For those ambitious individuals in the corporate world the title CEO sounds very attractive, many wholeheartedly pursue to become a CEO, the route to that coveted title CEO may include working as a president of a subsidiary of a conglomerate or working closely along with the CEO in an organization.
CEO stands for Chief Executive Officer and President is also known as COO (Chief Operating Officer).
The difference between CEO and president (COO) may fall in six broad areas, which can be classified into two categories; One is corporate governance and the other is scope of work.
Corporate Governance will deal with aspects of structure, authority, and reporting relationships. Scope of Work deals with aspects like tasks, duties, and responsibilities.
In the corporate world there seems to be fascination for titles and designations, they are both descriptive and fancy. Sometimes these titles overlap with one another or there to differentiate one from the other. Take an example of Chairman, there is Executive chairman and Non-Executive Chairman, which may differentiate the roles they play and the degree of their involvement.
Then there are titles like President, Chief Operating Officer, Executive Vice President, etc. which may sound different but in general may mean the same scope of work. Though these titles overlap at times, yet organizations may use the same or different title to differenciate the roles and responsibilities.
In this article I tried to address what is considered as the broad generalizations that can differentiate CEO and President. Let’s establish clarity and differentiate a president from the CEO.
Corporate Governance and Structure
To understand where CEO and president fit in the corporate structure, one must understand the different determining factors that are at work; such as national and international laws concerning companies, how big and diversified the corporate or company or organization is, and the corporate structure.
1. Where they sit at the board?
Both the CEO and the President have good working relationship with the Board Members. The CEO has a permanent seat at the Board, whereas the President may or may not have the seat at the board.
CEO can also be the Chairman of the Board; it is not always, but some CEOs do occupy the chairman’s chair in the board. The Board members are elected and appointed by the shareholders, the board members are the guardians of the investor’s interests. Chairman is also the head of the Board; who’s word is often the last word on what an organization or company does.
The Board, headed by the Chairman, hire a CEO to run the company. The CEO is the full time employee of the organization or corporate or company and Board meets periodically. In British System, Managing Directors play the role of the Chairman.
Chairman or Managing Director and CEO can be the same person both head of the Board and running the company as a full time employee, in some cases it is in the hands of two different individuals. In some cases, the CEO and the president is the same person. These configurations vary according to corporates and organizations' governance and structure they have adopted.
2. Who reports to whom?
In a corporate hierarchy, the CEO is the No. 1 official, most powerful in a company, and the President is the No. 2 official in a company. The CEO reports to the board and the president reports to the CEO.
Shareholders are the ultimate owners of the company, to which the board of directors are accountable to. The Board appoints the CEO; to the Board a CEO is accountable for the performance of a company. CEO appoints the president, depending on the company memorandum and articles CEO may seek the approval of the Board for the appointment of the president, the president reports to the CEO.
A conglomerate with subsidiaries may have one CEO and many presidents, running different business of the conglomerate or chairman and many CEOs running different business. CEO also may play the role of President depending on the size and distribution of responsibilities in an organization.
It is important to note; CEO is not always the Chairman of the Board. CEOs don’t always have a president. It is possible, in small companies, the roles of Chairman, CEO, and president may shouldered by one individual.
Scope of Work and Outcome Expectation
Scope of Work and outcome expectation of a CEO and president may change depending on the corporate governance, organization structure, and distribution of roles and responsibilities.
3. What is their focus?
A CEO’s focus is on the macro perspective of the organization’s performance and the president focus in on the micro perspectives of the organization’s performance. When the CEO also doubles as a president, then he or she focuses on both Macro and Micro perspective of the organization’s performance.
CEO, a strategist and a top decision maker of an organization, focus on the big picture, "vision and strategy", and sets the tone and positions the company’s brand image and operations, implements the same with president and senior management team. CEO may also co-create vision and strategy with the board or get the board’s approval of the big picture vision and strategy as well as integrates the pig picture into company policies and operations.
The president focusses on the execution, turning the vision and strategy of the CEO into results ensuring day-to-day operations and excellence in execution. The CEO delegates most of the tactical and operational aspects of the strategy implementation to the president and other senior management team members.
4. What are their responsibilities?
A CEO’s and President's responsibilities may vary depending on the vision, mission, strategic goals, products and services.
CEO is more often the face of an organization and management’s point of contact for the board. A CEO’s time is spent on attending to, along with setting the big picture of the organization, in public relation activities, investor relations, speaking at conferences, earning calls etc. which can be summarised as activities focuses representing the organization to the world.
The president’s role and responsibilities revolve around executing strategy, leading and managing change. The president, as the most actively involved manager in the execution and operational excellence, together with the management team, runs the day-to-day affairs of an organization or corporate. The president is also plans and initiates undertaking that encompasses strategy execution, oversee operations, and all business functions on a daily basis.
The president by taking responsibility for the execution of strategy the day-to-day operations and running of an organization or corporate releases the CEO to focus on strategy; such as, which markets to enter and how to take on the competition. When CEO takes important decisions affecting an organization’s present or future mostly jointly with or in consultation with or taking the president (COO) into confidence; it is very rare when a CEO may overrule a president’s recommendations in this regard. CEO also consults or takes the president into confidence decisions relating to productivity.
It is worth noting here, in a conglomerate with subsidiaries, it is unlikely that one person is able to shoulder both the responsibilities of CEO and president. It can be said, the president exists to help CEO bring his vision to reality and make the CEO more effective and competitive.
5. What are the key tasks they perform?
The tasks CEOs handle include, make sure the board have sufficient and up to date information, scan the environment and identify opportunities for growth and change, establish differentiators, set budgets, steer the organization in the right direction, build organizational culture, and lead senior management team.
The president's tasks, depending on the specific business need, includes: implementing objectives concerning production, marketing and sales, research and development. The president's tasks may also include ensuring suitable operations management, optimizing operational process, designing and executing framework to executing strategy into operations, driving key change and transformative initiatives, and shaping the future of the business.
6. How their Success is measured?
A CEO’s success is measured by how their contributions helps an organization to gain competitive advantage in a business environment through disruptive ideas and innovation. Some of the metrics used to measure CEO performance may also include Earnings Per Share, Return on Equity, Return on Assets, Return on Capital, Revenue Growth, Cash Flow, etc. in case of a public listed company, performance of a company’s stocks over a long terms may be the final scorecard on a CEO’s performance.
The president is the ultimate successor of the CEO. One critical elements that can measure the president's success is their partnership with the CEO, for the trusting partnership between CEO and president, is the most challenging and difficult of all organizational relationships. The president's success also depends on closing the execution gap and achieving objectives set by the CEO.