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Who Is Superior - CEO Or MD - Management

sunilvs27 Started The Discussion:

Hi Friends,
i like to know who will be superior in an organisation - either the CEO or MD. Will any organisation have these two designations managed by two different individuals and if so what is the need for the same.
please throw some light on this matter
regards
sunil

Faygeorge - Contributing Member
HI there

In general business culture CEO is Chief Executive Officer, CEO can also the chairman of the board. the CEO is answerable to the MD regarding the operations.
MD is the Managing Director who controls the overall operations through CEO.
The role of a MD is to design, develop and implement the strategic plan for their company in the most cost effective and time efficient manner.
The Managing director is accountable to the board and the shareholders of the company. It is the board that grants the Managing director the authority to "run" the company.
The CEO reports to the MD of the said Co. I hope this info has helped u.

Regds
Fay

swastik73 - Contributing Member
Dear Sunil,

The position MD is a statutory position as per the Companies Act, 1956. So, MD has to discharge statutory duties and responsibilities as given under the Act. On the other hand a CEO is a person who is chosen by the Management to lead the executive operations i.e to run the Company. The CEO is the link between the Board of Director and the Company.

A CEO can be a Director, MD, Chairman or an employee, but no person other than the Director can become a MD.

For details of MD you can look up the Companies Act.

Regards,
SC

sunilvs27 - Contributing Member
Thanks George & Swastik for your valuable input.
Meanwhile i was informed by one of my friends that Russy Moody, when he was in Tata Steels, was the CEO and Tata was the MD. Still Russy was given the executive powers and in turn Tata was reporting to him. Some confusion again.
Anyway thanks for both of yours valuable information
regards
sunil

cjviji - Contributing Member
Good morning !!!

CEO - Chief Executive Officer - Over all
CFO - Chief Finance Officer - Finance
COO - Chief Operating Officer - Operations
and so on....

all these Executives report to MD.

Hope your confusion is over.
Regards,
Viji

kaybee2020 - Contributing Member
Dear SC, are u sure that the managing director cont be appointed(unless he is director of the company)???

Sanjeev.Himachali - Contributing Member
I agree with Swastik.

On one side, any deserving candidate can be CEO but only a person selected, approved and authorized by Board of Directors can be MD.
CEO is to look after the execution of policies, administer the day-to-day affairs, get business etc. CEO is answerable to the Management, whereas MD is answerable to Board of Directors.

I hope this will help.

Regards
Sanjeev Sharma

govindraj - 
DEar All,
As I understand, the MD is a stake holder and generally the CEO is an paid employee. MD may receive remuneration and definitely has the stake in the business & CEO usually doesn't have stake in the business.
Raj

swastik73 - Contributing Member
Dear Kaybee,

The position of MD as recognised by statutory authorities should be apponited as per the provisions of Companies Act,1956. You will have to follow the guidelines, rules and regulations.

Now, if you appoint a person and designate him in whatever name you want like MD, Chairman, ED, VP and there is no bar in that. All, I am trying to say is that to get statutory recognistion the appointment rules and regulations as per the Act must be complied with.

Let me elucidate, say in case of Factory, you will have to appoint someone as the Manager of the Factory. He may be an Officer, Asst. Manager, Dy. Manager, Manager, Sr. Manager, DGM, GM in the hierarchy of the Company, but he is a Statutory Manager as per the Act, and will have duties and responsibilities as defined by the Act.

So, there is a distinction between a statutory post and a designation given by a company and I was refering to the statutory MD. Like the term CEO is relatively new earlier to that people who headed the Company had different designations. In the future this term may also change.

I hope I have cleared your confusion.

Revert back for further assistance.

Regards,
SC

Dear Sunil,

Most of the Private Companies has both the designation - wherein,

CEO is solely responsible for all the operational functions like Recruitment, Training, Deployment and Monitoring of staff. He is reporting to the Managing Director on all aspects.

and MD has a long association with the Organization, he is well versed in all aspects of providing effective and efficient solutions and evolve workable systems for the Organization. MD is solely responsible for planning, communicating, implementing systems and procedures and to oversee the compliance and conformity with all the systems set for the Organization. He is the one who controls the overall operations through CEO. The role of a MD is to design, develop and implement the strategic plan for their Organization in the most cost effective and time efficient manner. The MD is accountable to the board and the shareholders of the company. It is the board that grants the MD the authority to "run" the company.

- Alpa Dhimar :lol:

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