The role of managing director vs. CEO is not always easy to understand. Both are high-ranking executives; however, they have a number of key differences in their roles. Simply put, a managing director is typically responsible for a single business unit, while the CEO is accountable for the entire organization.
Nonprofits develop their leadership structure based on several things, including the nonprofit’s size, type of industry, geographical location, regulations and other criteria. The leadership hierarchy should be arranged to provide the nonprofit with solid direction and accountability, meaning nonprofits sometimes have a managing director and a CEO.
To sort out any confusion surrounding managing director vs. CEO, we will discuss:
- The role of a managing director
- The responsibilities of a managing director
- The role of a CEO
- The duties of a CEO
- Differences between a CEO vs. managing director
What Is a Managing Director?
Not considering the C-suite, a managing director is the highest-ranking manager in the organization. A qualified managing director typically has many years of experience managing staff and operations. A managing director is below the CEO in a corporate hierarchy. The person filling this role reports directly to the CEO and must fulfill the CEO’s orders and expectations.
What Are Managing Director Responsibilities?
CEOs count on managing directors to provide the status and scope of an organization’s operations.
Managing directors are responsible for the following:
- Providing a top-level view of workflows, budgets and regulating expenses
- Carrying out the business plan in the most efficient, cost-effective manner
- Preparing the corporate and annual business plans
- Monitoring the nonprofit’s progress against the business plans
- Research and development
- Informing the C-suite about trends and advancements in technology
- Offering guidance and advice to the board of directors
- Ensuring the organization complies with laws and regulations
Boards can expect managing directors to have a hands-on approach to all aspects of the nonprofit’s operations.
What Is a CEO?
To best understand the position of managing director vs. CEO, it important to get to know the roles and responsibilities of the chief executive officer. The nonprofit CEO is the highest-ranking employee in the organization. While the CEO does not report to other employees, they are accountable to the board of directors. The board is responsible for hiring a qualified CEO and firing them if they don’t fulfill their responsibilities.
CEOs are not intricately involved with a nonprofit’s daily operations, unlike managing directors. CEOs also do not serve on the board of directors, although the board may allow the CEO to log into the board management system so they can collaborate more closely.
What Are CEO Responsibilities?
CEOs must have a clear vision of where the organization is and where it needs to go. As the highest-ranking manager, CEOs must be receptive to new ideas and be invested in the nonprofit’s culture, morale, public image, and profitability.
CEOs are responsible for the following:
- Ensuring the operations are in keeping with the nonprofit’s mission and vision
- Overseeing the organization’s operations
- Directing the organization’s agendas
- Managing the organization’s structure
- Ensuring financial viability
- Analyzing the organization’s business strategy
- Overseeing compliance
- Keeping the board informed of the status of operations
- Representing the nonprofit publicly and serving as a spokesperson
As the face of the organization, CEOs often travel for the nonprofit, making calls on potential partners and interacting with clients and the public. Nonprofit CEOs also develop public relations strategies to improve branding and expand the organization’s base of customers and vendors.
Understanding the Differences Between CEO vs. Managing Director
In larger nonprofits, different employees serve in the CEO and managing director roles. By contrast, smaller nonprofits may not have the budget to staff the positions separately. Nonprofits in the growth phase may assign the duties and responsibilities of the CEO and managing director to one individual temporarily and add either a managing director or CEO to their staff later on.
Overall, a CEO and the board craft a nonprofit’s strategy according to the organization’s mission and vision. The managing director is the individual who is responsible for bringing the plans to life and ensuring progress toward the nonprofit’s goals.
comparing Managing Director vs. CEO
|Not part of the C-suite
|Part of the C-suite
|Directly manages operations
|Not directly involved with day-to-day operations
|Ranks under the CEO
|Ranks under the board, over the managing director
|Accountable for daily operations
|Must be able to report on daily operations
|Reports to the CEO
|Reports to the board
|Role with Public/Media
|Is not a public-facing role
|Serves as a public spokesperson
Managing Director Vs. CEO: Make the Distinction Clear
The managing director is the driving force behind the central operations. It’s essential for managing directors to be able to think critically, make good decisions, and be good problem-solvers, as they often work in high-pressure situations. Managing directors must also be able to keep up the overall morale within the organization and represent the nonprofit’s intended culture in all they say and do. It is critical for managing directors to communicate regularly with the CEO and share their concerns before any situation gets out of hand.
When considering the managing director vs. CEO positions, the two roles are similar to partners rather than a boss and a subordinate. Each one helps the other in various ways.
Lastly, whether one or two people serve the roles of managing director and CEO, boards must ensure that those who serve in the roles are clear on their duties, responsibilities, and boundaries.