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CEO vs Managing Director

Updated on March 21, 2024
Article byWallstreetmojo Team
Edited byWallstreetmojo Team
Reviewed byDheeraj Vaidya, CFA, FRM

CEO vs Managing Director Differences

A CEO does not look after the day-to-day operations of the company. Instead, they are much more involved in designing strategies and visions for the company. A Managing Director is involved in the company’s daily management and motivates the employees. A CEO reports to the company’s  Board of DirectorsThe Board Of DirectorsBoard of Directors (BOD) refers to a corporate body comprising a group of elected people who represent the interest of a company’s stockholders. The board forms the top layer of the hierarchy and focuses on ensuring that the company efficiently achieves its goals. read more. In contrast, a managing director takes orders from the chief executive officer.

A CEO is not accountable to the shareholders of the company. Instead, a CEOCEOChief Executive Officer is the full form of CEO. He is the most senior member of a corporate organization, an executive who oversees the whole administration and operations of the company and reports directly to the board of directors and chairman, with the sole purpose of generating wealth for the company's stakeholders and shareholders. read more often acts as a leader or a communicator for the company and implements change within the organization. On the other hand, a managing director is accountable to the company’s shareholders, but he does not have the substantial authority to sign cheques or share certificates.

In this article, we look at the differences between CEO and Managing Director in detail:-

Responsibilities of a CEO

The responsibilities of a CEO include maximizing the share price, market price, 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 missions like reducing poverty, increasing literacy, etc. The CEO controls the President, Chief Executive, CEE, and Managing Director. So, we can safely say that the Chief Executive Officer or the CEO comes into play directly under the Board of Directors of an organization.

The Board of Directors determines the responsibility of the CEO based on the organization’s legal structure. They can be far-reaching and the formal delegation of authority. Typically, the duties 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 company leader, the CEO drives change and motivates the employees.

The Chief Executive Officer presides over the company’s day-to-day operations as a manager. They are 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, human resources, etc.

Chief-Executive-Officer-vs-Managing-Director

Responsibilities of a Managing Director

A Managing Director is responsible for the company’s daily operations, organization, or corporate division. In some countries, the term Managing Director is equivalent to the CEO. There are four ways to appoint or decide upon a managing director. One way is that a Managing Director can be selected by a resolution passed at a general meeting. Secondly, they can be appointed by the association of a company. The third method is appointing a Managing Director with the Board of Directors. And the fourth way is by way of an agreement with a company.

The Managing Director has substantial powers to manage the company’s affairs. But this considerable power does not include administrational acts like the signing of cheques or share certificates.

A Managing Director is directly responsible for managing the day-to-day functions of an organization and reports to the CEO regarding any progress and escalations required. The heads of different divisions and the management report to the Managing Director, and the managing director helps the overall management in the smooth functioning of other divisions.

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CEO vs Managing Director Infographics

Here, we provide you with the top 5 differences between CEO and Managing Director: –

Chief-Executive-Officer-vs-Managing-Director-info-new

CEO vs Managing Director Head-to-Head Differences

Let us look at the head-to-head differences between the CEO and Managing Director: –

BasisChief Executive OfficerManaging Director
Position in the company  structureA CEO comes after the Board of Directors in the organizational structure.A Managing Director comes under the authority of the CEO.
ResponsibilityA Chief Executive Officer is not responsible for the organization’s day-to-day affairs.A Managing Director is responsible for the daily business of the organization.
FunctionsA CEO facilitates trade and has his strategic vision, which helps align internally and externally.A Managing Director assists in the overall management of the company.
AccountabilityA CEO is not accountable to the organization’s shareholders or company’s actions.Managing Directors are responsible for the company’s activities and are also liable to the company’s shareholders.
Delegation of authorityA CEO reports to the Board of Directors.The Managing Director takes orders and reports from the CEO.

Conclusion

The terms CEO and Managing Director in an organization refer to different positions. But some countries may refer to the same place in the organizational structure since these two positions exist within the same company but have other functions and responsibilities. Their roles and responsibilities depend on the company’s setup and the industry to which the company belongs.

This article is a guide to CEO vs. Managing Director. We discuss the top 5 differences between CEO and Managing Director, infographics, and a comparison table. You may also have a look at the following articles: –