You may have heard the job title "Managing Director" being used interchangeably with "CEO" — but are they really the same?
Not quite. However, it is possible for a company's Managing Director and CEO to be the same person. This is most often the case in a startup or small business, where a company's founder sometimes performs the roles of both positions.
But from the overall function of each position to their respective rankings within the corporate structure, the work of CEOs and Managing Directors differ in several ways. Some organizations have one or the other, but depending on your corporate structure, you might need both a CEO and a Managing Director. Below, we’ll explore the differences in responsibilities between these two roles.
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CEO Roles and Responsibilities
The CEO is the highest-ranked executive of a company. They oversee the overall operations, making business-critical decisions aimed at driving growth as they define and lead the organization on its mission.
The primary duties of a CEO include, but are not limited to:
- Making immediate decisions focused on driving growth by swiftly assessing situations, considering potential outcomes, and making timely judgments to steer the organization in the right direction.
- Reviewing company performance across departments to ensure it’s on track with company objectives.
- Developing long-term strategy by collaborating with other C-suite leaders.
- Reporting to the Board of Directors and company stakeholders regarding the company’s financial health, performance, challenges, and successes.
- Maintaining budgets by collaborating with finance teams to set budgetary guidelines and identifying cost-saving opportunities.
- Carrying out public relations duties (public speaking, community events, speaking with the media, etc.).
Core CEO Skills and Personality Traits
A CEO's core skills and personality traits include, but are not limited to:
- Public speaking: A CEO is the company's public representative, and does a lot of public speaking as a result. They should have strong communication skills and be able to deliver impactful and influential speeches about the company’s mission, values, and vision.
- Visionary: The CEO is responsible for the direction of the organization, and should have an optimistic, yet realistic, attitude and outlook on the company’s future, including a creative vision that inspires employees and stakeholders. They should be motivated to set ambitious goals and adapt to the ever-changing business landscape to continue driving the company toward success.
- Financial acumen: While many businesses often have a dedicated Chief Financial Officer (CFO) who reports to the CEO, the CEO still usually has the final say regarding major financial decisions. Because of this, the CEO should have a solid understanding of financial concepts and metrics as they relate to the company’s specific objectives. They should be able to interpret financial data, identify growth opportunities and risks, and ensure sustainable financial health.
- Verbal and written communication: CEOs must be able to effectively articulate company updates and changes in an effective, yet positive way. A CEO must also be willing to listen to others. Accepting feedback from colleagues will only strengthen the business and help a CEO make more informed decisions that help the company thrive.
CEO Education and Qualifications
While this can vary between organizations, common expectations for CEO eligibility include, at minimum, a bachelor's degree and extensive experience in the respective industry — which can translate to schooling, on-the-job experience, or relevant certifications. Some organizations may also prefer candidates with a master's in Business Administration (MBA).
Managing Director Roles and Responsibilities
While a Managing Director works closely with the CEO, their daily responsibilities are more internally focused on a specific business offering, product, or vertical. This individual is often responsible for a startup's day-to-day operations, staff oversight, and project management within their given vertical.
Common responsibilities include:
- Implementing the company’s strategic goals across departments or their specific focus.
- Overseeing daily operations, monitoring performance, and identifying areas for improvement for their team, product, service, and/or offering they are dedicated to.
- Building and maintaining a nurturing and positive company and team culture.
- Reporting to C-level executives about company and/or department performance.
- Monitoring and managing risk while ensuring compliance with relevant industry regulations and standards.
Managing Director Core Skills and Personality Traits
An MD's core skills and personality traits include, but are not limited to:
- Strategic planning: A Managing Director should have experience developing and implementing long-term strategic plans. They should be adept at analyzing market trends, identifying opportunities, setting goals, and developing plans to achieve those goals within their given area of focus.
- Strong presentation: This role also often communicates directly with both staff and the public; they should have strong speaking, negotiation, and presentation skills.
- Problem-solving and critical thinking: To excel in high-pressure situations, an individual seeking this role will need to be able to evaluate complex situations, assess risks, and develop informed and innovative solutions to resolve issues.
- Detail-oriented: A Managing Director should have a strong eye for detail, helping them oversee daily operations within their given area of focus, identify areas for improvement, and ensure compliance with any relevant industry standards.
- Agility: Managing Directors working within agile environments must be able to embrace a growth mindset and respond quickly to sudden changes, shift gears when needed, and prioritize efficiency.
Managing Director Education and Qualifications
Because a Managing Director role tends to be a "jack of all trades," the educational and professional qualifications usually sought are diverse. Common requirements include:
- Bachelor's degree in business, marketing, or a related field (Master's degree might be preferred or requested in some organizations).
- Comprehensive experience as a Managing Director or 10 years of professional work in a similar role.
- Proficiency in implementing strategic and business plans.
- Business acumen, including a functional understanding of operations, marketing, sales, and finance.
- Industry-specific knowledge and experience, including trends and the competitive landscape.
Managing Director vs. CEO: Key Differences & How They Work Together
Rank Within Company Structure
Both the CEO and Managing Director hold a high ranking within the typical corporate structure. In most cases, the CEO reports to the company's Board of Directors, whereas a Managing Director is positioned below the CEO. This means that, technically, the Director reports to the CEO.
Ultimately, the CEO is one of the biggest decision-makers within a company. But Managing Directors must also make important decisions on a regular basis. These decisions are usually more focused on day-to-day procedures (such as how a project will progress), but they're always made with the vision and goals of the CEO in mind.
Function and Primary Focus
The overall function of a CEO is to develop a strategic vision for the company and work to implement that vision both internally and externally.
While a CEO may be more focused on long-term goals and strategy, a Managing Director is focused on the highly-specialized day-to-day business initiatives that must be implemented to achieve those goals in specific areas of focus (product, sales, etc.).
Involvement in Day-to-Day Operations
A CEO is more focused on the big-picture vision, external communication with the public and board members, and the overall health and direction of the business.
Managing Directors deal more intimately with employees and their daily functions, keep projects on track, manage product launches, and oversee different teams and departments within the company. Still, these skills come together to keep the company moving forward.
Company Culture and Employee Engagement
CEOs and Managing Directors must also work together to develop the company culture and keep employees engaged. A CEO may have a vision for what the organization's culture should look like and what the organization’s mission and values are.
Then, the Managing Director must understand the company culture and work directly with employees to keep them engaged and aligned with those values.
Hire the Best Executive Talent with Hunt Club
Just as a CEO can differ from a company President, Chairman, or Owner — CEOs and Managing Directors play very distinct yet vital roles within growing companies, startups, non-profit organizations, and more. While their responsibilities and duties may vary in some distinct ways, they must ultimately work together to align a company's everyday operations with long-term outcomes.
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