In the world of business, a managing director and a CEO may carry very different meanings. A managing director might act like a CEO, and even be in charge of the company, but operate with a two-tiered corporate board. The chief executive officer serves as the strategist for the company, sometimes as a cheerleader, and helps to create implementation plans that lead toward a specific objective.
The managing director is a unique position which is required to consider the environmental and social consequences of each decision that is made. Under British law, this is a form of corporate responsibility. They might share responsibility for leadership of the company with an independent board chairperson in a way that a COO would support a CEO in the United States.
The CEO is considered the top executive in a company. They may serve as a chairman or president in a dual role with their executive responsibilities. The CEO reports to the board of directors for their company, then delegates tasks to the rest of the leadership team when tasks must be accomplished.
How a company structures each role will dictate its authority and where each position falls on the chain of command.
Can a Managing Director Be Ranked Higher Than a CEO?
In some companies, the managing director holds a higher position than the chief executive officer. For this structure, the managing director is often elected by the shareholders or the board. This places the managing director in charge of the daily operations of the company, which causes the CEO to report directly to them.
There are also times when the roles are reversed. Some companies place the CEO in charge of the daily operations of the company, which forces the managing director to report to them and the board. In this circumstance, the managing director would become part of the C-Suite or executive team.
In Europe, there may be two different and separate boards that are used to guide a corporation. This structure creates an executive board and a supervisory board. The supervisory board would be elected by stakeholders or shareholders for the purpose of controlling the agency, while the executive board would see to the daily operations of the company.
In the structure where a managing director and a CEO are present, the jobs cannot be filled by the same person.
The Non-Profit Exception to the Managing Director
In the United States, non-profit companies (tax-exempt agencies) may refer to the head of their company as an executive director or a managing director. In this situation, the role would be similar to that of a traditional CEO. The director would be in charge of delegating tasks, creating a vision, and being the first cheerleader for the organization while reporting to a board of directors or an oversight committee.
The same may be true for international NGOs that operate from a charitable budget.
Some of these agencies may also place a chief executive officer at the head of the agency as a way to create more formality for the position. In either case, the job duties are similar, no matter what the official title happens to be.
What Are the Job Duties of a CEO?
The chief executive officer is the highest-ranking executive in most companies. That means their job is to make the major decisions that are required for corporate health. They managing the operations and resources for the organization, communicate results to the board of directors, corporate operations team, and other leaders and executives that are on the chain of command.
For the average CEO, that means they are responsible for creating the vision and mission for the company to steer it in the right direction. They must communicate, and then implement, the strategies which will push the company forward.
At the same time, they are charged with guiding, directing, leading, and evaluating the work of the C-Suite. Vice presidents, directors, and other managers may all be direct reports of the CEO. Any strategic decisions would filter down from the CEO to each management level, allowing for the mission and vision to be implemented.
CEOs may be tasked with the evaluation of potential acquisitions, changes to internal structures, and oversight of timing and implementation of new products, services, or marketing opportunities.
What Are the Job Duties of a Managing Director?
Many of the job duties that are listed for a CEO are what will be found in the job description for a managing director. They are also charged with leading a company, making sure that all employees are buying into the vision that was set for the organization. They’ll speak at events, set metrics, and build relationships that allow the vision and mission of the company to progress forward.
The one point of difference in this leadership position when compared to a CEO is that a managing director is responsible for daily operations in most corporations. That means they directly oversee each department and are ultimately responsible for its success or failure.
That requires a managing director to meet with other members of the leadership team to review the performance of each department.
Some managing directors are even tasked with budget creation, forecasts, succession planning, and seeking out opportunities for growth in local markets.
Salaries of Managing Directors and CEOs
In the United States, an entry-level CEO with fewer than 5 years of direct experience may earn $120,000 or less. That is far less than the average CEO salary in the U.S., which was more than $750,000 per year in September 2018. How much a CEO earns is dependent upon their certification, business experience, education, and additional skills. Some CEOs are able to earn $30 million or more per year.
The salary range for a CEO, however, starts at $580,000 and tends to top out at $950,000 for the average position.
For the managing director, there are 3 points of consideration which must be determined to figure out what the salary will be.
- Is the managing director serving in a leadership position for an NGO, tax-exempt, or non-profit agency?
- Does the managing director report to the CEO, or does the CEO report to the managing director?
- Where is the geographic location of the position?
Managing directors who oversee a company that is not classified as a for-profit agency tend to earn the least. Although the salaries do reach six figures, most managing directors in this situation will earn $150,000 per year or less.
In a position where the managing director reports to the CEO, the average salary for this position is $295,00 per year in the United States. If the managing director oversees the CEO, then the salary jumps to $400,000 per year.
Both leadership positions are critical for the success of an agency. Understanding how each one is different makes it possible to know what responsibilities are required of managing directors vs CEOs.
Natalie Regoli is a seasoned writer, who is also our editor-in-chief. If you have any questions about the content of this blog post, then please send our editor-in-chief a message here.