CEO vs Managing Director Differences
A CEO does not look after the day to day operations of the company. He is much more involved in designing strategies and visions for the company. A Managing Director is involved in the daily management of the company and provides motivation to the employees. A CEO reports to the board of directors of the company whereas a Managing Director takes orders from the chief executive officer.
A CEO is not accountable to the shareholders of the company. Many times a CEO acts as a leader or a communicator for the company and implements change within the organization. A Managing Director is accountable to the shareholders of the company but he does not have the substantial authority to sign cheques or share certificates.
In this article, we look at the differences between CEO vs Managing Director in detail –
Responsibilities of a CEO
The responsibilities of a CEO include maximizing the share price, market price, or the revenues or other elements. In a non-profit and government organization, the chief executive officer or the CEO typically aims at achieving the organization’s long term and short term mission like reducing poverty, increasing literacy, etc. The CEO directly has control over the president, chief executive, CEE, and the managing director. So we can safely say that directly under the board of directors of an organization the position of the Chief Executive Officer or the CEO comes into play.
The responsibility of the CEO is determined by the board of directors based on the organization’s legal structure they can be far-reaching and the formal delegation of authority. Typically the responsibilities of a Chief Executive Officer or CEO include decision making, developing a strategy and other key policy issues along with being a manager or executor. As a leader of the company he drives change within the organization and motivates the employees.
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As a manager, the Chief Executive Officer presides over the day to day operations of the company. He is the one who makes all the key decisions relating to the company which includes all the fields of the business including operations, marketing, business development, finance, and human resources, etc.
Responsibilities of a Managing Director
Managing Director is someone who is responsible for the daily operations of the company or the organization or corporate division. In some countries, the term managing director is equivalent to the term chief executive officer. There are four ways in which we can appoint or decide upon a managing director. The first way is that a managing director can be appointed by a resolution passed at a general meeting. The second way is that a managing director can be appointed by virtue of the association of a company. The third method is appointing a managing director with the decision of the board of the directors of an organization. And the fourth way is by the way of an agreement with a company.
The managing director is entrusted with substantial powers of management of the affairs of the company. But this substantial power does not include administration acts of routine nature like the signing of cheques or share certificates.
A managing director is directly responsible to manage the day to day functions in an organization and reports to the CEO regarding any progress and escalations required within the organization. The heads of the different divisions and the management reports to the managing director and the managing director help the overall management in the smooth functioning of different divisions.
CEO vs Managing Director Infographics
Here we provide you with the top 5 differences between CEO vs Managing Director
CEO vs Managing Director Head to Head Differences
Let’s have a look at the head to head differences between the CEO vs Managing Director
| Basis | Chief Executive Officer | Managing Director | ||
| Position in the company structure | A CEO comes after the board of directors in the organizational structure. | A Managing Director comes under the authority of the CEO. | ||
| Responsibility | A Chief Executive Officer does not have any responsibility for the day to day affairs of the organization. | A Managing Director is responsible for the day to day business of the organization. | ||
| Functions | A CEO facilitates business and also has his own strategic vision which helps in the alignment of the company both internally and externally. | A Managing Director helps in the overall management of the company. | ||
| Accountability | A CEO is not accountable to the shareholders of the organization or for any action of the company. | Managing Directors are accountable for the actions of the company and are also accountable to the shareholders of the company. | ||
| Delegation of authority | A CEO reports to the board of directors. | Managing director reports and takes orders from the CEO. |
Conclusion
In an organization, the terms CEO vs Managing Director both refer to different positions. But in some countries, they may refer to the same position in the organizational structure. These two positions exist within the same company but have different functions and set of responsibilities. Their functions and responsibilities depend on the set up of the company and also on the industry to which the company belongs to.
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