As a matter of fact, the names differ from company to company and business to business. Depending upon the work a business performs, the head of the Board or committee may be addressed differently. The President collaborates with inter-departments leaders in order to tailor main action plan to all units and then he monitors all the progress in order to provide regular reports to the CEO.
- As we see the Baby Boomer generation coming of retirement age, we expect the Executive Chairman position to become more prevalent.
- The CEO leads the company, while the Chairman leads the Board of Directors.
- This forms a key difference between Executive Chairman vs CEO.Some of the primary duties that an Executive Chairman undertakes are –
- Understanding the distinct duties, reporting lines, and collaborative dynamics of these two roles is fundamental to sound corporate governance.
- CEOs shape and execute strategies within the framework approved by the board, while Chairmen guide and approve those strategies from a governance perspective.
Depending on the organization’s size, the CEO may be less involved in day-to-day happenings and instead focus more on executing the strategies set by the board of directors. On the other hand, the chairman of a given company is the head of the company’s board of directors. They function a little outside of the company itself so the CEO typically reports to the chairman of the board of directors. The board of directors is in charge of ensuring the investor’s interests are being met and the chairman is the head of that team, which means they are responsible for ensuring the company’s profitability.
They have a significant influence on the development and maintenance of the company’s culture, fostering a positive work environment that aligns with the organisation’s values and objectives. The members of the board of the company report to the chairman about their concerns. On the other side, the senior executives or the senior managers of the company report to the CEO about the daily tasks that the latter supervises. The position of the chairman is the highest rank on the board of trustees or directors.
Who holds more legal liability?
It’s vital to separate the Chairman and CEO roles to maintain clear leadership. This separation allows each leader to focus on their duties without conflict. The main goal is to have a governance model that balances chairman and CEO powers. It helps the chairman and CEO perform well, pushing the company towards success and benefiting shareholders.
More Productive Board Meetings
Outside directors, meanwhile, make unbiased decisions for the company’s direction17. On the other hand, the CEO tackles problems in the company’s daily operations. Their decisions, like firing if needed, keep the business running smoothly.
This includes maintaining transparent and open lines of communication with the board of directors, shareholders, employees, customers, and other key stakeholders. The CEO must be able to articulate the company’s vision, strategy, and performance clearly and convincingly to build trust and confidence. Yes, in some companies, one individual may hold multiple titles, such as Chairman and CEO or even all three roles.
As the most senior executive, the CEO is responsible for the company’s overall performance, strategy execution, and operational management. The CEO is the driving force behind the business, ensuring it remains competitive, innovative, and profitable in an ever-changing market landscape. The chairman’s primary responsibility is to meet their stakeholders’ expectations. They also manage the board directors and their activities, providing transparency and accountability.
A major responsibility of the Chairman is the evaluation of the CEO’s performance. The Chairman must ensure that the CEO’s actions are aligned with the interests of the stakeholders and the organization’s goals. The CEO reports directly to the board and is the public face of the company, leading the senior leadership team to execute the long-term plans set by the directors. See why organizations worldwide are making the switch to board portal for improved board governance. Convene has been rated the top board management software by several trusted sources of technology reviews.
Does the CEO or the Chair Have More Influence on Company Performance?
This structural separation empowers the board to challenge, support, or redirect the CEO when necessary. The Chairman thus serves as a counterbalance, promoting fairness, accountability, and ethical decision-making at the highest level of leadership. This dual-structure model is foundational for long-term organizational health and credibility.
While the CEO is deeply involved in managing the company’s everyday functions, the Chairman remains removed from daily affairs, focusing instead on oversight. Reports show that over 90% of CEOs participate in daily decision-making, whereas fewer than 10% of Chairmen engage in operational tasks. Chairmen dedicate nearly two-thirds of their time to ensuring alignment between board decisions and long-term corporate interests.
- The chairman of the board is responsible for leading the board of directors and focusing on the effectiveness of the board.
- The CEO is a more operationally-focused leader of an organization and a key implementer of strategies and initiatives approved by the board.
- Generally, an executive chairman maintains the Board and also represents the company as its face in public meetings, etc.
- Increases come at the expense of shareholder profits, although most shareholders understand that competitive pay helps to keep talent in the business, which can drive profits.
- As you can see, a CEO holds substantial authority in determining their company’s policies and actions.
Situations When Chairman is Better Than CEO and President
They set the tone for the board, plan relevant agendas, encourage participation from all members, and resolve any conflicts as they arise. With this high level of involvement, the board’s culture is often a direct reflection of the Chairman’s leadership style.
Executive Chairman Has Higher Authority
The Chairman, while more discreet, may engage with investors and regulatory bodies, focusing on governance and strategic oversight. The President typically has less public visibility, concentrating on internal operations and execution. The President typically collaborates closely with other C-suite executives, such as the CFO, COO, and CMO, to implement operational strategies and achieve the company’s objectives.
Key Differences Between CEO and President
This is vital for maintaining good governance and pushing the company’s strategy forward. The debate on whether to split the chairman and CEO roles points to better independence and reduced conflicts, fitting with agency theory3. A CEO is a company’s top decision-maker who establishes strategic processes and ensures that progress is made toward corporate objectives.
It is generally based on the country’s laws, administrative structure, aims and needs, etc. These CEOs are extremely dedicated to their company and take the initiative as the global representative of their company in the corporate world. Their main prerogative is to make their company a star in the corporate world, and they work with great and tough goals. Such a chairman is only concerned with the smooth functioning of the board. This type of chairmanship maintains a clear and precise difference between the Chairman and CEO. The next type of Chairman is termed an “Executive Chairman”, depending upon his or her involvement in the executive functions of the company.
This collaboration is essential for adjusting plans and resources to meet the company’s objectives effectively. The President’s focus on operational excellence complements the CEO’s strategic vision, resulting in a more cohesive and well-rounded leadership approach. The President plays a critical role in executing the CEO’s strategic plans through effective operational management.
The collaboration was highly successful, leading to significant growth and innovation. In 2011, Page resumed the role of CEO, with Schmidt becoming Executive Chairman. This case exemplifies how a well-structured leadership difference between chairman and ceo team can leverage diverse skills to drive corporate success. Musk is known for his visionary leadership and hands-on approach, while Denholm brings a more traditional, governance-focused perspective. Their relationship has been characterized by a balance of Musk’s aggressive growth strategies and Denholm’s emphasis on regulatory compliance and risk management. Succession planning is another area where the CEO and Chairman must collaborate closely.
