The Difference Between President and CEO in a Company: Who Holds the Bigger Role?

Understanding the roles of President and CEO in a company is crucial for both internal and external stakeholders. In this article, we will explore the similarities and differences between these two critical corporate titles, as well as the implications for corporate leadership and management structures.

Corporate Titles and Board Determination

Credit Suisse notes that corporate titles have specific meanings and authorities as specified by the Board of Directors. Thus, the roles and responsibilities of positions like President and CEO are determined based on Board of Directors' stipulations. While there can be overlap, these titles signify distinct levels of authority and responsibility within a company.

Leadership Dynamics and Authority

The phrase "if a CEO acts like the top boss and everyone accedes to him or her the de facto that CEO is the top boss" highlights the practical realities of leadership. In many companies, the President and CEO are the same person. However, in some organizations, the CEO may be more authoritative, and the Board of Directors would need to establish the chain of command, duties, and authorities.

If the CEO and President roles are distinct, confusion and conflict can arise. This ambiguity can be dangerous as it may lead to disputes and hinder effective decision-making. The Board of Directors must clearly define the roles, responsibilities, and authority of each position, including how each position interacts with the others.

Understanding CEO as the Highest Officer

According to Credit Suisse, a CEO is the highest-ranking officer in a company. This title signifies ultimate responsibility for ensuring the smooth operation of the company. The CEO is accountable for all aspects of the business, including strategy, risk management, and strategic planning. CO (Chief Operating Officer) is an executive tasked with managing the day-to-day operations of the company under the CEO.

CEO vs. CO: Key Responsibilities

The CEO, or Chief Executive Officer, runs the company. They are responsible for setting the overall direction and vision for the organization. The CEO is also responsible for overseeing the board and ensuring the company meets its strategic goals. On the other hand, a CO (Chief Operating Officer) focuses on the day-to-day operations and management. This includes optimizing business processes, ensuring efficient and effective operations, and directly managing teams.

Ownership and Management Structures

It's important to clarify the position of ownership within the CEO and CO roles. In many multinational companies, the CEO manages and oversees the entire company. In smaller companies, the owner typically handles the day-to-day operations, and the CEO may be an employee. In some cases, the CEO is both the manager and the owner, while in others, the CEO is strictly a corporate officer reporting to the owner.

The presence of a Chair of the Board (CB) does not negate the CEO's role. The role of the CB is to preside over board meetings and act as a primary liaison between the board and management. While the CB might have oversight or advisory roles, they are typically not a hands-on direct manager. In some cases, the CB may be referred to as the Chief Executive Officer, but their role is more about governance and oversight rather than active management.

Conclusion

In summary, while the terms President and CEO may sometimes be used interchangeably, they often refer to different levels of leadership and responsibility. The authority and role of each position are determined by the Board of Directors, and it is essential to clarify these responsibilities to avoid confusion and conflict. Understanding the distinctions between these roles is crucial for ensuring effective corporate governance and management.