When you work for a large corporation or hold a public-sector position, then you may encounter several different directorship titles within the workplace. Two of the most common directors are the managing director and the executive director.
Unlike vice president titles, the managing director outranks the executive director when these titles are used in the traditional chain of command. Some companies use these titles interchangeably, or have even reversed them, so it is important to look at the actual job description to see how each role has been defined.
The managing director is responsible for the direct operations of the company. They are in control of the strategic direction and guidance, offering advice to the Board of Directors to ensure compliance is achieved and objectives can be reached.
An executive director is responsible to implement and executive the initiatives, policies, or programs that are recommended by the Board of Directors. Because they are responsible for implementation, not corporate oversight, this position is placed lower on the typical corporate chain of command.
What Is the Role of the Managing Director?
The managing director plays a role that is similar to a CEO. They are directed to control the resources of the organization, recruit effective employees, and reduce employee churn. The goal is to have the managing director combine budgetary and human resources to lead the company toward its overall mission.
In some countries, the role of a managing director is exactly the same as that of a Chief Executive Officer. In the United States, many companies place a managing director at the same level as a senior vice president on their hierarchy chart.
For non-profit organizations, the managing director may serve in the role of CEO.
This position is also responsible for preparing the annual business plan for the corporation. They will be tasked with monitoring the budget, making sure that each step toward the mission of the company can be achieved in the most expedient manner possible.
The managing director works closely with the Chairman of the Board in most companies, offering strategic advice when necessary. They’ll inform the board of relevant regulatory updates, policies that may need improvement, and other relevant rules that must be enforced to ensure the objectives and mission of the company are met consistently.
The managing director is also responsible for the research and development programs that are initiated by a company. In smaller agencies, this role might include direct oversight of product or service development, ensuring that there are efficient processes to use.
There is a need to have this role create professional networks that the business and Board can use to continue building growth into the company profile. They will create links, both formal and informal, to the various stakeholders, shareholders, and clients involved to ensure everyone is on the same page. This networking may include public-sector departments and agencies as well, depending upon the work that is being done.
In many ways, the managing director is the public face of the company. The brand and message offered becomes a personal reflection of who that person is and what they do. From the creation of reports to the approval of the Board on a budget plan, this position is directly responsible for the day-to-day operational challenges that every business must face.
What Is the Role of the Executive Director?
The executive director is in contact with the Board of Directors on a regular basis. Instead of lending advice to the Board, their role is to provide status updates for the implemented initiatives which are under their direct supervision.
That means the executive director is responsible for managing their direct reports, with hire/fire capabilities. They will develop, then manage, policies and programs that lead the company toward their vision and mission.
This position attends most Board meetings, keeping all members updated to the progress of each project that is under their supervision. They answer questions, provide data, and keep open lines of communication available at all times.
Some executive directors may be responsible for aspects of strategic planning. They will collaborate with the Board of Directors to create strategies that serve to guide the entire company on a path that leads toward success.
They will also implement programs and protocols which help the Board be able to supervise the company, ensuring that each process is as effective as possible. They’ll review metrics and make changes, as needed, to ensure that all objectives can be met.
What About Companies That Have a Partner Managing Director?
In the financial world, some people are given a title that has “partner” in it, instead of “executive” or “managing.”
A partner managing director would be above a managing director. It would be the comparative difference of an executive vice president and the president of a company. Both would have certain job responsibilities that were similar. The authority granted to one, however, would be greater than what was granted to the other.
Although some companies may include a PMD as part of their chain of command outside of the financial sector, in the United States, this title is somewhat rare. It is reserved for those who are partners in a company, or on a partnership track, and they work in a specific department where they oversee programs and policies that are a direct reflection of their expertise.
Managing Director vs Executive Director Salary Comparison
In the United States, the average salary for an executive director is $209,000, based on the reported salaries of current executive directors to Glassdoor. The lowest-paid employees in this position earn about $125,000, while the highest reported salaries are in the $354,000 range. This level of pay is on-par with what a Chief Executive Officer would make, which is fitting, as the managing director is often a C-Suite role.
An executive director earns an average salary of $130,000 in the United States. Glassdoor reports the range of real salaries that are reported anonymously in this role start at $84,000 per year, then topping out at $201,000 per year. In most companies the executive director is a step down from the vice president level on the chain of command. You would have the CEO, then the C-Suite, then the VPs, and then the executive director.
Companies have the ability to give titles at each level of management based on their own preferences. In general terms, a managing director will outrank an executive director. That is because they have more direct responsibility to the daily operations of the company. The executive director is responsible for specific programs or services that are assigned to the by the Board of Directors or the managing director.
Keith Miller has over 25 years experience as a CEO and serial entrepreneur. As an entreprenuer, he has founded several multi-million dollar companies. As a writer, Keith's work has been mentioned in CIO Magazine, Workable, BizTech, and The Charlotte Observer. If you have any questions about the content of this blog post, then please send our content editing team a message here.