What are the Differences Between Positions of Leadership?
The roles and responsibilities of CEOs, Chairmans and Presidents
I was recently asked to explain the real-world differences between three levels of leadership in many companies: the chairman, president, and CEO. While the dictionary definition may give us a basic understanding of these roles and their responsibilities, what we may misunderstand is their impact on an organization, and what kinds of people we should look for to fill those roles.
So, from a long career in leadership and training leaders, here is my answer to the question:
What is the difference and responsibilities between a CEO, president, and chairman?
Let me give you my opinion. (And yes, it’s only my opinion. Because each of those roles individually and how they work independently is purely a function of how you or the organization you’re a part of choose to define them.)
Generally, a “chairman” is chairman of the board of directors. And the board of directors, as led by that person, is the group everyone else in the organization (President, CEO, etc.) ultimately report to. A chairmanship is about governance, ensuring that the overarching strategy and all of the regulatory issues at a very high level are complied with. Many times the chairman is a public-facing position, representing the company to the shareholders the board represents, and who own the company. Obviously, this implies that a private company does not have a chairperson.
The next one down in the usually vertical food chain is the chief executive officer. His or her job is to ensure that the strategy and the staffing and the policies and all of the things that need to be in place are actually in place. If you think of a leader of the organization, usually it’s the chief executive officer you think of, and they usually have that title combined with president. So, think of a chairman of the board as the governance, and representing the shareholders. A CEO is strategic, and ensures that the overarching vision and strategies are being employed and executed. Then the president is usually one that’s tends to be more in the weeds.
The president’s job is more execution-focused, more operationally focused on customers. Many times, you’ll see the “president-slash-COO” for this exact reason. So basically, everyone reports to the chairman of the board, who represents the owners of the company. In their board meetings, the highest level of things are discussed and decided. The CEO usually sits on the board, and takes that high-level vision and turns it into middle strategies and tactics that the team can execute on. They are the default leader, if you will, of the operational organization.
Then the presidents are the ones with their hands a little bit dirtier, they actually do more of the managing of things and executing into the strategy as defined by the CEO.
Now that we have that understanding, I’ll add a couple of comments.
You’ll see many times that all three titles apply to just one individual. In my personal opinion, when that is done, it is dangerous.
Certainly the CEO and president can overlap in smaller organizations; oftentimes you don’t have a choice. I believe from a governance perspective, from a checks and balances perspective, that it’s unwise to have the CEO/president also be the chairman of the board.
The CEO needs to have someone to report to, someone to hold them accountable, someone that is specific, and not a nebulous board of directors that they also happen to chair. Most times, when organizations get themselves strategically, financially, or legally in trouble, it’s because there’s been too much concentration at these very highest levels on one individual, and they started to believe their own press releases. They get off track strategically or legally and the fall, therefore, begins.
My advice is to have at least two people to fill those roles, and have the line of demarcation be just below the chairman. I think that’s wise.
Now, what kind of people work best in these positions?
A chairman is usually someone with significant, deep and wide experience. Usually, they’re also on the boards of other corporations, both tangentially and not. They understand the marketplace and the landscape. They understand the legalities, because of their job mostly, of leading the various committees that come from the board to ensure appropriate governance and behavior of the overarching organization. They are someone who has that breadth and depth of experience. They are not supposed to being engaged full-time in the business.
A good CEO is usually someone that has a great depth of experience of the functions of the business. They would be able to speak the language of business (which is finance and accounting). They learn that language after a long career on their path to the C-suite. If you’re going into the scientific field, you need to be able to speak the language of mathematics because mathematics is the language of science; accounting and finance is the language of business. That’s why you’ll see, ultimately, a disproportionate number of CEOs that have come through that field, or have a significant appreciation and have had to learn lessons the hard way.
A president should be someone that’s much more detail-oriented. They’re engaged in the operational exercise of the business, they understand how the business operates and what needs to be done. If we’re going to do X, then what are the ABCs that feed into that, and what is the Y result?
That is my impression, and my experience as a leader and with other leaders. These are my suggestions as to the nature of those roles, the nature of the people that fill them, and the idea of separation and distinction between them. But again, it’s entirely up to the unique organization of where they want to go and how they want to get there. A lot of it depends on the personalities and skill sets and natural forces that they have internally.
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