would report to the director of sales.

There is also another benefit that can come from job titles. Employees recognize that job titles look good on business cards, and naturally engender respect from peers. They demonstrate that a level of competence and professional advancement has been reached. Therefore, while a small business may not be able to provide a big bump in salary due to cash constraints, they can recognize an employee’s contribution with a new job title.

Defining Roles and Responsibilities in a Small Business

Naturally, in a small business with only a few employees, it might not be possible to clearly break every task that needs to be done into a separate job title. The receptionist may perform secretarial duties, or a director of sales may also coordinate marketing and advertising efforts. Some people may believe they warrant a title that more accurately defines a portion of their contributions or be disappointed to see a fellow employee that they consider an equal receive what they deem to a more prestigious title.

The responsibility for setting up job titles and defining the corresponding responsibilities typically falls upon the owner of the business, president of the company or chief operating officer, depending upon the type of business entity. Defining roles is not only important to manage current operations, but a clear definition of titles and their corresponding responsibilities can prove valuable for new employees joining the business. They can quickly understand what is expected of them.

Defining Roles and Responsibilities in a C Corporation

For businesses established as C corporations, a general structure exists as determined in the Articles of Incorporation and follows a similar pattern. The positions and responsibilities tend to be the same whether the business is in finance, manufacturing, marketing, healthcare, or any other industry. There are three main roles established in C Corporations:

  • Shareholders: Shareholders are the owners of the corporation. Although they may hold other positions within a corporation, in this capacity, their responsibilities are to vote on major issues presented by the board of directors and elect directors to the board.
  • Directors: These individuals perform a fiduciary obligation to the shareholders of the business and are responsible for the overall operation of the business, guiding the business but not involved in the day-to-day operation of it. The incorporator who has signed the Articles of Incorporation appoints them at first, and their role is temporary until the first vote by the shareholders of the company. At that time, they may stay or be replaced. They assume total responsibility for the actions of the business and approve all corporate activities and transactions as determined by the bylaws.
  • Officers: These are the executives who are the driving force behind the daily operation of the business. They hire key personnel, manage resources so that the business operates efficiently and tend to be the public face of the corporation. In smaller or closely held corporations, these individuals also tend to be shareholders and intimately involved in all facets of the operation. In larger corporations, they may only be responsible for divisions created within the business. They have the authority to transact business transactions that fall outside the direct responsibility of the board of directors. The most familiar titles assigned to officers of a corporation are Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, and Secretary.

Whether positions and responsibilities within a business are created on an ad hoc basis, as is the case in many small businesses, or through corporate charters, a clear understanding of them leads to a more efficient business operation.

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