CEO or President – what do we call the people who lead us?

CEO? President? MD? Chairman? Ever wondered about the meaning behind the title? You’re not alone. Far from being clear-cut, titles quite often tell us more about corporate structure and company culture than an individual’s responsibilities.

At a recent Eye for Image seminar, an attendee raised a question that had been worrying him for a long time. Here it is, in his own words:

“What is the correct title for ‘adm. Direktør’ and the next level ‘direktør’? In other words, what is the difference between CEO, Managing Director, General Manager and Director – and what is the correct title for their deputies?”

Unfortunately, there is no simple answer. Back in the sixteenth century when organizations like the East India Company started to get really big, they borrowed their titles and structure from the only large human organization that existed at that time: the military. That’s why terms such as ‘chief’ and ‘operations’ can sound more suited to describing a platoon than positions at a toothpaste manufacturing company.

If you take the executive level of a modern company, the three variants are Chief Executive Officer (CEO), President and Managing Director (MD). Corporate Governance varies so much from company to company that the terms are often interchangeable. However, there are some key differences that can sometimes give you a useful glimpse into individual company culture.

What titles tell you about companies
‘CEO’ and ‘President’ tend to be used in US companies, whereas ‘MD’ is preferred in the UK. A General Manager is on a lower level. They are senior managers with Profit and Loss responsibility – which means they have executive responsibilities and answer to shareholders. Some US companies have a CEO, others a President, and some big corporations have one CEO then a President for every division.

The CEO of a small company often has a hands-on role, making business decisions at every level from big-picture strategy to hiring a new cleaner. We recently dealt with an agency that specializes in visual concept development. When the Art Director handed over her card, we noticed her title was CEO. “That’s the great thing about having your own company,” she said. “You get to be the CEO.” As it turned out, there were only two people in the company, so her role must have been pretty hands-on!

In larger companies, CEOs tend to operate exclusively on a strategic level, directing overall growth and delegating operational tasks to managers and departments.

CEO vs. President
In a mature corporation, the CEO often sits on the board of directors, developing the vision for the company. It’s this vision that the President is responsible for executing at an operational level. The word ‘president’ (from Latin prae- ‘before’ + sedere ‘to sit’) describes someone who presides – who sits in leadership.

Originally, ‘President’ referred to the presiding officer of a ceremony or meeting – what we would call a chairman. But today, it most commonly refers to an official with executive powers. Where the CEO would occupy the highest position in a corporation, the President is often the title of choice for the leaders of organizations, companies, universities, and, well…countries.

In a corporation, the President reports to the CEO, and is often called the Chief of Operations (COO). COOs are responsible for day-to-day operations and have vice presidents for different parts of the company reporting to them.

A company without subsidiaries may have only one person to execute the roles of CEO and President – and perhaps even chairman. As such, greater communication and contact can be achieved between the board of directors, which sets policies, and the President, who oversees the day-to-day operations of the company.

One person can’t do it all
Another factor that determines the positions of company officers is corporate structure. For example, a corporation with many different businesses – a conglomerate – typically has a CEO who oversees a number of presidents, each running a different business of the conglomerate and reporting to a single CEO. In a company with subsidiaries, it would be unusual to have one person carrying out the roles of both CEO and President.

But what about the Chairman of the Board? How does he fit in? When Bill Gates handed over his CEO title to Steve Balmer, he became Microsoft's chairman. The chairman, in charge of setting the agenda of the board of directors, can hire and fire CEOs and must approve CEO-sponsored strategies. So, technically the chairman of the board is top dog, but still needs the support of the Board. Then again, it all depends on the company – it’s doubtful that anybody gave orders to Henry Ford.

The (fuzzy) bottom line
It’s worth bearing in mind that these are examples of general scenarios. The CEO is not always the Chairman of the Board, and the President is not always the COO. The ultimate goal in corporate governance is to manage the relationship between owners and decision-makers as effectively as possible and increase shareholder value.

This means title systems are intended to serve companies, making their delegation of responsibility crystal clear. We still have a long way to go, it would seem.

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WordNerds
Did you know...?
We did the caps all wrong in this article! We wanted to make it easier for you to read by highlighting some of the key terms. In reality, you should only use initial caps when you’re referring the title of a specific person.