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Entrepreneurship Through Acquisition

CEO vs Managing Director – Is a CEO Higher than an MD?

If you have wondered who is the senior-most between the CEO and Managing Director of a company, or what the difference between the two roles are, then you are not alone. They are both among the most senior leaders at any company. But there are some differences. Their roles are largely different and both are essential to a company’s smooth running, depending on the company.

Not every company has an MD or a managing director. But every company has a CEO or a chief executive officer. So that’s the main difference between the two. The CEO’s role is more prominent and more common than the Managing Director’s role.

Here are some of the specifics.

Who is a CEO?

A CEO is at the highest level of hierarchy at any organization. Their job includes overseeing all areas of the company, whether operations or sales. But they do not involve themselves in the day-to-day workings of every department. They are more concerned with the overall running, strategies, and goals of the company. They are also the face of the company in the public eye.

Who is a Managing Director?

A Managing Director is, on the other hand, among the highest leaders at an organization and usually functions under the CEO. They might also be part of the board of directors. The Managing Director is responsible for the day-to-day functioning of the company. In some companies, the Managing Director is answerable to the company’s shareholders in matters that regard the company’s future.

Responsibilities

A CEO is responsible for the overall success of the company. They are in charge of setting goals and strategies for the company’s future. They are also in charge of making all the important decisions for every aspect of the company.

A Managing Director reports to the CEO on updates and concerns on the day-to-day business of the company. They might also report to the board. They are responsible for the smooth functioning of daily processes and manage the managers and other department heads in a company. They are also tasked with liasoning with the shareholders of the company.

Hierarchy

The CEO is at the highest position in a company. They head C-level members such as the COO, CTO, CFO, etc. They also rank higher than the vice president and many times, the Managing Director. They only report to the board of directors and the chairperson of the board of directors.

The Managing Director on the other hand has a vastly different place in the hierarchical order. In many companies they work under the CEO. In others their role might be at par with the CEO and they might also be a part of the board of directors. In this case they report to the chairperson of the board.

Functional role

The CEO is the company’s decision-maker. The highest-ranking executive, the CEO is the face of the company to the public and internally as well. The CEO is responsible for developing and putting into motion the vision and long-term goals of the company. They are also involved in developing company policy and implementing the company’s strategic goals. They oversee the duties of the other C-level executives.

The Managing Director of a company oversees the function and performance of different departments. They also look after the daily performance and functioning of the departments or managers under them. Oftentimes the Managing Director is part of the board of directors. They work closely with the board to create policies and strategies for the success of the company. A Managing Director’s role isn’t written in stone, and can also involve aspects of a COO’s role or a vice president’s role too. This depends largely on the structure and requirements of a company.

Exceptions

There are instances where the titles of CEO and Managing Director belong with the same person. This usually happens when the CEO is also the founder of the company. While this is not uncommon, it is usually preferred that the roles are held by different people so that the power and authority that comes with them are distributed.

So, a CEO’s role might or might not be higher than that of a Managing Director’s. It depends largely on the company’s corporate and hierarchical structure.

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