Managing Director vs. Executive Director: Key Differences

By Indeed Editorial Team

Published 20 April 2022

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.

An executive director and managing director are key members of executive teams who contribute to a company's growth. If you're interested in leading a company and being part of a company's management, a career as an executive director or managing director may be a good fit for you. Knowing the differences between an executive director and a managing director can help you decide which role you would like to take on and work towards it. In this article, we explore the positions of an executive director and a managing director and compare how the two roles differ.

Related: 30 Director Interview Questions (With Example Answers)

Managing director vs. executive director

To find out the differences between a managing director vs. an executive director, it's important to know what both roles encompass. Here are the definitions for both of these careers:

What is a managing director?

A managing director is a senior-level executive in a company who is responsible for managing a company's daily operations. In some companies, they may be part of the board of directors. A managing director usually reports to the chief executive officer (CEO) about the company's activities and progress to ensure they're on the right track. Following the strategy of the CEO, a managing director ensures their employees implement the company's strategy effectively and keeps a company profitable and innovative so that they can expand continuously.

What is an executive director?

An executive director is someone who acts as a senior manager or a leader in a firm or a non-profit organisation. A company's executive director is responsible for planning and managing any activities of operations of a company to ensure they're within budget. An executive director usually works with the company's board of directors to raise funds for a company or promote the company to raise awareness for its growth.

An executive director's role is mainly to find strategies to help a company advance financially. They also oversee a company's daily operations and set company policies for employees to adhere to. An executive director is also responsible for motivating employees that work under them.

Differences between an executive director and a managing director

While they're both high-level positions in a company, they have multiple differences. Executive directors provide leadership to a company and act as a representative between a company and its board of directors. Managing directors are responsible for a company's growth. Here are some of the differences between an executive director and a managing director.

Responsibilities

An executive director is responsible for deciding and creating the strategy for a non-profit organisation, while a managing director is responsible for controlling and directing any operations within a company. Executive directors find opportunities in a company, while a managing director executes the steps and policies that the CEO and board of directors developed for the company. An executive director usually acts as a leader for the company and is responsible for the company's success or failure, while a managing director identifies areas of improvement for the company to help the company perform and reach goals.

Rank

While this may vary according to different companies, an executive director usually holds the highest role in a non-profit company. They conduct meetings regularly with the company's board of directors to identify the company's goals and strategies. The executive director reports to the board of directors and is the person who recruits and provides leadership to the company's executive team members.

In some companies, a managing director reports to a for-profit company's chief executive officer (CEO). In others, a managing director has the same rank as a CEO and reports to the board of directors. A managing director usually receives instructions from the CEO and board of directors and implements their decisions, while supervising the companies' department heads and senior staff.

Related: Managing Director vs. CEO: Responsibilities and Differences

Salary

Since executive directors work in a non-profit organisation, they usually earn a different salary than managing directors who work in a for-profit organisation. An executive director's salary package may include a monthly salary, bonus and other benefits within a company, which may be similar to a managing director if not less. An executive director usually earns an average of $12,681 a month, while a managing director usually earns an average salary of $12,091 per month.

Job duties of an executive director

An executive director usually designs strategies and looks for opportunities to help an organisation grow and achieve targets. Here are some of the common job duties an executive director has:

  • oversee the company's daily operations

  • evaluate a company's work performance and work with the company's executives to find out how to help the company improve

  • identify opportunities for the company while creating strategies for the company to use these opportunities

  • form strategic relationships and partnerships for the company to contribute to its growth

  • monitor industry trends and make changes to the company's strategy if needed

  • manage the executive fork performances and give them feedback whenever necessary

  • plan a company's long- and short-term strategy and policy with the board of directors and answer their enquiries

  • motivate a company's employees y creating a positive work culture to enforce the company's vision and mission

  • allocate tasks and key performance indicators to the executives according to an annual timeline

  • set up fundraising campaigns for the company to raise funds

Job duties of a managing director

A managing director is responsible for implementing a company's policies and ensuring those day-to-day activities and going smoothly. Here are some of the common job duties a managing director has:

  • manage a company's budget and allocate its resources to different areas

  • represent a company to interact with clients during public events

  • delegate tasks, targets and timelines to senior managers and department heads while monitoring their progress

  • formulate the company's business plans to the achieve company's goals and hit targets

  • create strategic plans for the company to align with its goals

  • communicate with the legal team to ensure the company is adhering to relevant laws

  • prepare and present reports on a company's progress to the board of directors or CEO

  • oversee and approve policies and recruitment processes within the company

  • maintain the company's image and competitiveness in business and client meetings

Related: What Does a Managing Director Do? (And How to Become One)

What skills do executive directors and managing directors use?

If you're keen on being an executive director or managing director, here are some essential skills you can develop to achieve these roles:

Leadership

Leadership skills are important since you may motivate and inspire your team members to reach goals within the company. Leadership skills help you direct your team towards a common goal, which may comprise skills including patience, dependability, teamwork or active listening. Strong leaders require strong communication skills to communicate a company's vision and mission to their team members and provide constructive feedback positively whenever necessary.

Strategic thinking

Strategic thinking is an important skill for executive directors and managing directors to have because they often form and implement strategies within a company. As an executive director or manager, you may be responsible for evaluating and analysing a company's position to create decisions and plans to ensure the company's success and goals. You may also create sudden changes or plans for the company according to constant changes in the industry.

Decision-making

As an executive director or managing director, you may require making important decisions at critical times. Decision-making skills help you make insightful and informed decisions that are justifiable for the company. An executive director or managing director may also be responsible for the decisions that they make. So, strong decision-making skills are important to ensure that they make the right decisions to direct the company effectively.

Conflict management

As an executive director or managing director, you're the head of a company, which means you may handle any conflict that takes place within a company. You can use conflict management strategies to prevent tensions from escalating between any employees or clients in the organisation. You may work to resolve the conflict productively and efficiently to ensure that minimal hindrance to the company's progress. In some cases, in these roles, you may also resolve conflicts from the board of directors, which requires strong conflict management skills.

Change management

Change management is an important skill for any executive director or managing director to have. Most companies may require changing at certain times, and an executive director or managing director usually has the responsibility to manage such changes. Change management helps an executive director or managing director anticipate issues during change and navigate and develop plans to overcome such issues. This useful skill also gives executive directors and managing directors the ability to assign the right people to lead the change management process and equip them with the right resources to succeed.

Salary figures reflect data listed on Indeed Salaries at the time of writing. Salaries may vary depending on the hiring organisation and a candidate's experience, academic background, and location.

Explore more articles