Difference Between CEO and MD (With Table)

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 their own set of hierarchical authorities that help in the management and the growth of it.

In an organization, there needs to be employers and employees who have the same goal i.e., working for the growth of the company and accomplishing the goals set for the company. They are divided amongst various groups and are each given tasks for management.

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 management of the company. They come under the board of directors and have to work according to their decisions. Their main responsibility is to maximise the profit for the organization.

MD or the Managing Director is the person who is in charge of the functioning of the organization and management of the business. They report to the chairman and the CEO. The MD belong to the board of managing directors and are responsible for the day to day functioning and performance of the company.

Comparison Table Between CEO and MD

Parameters of ComparisonCEOMD
Abbreviation forChief Executive OfficerManaging Director
Level in the organizationThey 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
AuthorityThe board of directors have authority over the CEOAre accountable to the CEO as they come under CEOs
Responsibility for performanceThey are responsible for the overall performance of the companyAre responsible for individual or particular division’s performance for the company
Other responsibilityThey are focused on guiding other executive officersThey are focused on managing day to day activities of the company
FunctionsThey are required to facilitate business with their ideas and strategic visions for improving the companyHelps in managing the overall management of the company
RepresentationThey represent the entire companyThey 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 are required to have strategic visions and plans for improving the development of the company and bring profit for company. They have to overlook the functioning of the employees and guide other executive officers with their work.

A CEO can be found in a public or private organization as well in NGO and non-paid organizations. The CEOs of this generation are required to 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 structure of the company their responsibilities and roles can change.

What is MD?

A managing director or an MD is responsible for the daily functioning of the company and to check the performance of the individual employees or a particular group of them.

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 the management of 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

  1. CEO stands for Chief Executive Officer whereas MD stands for Managing Director.
  2. In a company or an organization, the CEOs come under the board of directors and among other executive officers like CMO, CCM, etc. On the other hand, MD belongs to the board of managing directors and report to the chairman of the company.
  3. The board of directors hold authority over the CEOs whereas the CEOs hold authority over the MDs. They are even allowed to order them.
  4. They are both responsible for the performance of their employees but the difference being CEOs are responsible for the overall performance of the company during deals. But MD is responsible for the performance of an individual or particular divisions of the company.
  5. The other responsibilities of 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.
  6. 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 to make decisions and also work on the management of the company.
  7. The face of a CEO is often used for representing the company. This is not the case with MD unless the MD and CEO of the company are the same individuals.

Conclusion

A company or an organization comes with many responsibilities and requirements to achieve the goals. This is only possible if the functions and responsibilities are divided among groups of people who are qualified and experienced enough to handle the work given.

A CEO is an individual who is among other executive officers and tries to lead the executive officers with their work. They are responsible for the overall performance and the profit of the organization. The CEOs are required to work with strategic visions for the betterment of the company as well as abide by the decisions of the board of directors.

An MD is an individual who looks into the daily functioning of the company or organization. They work with the board of managing directors for managing and making decisions in business and company. They have to report to the chairman and also take orders and work under the CEO.

CEO and MD are individuals at different tires of a company that are responsible for the performance of the company and individuals or particular groups together.

References

  1. http://www.ijem.upm.edu.my/vol14no1/7)%20Value%20Relevance.pdf
  2. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3336641