The chief executive officer (CEO) and the president of a corporation are normally the two highest-level leadership roles in a business. Sometimes the same person fills both roles, but there are often significant differences in responsibilities, powers and objectives. The duties of the positions may overlap somewhat but primarily complement each other. Here’s what these job titles normally describe.
A CEO and a president are more like siblings than identical twins. They share many of the same traits. To an outside observer, the jobs may appear more or less identical. However, viewed from the inside, the jobs of CEO and president are distinct. Essentially, the CEO is more involved with long-term strategic planning and the president is more involved with day-to-day methods for achieving those long-term goals.
In the U.S., CEOs are somewhat less common than presidents. It is more usual for a company to have a president but no CEO than for a company to have a CEO but no president. Company founders are often CEOs.
How Jobs of CEOs, Presidents Differ
American corporations enjoy latitude on how to designate their leadership and whether one person can fill more than one role. For that reason, the following distinctions are generally – not invariably – applicable to understanding how the two roles differ.
The CEO is the top executive in a business; the president is the second-highest executive, after the CEO. In some cases the second-highest executive in a business is called the chief operating officer (COO). CEOs report to the the directors, collectively known as the board. The president or COO reports to the CEO and is typically hired by and can be dismissed by the CEO. A CEO receives reports from the president and sometimes other C-suite executives such as the chief financial officer. Answering to the president are vice presidents, including executive vice presidents and group vice presidents. In addition, higher-level staffers like general managers usually report to the president or chief operating officer.
A CEO’s focus is on spotting opportunities and strategically setting the long-term goals for the organization. The president is more concerned with conducting daily operations efficiently in support of those goals — in other words, the tactics.
CEO objectives typically revolve around large-scale concerns such as building shareholder wealth, acquiring market share and creating a sound company culture. Presidents are more concerned with implementing marketing plans, cutting costs and similarly focused matters. The two jobs sometimes differ in scope: The CEO is concerned with the entire company, while a president may have one operational unit as his priority. The president is more involved with lower-level executives, outside suppliers and customers. Sometimes, a company will have more than one president, with each president responsible for an operating unit.
Relation to board
CEOs often also have a seat on the board of directors. CEOs have relationships with directors, especially the chairman, and the public. The president less commonly sits on the board, although the president may appear before the board to make presentations and provide information to the members.
One area where both the president and CEO sometimes take subordinate roles is succession planning for their roles. The CEO is selected, recruited, hired and continues in the job at the discretion of the directors. Typically, the board creates a team that includes some directors, the company’s human resources department and one or more outside consultants.
Once the team has assessed or clarified the company’s strategic goals, potential weaknesses and opportunities, it develops criteria that potential candidates must meet. It also determines to what extent outside candidates may or may not be considered. In addition, the team proposes a compensation package, which must be approved by the board.
Similar Job Titles
In different sorts of organizations, different positions may be called upon to fill roles that resemble those of CEOs and presidents. For instance, in non-profit organizations, an executive director frequently does the job that a CEO and a president would do in a for-profit company.
In partnerships, a managing director often serves as the top executive. The managing director may handle responsibilities similar to those of both the CEO and the president in a business structured as a corporation.
The Bottom Line
While the CEO and the president may appear to be nearly identical, in many cases their duties and powers are significantly different. CEOs are more strategic and concerned with broader measures of success, and they serve at the pleasure of the board. Presidents, or the chief operating officers, concern themselves with day-to-day execution of the CEO’s strategies, and they answer to the CEO.
Tips for Investing
- A financial advisor can help you assess whether a corporation you’re considering investing in is being well run or not. Finding a financial advisor who fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors who will help you achieve your financial goals, get started now.
- The CEO vs. president question is just one issue in the broader topic of corporate governance, which concerns the processes, rules and regulations that run a business. Understanding how the question of CEO and president roles relates to other corporate governance issues can sharpen your ability to correctly size up a business.
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