Managing Director vs. CEO: Responsibilities and Differences

By Indeed Editorial Team

Updated 28 October 2022 | Published 22 July 2021

Updated 28 October 2022

Published 22 July 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Executive roles in a company can vary depending on the size of a company, the industry, and business needs. Often, roles like a chief executive officer and managing director seem interchangeable even if there are a few important distinctions. Knowing the difference between a managing director and a CEO can help establish what a company might need. In this article, we look at the roles of both managing directors and CEOs, explore the differences between a managing director vs. CEO, and examine some frequently asked questions.

Related: What Is an Executive? (With Salaries and Job Duties)

Top differences between managing director vs. CEO

Although they might be very similar in roles, there are some key differences between the two roles of managing director and CEO. Especially internationally, the role might vary from company to company. Here are some major ways the two are unique:

Interests

Although both roles report their interest in shares for the company, the MD also reports their interests in the company's related businesses or subsidiaries. CEOs simply disclose their involvement in relation to the main company. Also, the law requires MDs to register their participatory interests while the CEO is not required to do the same. These might be stocks or investments in collective schemes, such as real estate investment trusts and public unit trusts.

Roles

Companies always consider a managing director the CEO while the CEO is not necessarily the managing director. If a company has both, the managing director handles the daily operations to ensure the company operates smoothly while the CEO focuses on strategy and reputation. For example, the CEO might decide they want the company to expand to additional Asian markets. The managing director might conduct the research that determines the best way to do that is to acquire a competitive company in that region and design a plan for how they might achieve this.

Hierarchy

The hierarchy of these two roles can vary based on location. Here and in the UK for example, the CEO reports to the managing director while in the US this can be reversed. Some industries might have a third role known as the president. This role appears in financial companies and serves as the second-highest employee in the company behind the CEO.

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Publicity

In most cases, CEOs are the people who represent a company publicly. The managing director may have more private roles with the board of directors as they implement changes and strategies within the organisation. Managing directors may take a more public role if they are also the CEO of a company.

Decisions

The CEO typically performs their job duties as decided by the board of directors. The managing director often works on the board to help them decide on policies and procedures. In most companies, particularly in America, the CEO makes the final recommendations, but the board votes on major decisions as a group.

Related: Leadership Skills: Definition and Examples

Responsibilities

Shareholders and the board often ensure accountability for the managing director for any action of the company. This might mean the managing director's future and career depend on the financial success or growth of a company. Conversely, even though the CEO is the public face of the company, they are not directly accountable for the decisions and financial results of a company. Still, it's crucial for CEOs to remain transparent, provide input, and take ownership of both good and bad decisions they may make for a company as this might affect shareholders' future decisions.

What is a chief executive officer?

The chief executive officer (CEO) is the legally recognised highest-ranking employee at a company who is responsible for the whole or part of a business's operations. CEOs typically report to a company's board of directors or the group of other executives and shareholders who support the CEO with decision-making. If a person creates a company or serves as a managing director, we typically refer to them as the CEO too. Some general tasks of a CEO include:

  • Communicating between the company, shareholders, and the public, such as sharing their ideas with the board and other executives for input

  • Developing a company's long- and short-term strategies

  • Conducting performance evaluations for other leaders within the company, including executive directors and other employees

  • Coordinating market research efforts, including researching the competition, new potential markets and identifying possible acquisitions

  • Maintaining social responsibility and being a community partner wherever the business is located

  • Monitoring and minimising risk

  • Establishing company culture and ensuring teams share the company's values

What is a managing director?

A managing director (MD) is a role in a company appointed by the board of directors in charge of managing the day-to-day operations of a company. Unlike the role of CEO, the MD doesn't have a legally defined scope or job description under the Companies Act (CA). Sometimes, the law considers the managing director the company's CEO. MDs and CEOs often have similar job responsibilities. Here are some tasks an MD might perform:

  • Assisting the CEO in implementing the company's strategies

  • Providing input to the company's board for major decisions

  • Preparing and implementing business plans

  • Establishing policies, guidelines, and approving workflows

  • Fostering long-term relationships with stock shareholders and potential investors

  • Supervising teams of directors and senior managers to ensure each group is operating efficiently

  • Conducting performance reviews and setting team and individual objectives

  • Analysing problems and risks and researching solutions

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Related roles

Depending on business needs, different organisations might employ roles with similar functions. Companies might only have a CEO or have an entire team of executives to oversee different areas of the business. Here are a few similar roles:

1. Chief operating officer

National average salary: $89,217 per year

Primary duties: A company's COO oversees the day-to-day operations and administrative efficiency of a business. The COO might set and implement strategic business goals, establish policies that reflect a company's vision and culture, and evaluate performance metrics. Chief operating officers plan how a business's employees operate to achieve the goals set by the board and CEO.

Related: COO vs. CEO: What Are the Differences and Similarities?

2. Chief financial officer

National average salary: $162,495 per year

Primary duties: The CFO manages, plans, and implements all the financial activities within a company. The CFO creates company-wide budgets, analyses data and trends, decides when a company needs additional resources, provides forecasts, and negotiates with vendors. CFOs often help determine if a CEO's business plans are financially possible.

Related: What is a Chief Operating Officer (With Skills and Types)

3. Vice president

National average salary: $188,126 per year

Primary duties: A company's VP can be the second or third ranking official within a company depending on the size of the business. Their duties are like those of the MD, but may oversee specific areas of the business such as sales, marketing or legal. There are often more than one VP at large companies.

Related: 34 VP of Sales Interview Questions (With Sample Answers)

Frequently asked questions

Here are some commonly asked questions about managing directors and CEOs:

Can a company have more than one CEO or managing director?

Yes. Some companies can have multiple people with the same title depending on the needs of the company and its constitution. Multiple CEOs or MDs may split responsibilities but collaborate on creating and implementing business plans. For example, one CEO may manage internal processes, workflows, and company culture while the other might travel for conferences, manage acquisitions, and confer with shareholders. If these two roles have separate responsibilities, it's important that they meet frequently with each other and the board of directors.

Can the same person hold both positions within a company?

Yes. In other countries and locally, they may legally consider a managing director or company's founder to be the CEO of the company. In other instances, the CEO might simply take on the responsibilities of a managing director without adopting both titles. Because these roles have so many responsibilities, having at least the two roles ensures they can manage a company's operations.

Can the company appoint or remove only one or the other?

Yes. In some countries, companies typically appoint one or the other, but not both. In other instances, the board may vote to appoint new CEOs or managing directors depending on business needs. For example, if a US marketing firm finds their CEO had underperformed, they may appoint a new one who is more qualified to handle their current challenges. The board or CEO might appoint a managing director then to oversee the day-to-day operations of the business and execute any new strategies.

Salary figures reflect data listed on Indeed Salaries at time of writing.

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