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Managing Director Vs. Director: Key Differentiators

Managing Director vs. Director: Key Differentiators

Companies develop their leadership structure based on several things, including the company’s size, type of industry, geographical location, regulations and other criteria. The leadership hierarchy should be arranged so that the company has strong direction and accountability.

Titles and ranks can be confusing since there is so much variance among corporate structures. In small businesses, owners and managers often assume multiple roles. In larger corporations, there are many types of managers and directors serving at various levels of the company, each with their own duties, responsibilities and accountabilities.

As it relates to a managing director vs. director, the roles are better known by their job duties than by their titles, since there are key differences between them. Here’s a look at the duties and responsibilities of each and the things that set them apart.

Who Is the Executive Director and What Are the Duties and Responsibilities?

The board of directors is responsible for overseeing all aspects of the company, and it is the ultimate authority. Boards usually need a key officer to execute the company’s programs, policies and initiatives, so they hire an executive director to fill this role. The executive director may or may not be a member of the board. In recent years, it’s been frowned on to give the executive director a seat on the board, as not to blur the lines of accountability or loyalty.

The executive director has a close working relationship with the board of directors by way of keeping the board in the loop with everything that goes on in the company. The executive director attends board meetings and keeps the communication lines open between the board and operations. Working in tandem with the board, the executive director helps to strategize on how to guide the entire company and periodically evaluates progress relating to the company’s goals and objectives.

Executive directors are the top line of management and they are in charge of day-to-day activities. They’re responsible for ensuring that the operation has the funds, equipment and other resources necessary to do their jobs. The executive director is responsible for monitoring the company’s operations and enhancing productivity. Part of the job requires hiring, supervising and reviewing department managers, as well as motivating staff.

An executive director plays an important role in the company’s culture, image and branding by maintaining strong corporate ethics personally, professionally and throughout the organization. Also, the executive director should ensure that the company operates in accordance with the its mission and philosophy and develops policies and programs to that end.

Who Is the Managing Director and What Are the Duties and Responsibilities?

A managing director is the highest-ranking manager at an investment bank without becoming a group head or member of the C-suite.

As some of the top leaders in the company, managing directors bring many years of business leadership and experience.

Management duties for managing directors include preparing the corporate and annual business plans and monitoring the company’s progress against those plans. This task requires ensuring that plans are being carried out in the most efficient, cost-effective manner.

Managing directors take a top-level view of workflows, budgets and regulating expenses. They are also responsible for future-looking responsibilities like research and development and keeping a pulse on trends and advancements in technology the company may need to gain a competitive edge. Along the same lines, managing directors offer guidance and advice to board directors, especially the chairman of the board, on developments in the industry to ensure that the company is  in compliance with laws and regulations at all times.

As the face of the company, managing directors often travel for the company, making calls on regional managers, interacting with clients and the public, and developing public relations strategies to improve branding and expand the company’s base of customers and vendors.

Managing Director vs. Director: Key Differentiators

While some of the duties and responsibilities of the managing director vs. director are similar or overlap slightly, there are some key differences.

First, and perhaps most importantly, managing directors outrank executive directors. Managing directors have the highest rank within the company and have the authority to fire the executive director. If the company lacks a managing director or CEO, the executive director takes the spot as the highest-ranking company official.

Second, managing directors are primarily responsible for implementing company policy, mentoring the board, and serving as the company’s main representative. Executive directors help the board design, develop and implement the strategic plan as it plays out in the day-to-day operations.

The executive director must answer to all superior managers. Managing directors must work in the best interests of the shareholders and answer to the board of directors.

Executive directors usually earn a base salary along with bonuses, incentives, guaranteed severance pay and other perquisites. Managing directors usually receive generous remuneration that includes a salary, bonuses and shares in the company.

Executive directors and managing directors have high-pressure jobs where the success or failure of the company rests on their performances.

Modern Governance Practices Maximize the Performances of Management

Regardless of a manager’s rank and responsibilities, managing a company in the era of modern governance requires working with the most innovative digital tools available. BoardEffect is a modern governance company that provides a board management software program using a highly secure electronic platform.

The platform offers a prime location for storing the job descriptions, duties and responsibilities for board directors, executive directors and managing directors. The program provides a place for secure communication and file sharing between all levels of senior leadership. The feature for granular permissions ensures that only authorized leaders can access important documents without the unnecessary fear of an outsider hacking into confidential communications.

Regardless of a company’s leadership structure, BoardEffect is flexible enough to respond to corporate needs as companies grow and expand. BoardEffect is committed to providing the best in board management meeting software and modern governance for today and in the future.

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