Introduction:
From the late 19th century market has seen many family-owned businesses. They were on a small scale and were run by the family members for years. The hierarchy or the structure of the business depended on the age and relationship criteria. But eventually, the pattern was changing in the market. Apart from changing the face of family-owned or run businesses, the wave of globalization also introduced new terms and structures in the companies. Let’s know the topic in detail- CEO vs President.
Globalization meant more investment and more profits. Indeed, to earn more profits, the privately-owned companies were transforming into public ownership. Thus, with public ownership came the separation between ownership and management.
Corporate Structure:
The late 90s’ have witnessed many mergers and acquisitions globally. With the purpose of establishing a global company where stockholders are taken care companies were formed in a two-tier hierarchical structure
The most widely used hierarchical structure in any American company; consists of the board of directors & the management team.
However, in any company, a hierarchical structure shapes the organizational activities and responsibilities. And in this structure, the two most important positions are the CEO and the President. These positions are often misunderstood with their roles and responsibilities. Following are some of their key differences and responsibilities.
Who is the CEO of the company?
A CEO (chief executive officer) is considered to be a representative or the face of the company. A CEO is the one who takes a top-level decision, develops policies and strategies. CEO builds a public image of the company, brings investors and stakeholders, and leads the company with a vision.
Who is the President of the company?
The President is responsible for day-to-day operations in the company. He is not involved in developing policies or bringing in investors, but the smooth functioning of the company is his duty. The President oversees the other executives and managers; he ensures that the vision & mission statement of the company is fulfilled.
Qualifications for CEO & President:
The initial qualification required to work in any corporation is to have a bachelor’s degree in business. Along with degrees, both positions require persistency, intelligence, agility, and endurance. For these positions in any organization, usually, the nominees are selected from within the company. However, having a master’s degree in business administration gives an extensive knowledge about the structure, opportunities, networking and opens a lot more possibilities in ones’ career. Alas! The most significant degree for any CEO or the President is their work experience.
Roles and Responsibilities of CEO & President:
There is a set of roles and responsibilities that the CEO and the President perform in an organization. Some of them are listed below for both positions.
CEO:
Building and planning strategies: A CEO is the face value of any company. They are bound to build new plans, policies, strategies, and visions for the company. They set out aims and objectives for the employees. And a clear picture for the Board of Directors to understand the business growth with new policies & short-term and long-term profits.
Implementation of plans: Just by developing strategies and policies, the CEO’s job is not over. He ensures that the new changes are understood and followed by the rest of the hierarchy. These strategies are developed with the intention to earn more profits, grow the business, and increase the share values.
Budgeting: Yes, the company’s budget is taken care of by the Chief Financial officer (CFO); however, the CEO has to allocate a certain amount or a budget for the entire financial year. It is the CEO who studies the fluctuation in the industry, estimates the expenses, calculates potential profits and revenues for a year. And then, the CFO takes over all the financial responsibility from the CEO.
Communications & Public Relations: The CEO is the link to the three imperative bodies of the company, namely, the Board of Directors, Investors/shareholders, and the management team of executives. He is considered as the face of the company and hence is expected to showcase moral & appropriate behavior in public. CEO is liable to inform both the bodies within the company (Board of Directors and the employees). CEO should regularly convey the upcoming updates & changes to both bodies.
Work Culture: A CEO is often looked up by all the employees of the company. Interns to managers, associates to senior-level executives, all tend to follow their CEO. CEO sets an example of an efficient, effective, and impactful employee of the company. He establishes a positive and healthy competitive environment in the company.
President: The role of a President starts when the Board of Directors and the CEO have developed long-term goals for the company.
Building and planning strategies: Once the CEO has laid the foundation of new policies for the company, the President starts developing policies & strategies for the various departments & teams of the company. President assigns new positions and responsibilities for the senior-level positions.
Management: The President has the responsibility to set new standards and the management style within the multi-functions of the company. He directly interacts with the managers and their teams and is well aware of the insights than a CEO or Board of Directors.
Execution: The President’s responsibility is to adhere to and achieve the policies, goals, & strategies laid by the CEO or Board of Directors. The direct contact with the managers and other employees of the company makes it easier for the President to achieve goals. In all, he oversees the company’s operations and ascertains that the vision is accomplished.
Setting relationships and a benchmark: The President makes sure that the employees hired possess the required qualities and qualifications for the position. He sets KPI’s (Key Performance Indicator) systems to measure the efficiency and effectiveness of every employee and the organization. The President is also responsible for creating relationships within the industry, planning mergers with industry leaders, maintaining partnerships, and encouraging investment opportunities.
Budgets for the company: The President is also responsible for analyzing budgets and financial reports of the sub-departments. He also needs to maintain and possess knowledge about the tax liabilities, exemptions of finances, and operations. The President also undertakes the responsibility of updating and revising plans to elevate the profits & progress of the company.
Differentiation between CEO & President: To compare these two positions seems rather tricky. As in many companies, the CEO and the President are the same. Nevertheless, the salient difference between the CEO and the President is that;
- The CEO is hired by the Board of Directors, whereas the company hires the President for smooth functioning of the organization.
- Some of the vital positions that come directly under the command of the CEO are the COO (Chief Operations Officer), CFO (Chief Financial Officer), CTO (Chief Technical Officer), and CSO (Chief Security Officer). And the President commands over the Vice-President, senior-level managers, and employees.
- The CEO backs by leading the company with a vision and a mission. He accumulates wealth for the organization. And the President takes responsibility for daily operations, increasing profits and achievements of the set targets.
In simpler terms, the CEO is the mind of the company who plans & strategizes objectives, and the President is the body of the company that executes the planning.
Mergers and Acquisitions: Globalization is given rise to many mergers and acquisitions in the market. There are many brands or companies that acquire or take over another type of company. For e.g., a cosmetic brand taking over an apparel brand; in such cases, the functioning of the parent company and the acquired company is different. Hence under one roof or a name, there are separate segments that are taken care of by different CEOs and Presidents. With such mergers, the CEO can presume the role of a Chairman or a Board of directors. At the same time, the President may presume the role of a COO (Chief Operations Officer).
Both the positions are bound to follow certain specific legal responsibilities towards their shareholders like care, loyalty, and disclosure. CEO and the President are the role models for the rest of the company; they are looked upon in terms of effectiveness, efficiency, and goal-oriented.
Who stands in a higher position, the CEO or the President?
For sure, the CEO (chief executive officer) is higher than the President of the company. A CEO is considered to be one of the C-suites types of officers in a company. Many a time, it depends on the scale of a company, whether it is a global organization or a small-scale business. In a small-scale business, it is often seen that a single person takes over all the responsibilities of a CEO, President, and Manager. Nonetheless, global organizations or large companies like Facebook, Google, or Tesla Motors have a single person who is a founder, CEO and handles many other responsibilities in a company. One needs to have a sound knowledge of the business that they have in the market.
President is always second to the CEO and is more focused on the execution of the company’s mission and goals. He is keener on running the business with smoothness and efficiency. There are many companies where the President also acts as a Chief Operating Officer (COO) but still not higher than the CEO. The roles and duties of both positions vary from organization to organization. Still, the CEO and the President both play a vital role in the company.
Closure:
In the end, after understanding all the differences, responsibilities, and comparisons of a CEO & the President, they both are equally essential and accountable for the company’s growth & success. If one constructs the mission, then the other launches it with the company’s growth. Both the positions are evenly required for the betterment of the organization.
Frequently Asked Questions
Can there be two CEOs in a company?
Yes, a company can have two CEOs. It works well, especially if the company is a start-up.
Is CEO more powerful than a President?
Yes, the CEO is considered the highest-ranking officer and powerful too.
Can the CEO fire the President?
Not really; it is usually a collective decision of the Board members. The decision is based on majority voting.
Who is the highest-paid CEO or the President?
Since CEO is in the higher position, it is the CEO who is bags a bigger package.
