An organization or company is a set of people who are organized and set on their ideas for development towards the country, like the government.
Like every other institute, organizations also have hierarchical authorities that help manage and grow.
In an organization, there needs to be employers and employees who have the same goal, i.e., working for the company’s growth and accomplishing the goals set for the company.
They are divided into various groups and are each given tasks for management.
Key Takeaways
- The CEO is responsible for a company’s overall strategy and direction and reports to the board of directors.
- The MD is responsible for the company’s day-to-day operations and reports to the CEO.
- While the roles of CEO and MD can overlap, the CEO focuses on long-term planning, while the MD focuses on executing the company’s plans.
CEO vs MD
The difference between CEO and MD is that the face of the CEO can be used to represent the company during meetings and other gatherings for business, but the same cannot be done with the MD.
CEO, or the Chief Executive Officer, is one of the major executive entities or individuals who work in the company’s management.
They come under the board of directors and must work according to their decisions. Their main responsibility is to maximise the profit for the organization.
MD, or the Managing Director, is the person in charge of the organisation’s functioning and management of the business.
They report to the chairman and the CEO. The MD belong to the board of managing directors and is responsible for the day-to-day functioning and performance of the company.
Comparison Table
| Parameters of Comparison | CEO | MD |
|---|---|---|
| Abbreviation for | Chief Executive Officer | Managing Director |
| Level in the organization | They come under the board of directors and among other executive officers like CMO. | They belong to the board of directors and report to the chairman |
| Authority | The board of directors have authority over the CEO | Are accountable to the CEO as they come under CEOs |
| Responsibility for performance | They are responsible for the overall performance of the company | Are responsible for individual or particular division’s performance for the company |
| Other responsibility | They are focused on guiding other executive officers | They are focused on managing day to day activities of the company |
| Functions | They are required to facilitate business with their ideas and strategic visions for improving the company | Helps in managing the overall management of the company |
| Representation | They represent the entire company | They do not represent the company unless the CEO and MD of the company are the same. |
What is the CEO?
A CEO is a person who manages the performance of the company and ensures profits for the company or organisation they are working for. A CEO can be used as a representative of the company.
They must have strategic visions and plans for improving the company’s development and bringing profit. They have to overlook the functioning of the employees and guide other executive officers with their work.
A CEO can be found in public or private organizations, NGOs, and non-paid organizations. This generation’s CEOs must have a top degree in science, technology and business management.
The CEO of a company is not necessarily the owner of the company, and depending on the company’s structure, their responsibilities and roles can change.
What is MD?
A managing director or an MD is responsible for the company’s daily functioning and checking the performance of the individual employees or a particular group.
They belong to the board of directing managers and are responsible for the business and management of the overall company.
In some companies, they work as the head of a unit within a company rather than in managing the entire company’s functioning.
An MD cannot be used as a representative of the company. This is only possible if the CEO and MD of the company are the same individuals.
Main Differences Between CEO and MD
- CEO stands for Chief Executive Officer, whereas MD stands for Managing Director.
- In a company or an organization, the CEOs come under the board of directors, among other executive officers like CMO, CCM, etc. On the other hand, MD belongs to the board of managing directors and reports to the company’s chairman.
- The board of directors hold authority over the CEOs, whereas the CEOs hold authority over the MDs. They are even allowed to order them.
- They are both responsible for the performance of their employees, but the difference is that CEOs are responsible for the company’s overall performance during deals. But MD is responsible for the performance of individuals or particular company divisions.
- The other responsibilities of the CEO include being focused on guiding other executive officers of their level. MD is also responsible for managing the day-to-day activities of the company.
- CEOs are required to facilitate business meetings with their ideas and strategic visions for the development of their company. On the other hand, MD is required to help the board of managing directors make decisions and work on the company’s management.
- The face of a CEO is used for representing the company. This is not the case with MD unless the MD and CEO of the company are the same individuals.
- http://www.ijem.upm.edu.my/vol14no1/7)%20Value%20Relevance.pdf
- https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3336641
Last Updated : 11 June, 2023
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Chara Yadav holds MBA in Finance. Her goal is to simplify finance-related topics. She has worked in finance for about 25 years. She has held multiple finance and banking classes for business schools and communities. Read more at her bio page.
I think the article could have delved deeper into the relative authority of CEOs and MDs in different types of organizations.
That’s a good point, Elliot. It would be interesting to see how their roles vary in different contexts.
I disagree. The article was detailed enough for the general reader.
The comparison table was very useful. It helped in understanding the key differences between CEO and MD roles.
I found it quite helpful as well.
Agreed! The table was a great addition to the article.
This article is a bit redundant. The difference between CEO and MD can be summed up more concisely.
I agree with you, Christopher. The content could have been more succinct.
The contrast between CEO and MD functions was well-illustrated in this article.
Yes, it was a clear and concise comparison.
Great article! I loved the comparison between the CEO and MD, very insightful.
Yes, I found it very educational. The breakdown of their responsibilities was very clear.
This content was enlightening. I enjoyed the comprehensive nature of the comparison.
An interesting read indeed. The difference between the CEO and MD roles was effectively communicated.
Very informative article! I appreciate the clear explanation of the CEO and MD roles.
This article was very detailed and provided useful comparisons between the CEO and MD roles.
Absolutely, Keith. The detail was very impressive.
I think the article could have been more engaging.
The article presented a lot of useful information. I’d love to see a case study to apply these concepts.