Difference between Director, MD and CEO

Key Difference: A director is the most basic and the lowest level of executive in a corporation. The Managing Director (MD) and the CEO are quite similar. In fact, depending on the context, they are the same. The US has CEOs, while the UK has MDs.

Running a company is complex. It takes many people fulfilling many different jobs and responsibilities to run a company effectively and profitably. In order for the systems to run efficiently the company has different titles such as Director, MD and CEO, or something along those lines. It is basically the responsibility of the people with these titles that the company runs effectively and profitably.

A director is the most basic and the lowest level of executive in a corporation. However, they do come above the title of associate director, if that role is present. Depending on the size of the company or organization, it may have only director or a group of directors each heading a department. Ideally, a director is fully responsible for a specific department, such as Finance, Sales, Marketing, etc. The director has to maintain its department and ensure that the department is running optimally. The director is held accountable for his responsibilities by the CEO and/or the board of directors.

The Managing Director (MD) and the CEO are quite similar. In fact, depending on the context, they are the same. The CEO is the highest ranking corporate officer in a company or an organization, which basically means that he is responsible for all the decisions that have to be made in the company. Also it is the CEO’s job to ensure that the company is running successfully and garnering a good turnover.

In the United Kingdom and most of Europe, the CEO’s position is replaced by the Managing Director. The Managing Director there is what the CEO is in an American corporation. Of course, there are some British corporations that now use the designation of CEO, while there are some American companies who might prefer to use the designation of Managing Director, rather then CEO. However, their job descriptions are mainly the same. Some companies may even choose to have both, a CEO and a Managing Director; in this scenario their job responsibilities may be split between the two.

It is the Managing Director’s job to maintain the overall performance of the company, as well as the performance of the individual departments. The MD is also responsible for planning strategic operating plans and objectives for the long term future, as well as ensuring that all short term goals have been met. The MD must also report all this to the chairman and to the board of director.

The CEO’s responsibilities are nearly identical to the MD’s, so much so that the CEO must also report to the chairman and to the board of director. However, in terms of their roles and responsibilities, the CEO is also responsible for the day to day activities and functions of the company, a responsibility that is usually not included in the job-description of the Managing Director.

Comparison between Director, MD and CEO:

 

Director

MD

CEO

Stands for

-

Managing Director

Chief Executive Officer

Description

Is the most basic form of an Executive Officer and is responsible for a specific department.

Is the highest level of Executive Officer and is responsible for the smooth functioning of the corporation, and for the company’s profitability.

Is the highest level of Executive Officer and is responsible for the smooth functioning of the corporation, for the company’s profitability, and the day to day functions and targets of the company.

Hierarchy

Lowest or Second lowest Executive Officer

The highest level or co-highest level of Executive Officer

 

The highest level or co-highest level of Executive Officer

 

Reports to

Reports to the Vice-President or the CEO or MD

Reports to the Chairman and/or the Board of directors

Reports to the Chairman and/or the Board of directors

Role and Responsibilities

  • Overseeing their specific department such as Finance, Marketing or Manufacturing.
  • Maintains the role of a specified decision maker within the department.
  • Analyzing and evaluating the efficiency of day to day tasks within the departments and to ensure all objectives are being met.
  • Maintaining the overall performance of the company and in particular the departments within.
  • Producing and planning strategic operating plans and objectives for the long term future. Also ensuring all short term targets have been achieved.
  • Keeping in regular contact with the board of directors or chairman and to maintain a positive relationship.
  • Communicate to the press and the rest of the outside world
  • Communicate to the organization's management and employees
  • Make high-level decisions about policy and strategy
  • Advise the board of directors
  • Motivate employees
  • Drive change within the organization
  • Preside over the organization's day-to-day operations

Image Courtesy: companiesmadesimple.com, learn.surbitonhigh.com, bdlive.co.za

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Comments

Are the founder and director are different??? Do founders required DIN

This is clearly wrong. You are confusing the title of "Director" with "Board of directors". A "Director" is actually a non-executive position, answering usually to the Vice President of his department. The VP is the highest non-executive position in some companies or the lowest executive position in others. All VPs answer to President or COO - both of which are almost same positions. President is a member of executive committee. On the other hand, the board of directors usually are shareholders of companies or non-executive directors appointed to provide mentorship and lobbying power. The board of directors appoint a MD to represent the board. Your description of MD and CEO and the difference between Europe and America seems to be correct to the best of my knowledge. But a director is not as small as you think and you are comparing him with a Director of finance or a Director of product management, which are just functional roles.

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