Difference Between Similar Terms and Objects

Difference Between CEO and Chairman

CEO vs Chairman

Perhaps you have already heard of Bill Gates and Steve Ballmer of Microsoft. You have probably presumed that Gates is the head honcho of the enormous company and Ballmer is his right hand. As a matter of fact and to put it in more exact terms, Bill Gates acts as the chairman and Ballmer performs as the CEO of Microsoft.

Many would often assume that the CEO, Chief Executive Officer, is the ultimate position existing in a particular company. Well, it is actually true that many CEOs are the owners themselves or the top dogs of various organizations. But it does not necessarily mean that the CEO position is always assumed by company owners nor the position is of the highest order.

Believing otherwise would make Bill Gates go under Steve Ballmer and you know that Gates, and not Ballmer, is at the apex of pyramid when Microsoft is concerned. Having said that, it simply means that being Chairman is definitely more prestigious than becoming a CEO.

It is very common for people to think that CEOs are the top dogs of a company as they are often seen in action doing all the delegation and stuff. They have authority over all employees, operatives, officers, and other executives. Basically, the CEO is the master of the company’s whole operation and function.

CEOs focus on strategic issues in accordance to the company’s mission and goals. The CEO is the captain of the ship but he or she is accountable to the company’s Board of Directors and its Chairman.

The performance of the CEO is ultimately evaluated by the board directors which is primarily based on the company’s success or failure. Even though the major strategies and execution of crucial procedures may seem to be the final say of CEOs, they can’t proceed on a certain procedure without the assent of the Board in cases of critical situations.

It also goes to say that CEO’s decisions can be overturned by the Board. The CEO’s job is very dependent on the satisfaction of the Board which is being led by the Chairman. Therefore, by technicality, the Chairman is the superior of the CEO.

The Board protects the investors best interests in terms of profitability and stability of the company and the CEO will act out the agenda approved by the Chairman and the board. CEOs usually propose strategic plans and the Chairman and the board will have to approve the proposals.

However, it should be noted that there is a balance of power between the Chairman and CEO as the CEO has the right to appoint his or her senior executives who will, in turn, have assured board seats. It is not unusual to see the chairman also act as the CEO of the company.

Summary;

1. Technically, the Chairman is the superior of the CEO.
2. The chairman is the ultimate boss of the company.
3. The CEO leads the company in terms of executing the agenda approved by the board which is headed by the chairman.
4. The CEO may present proposals before the Chairman and the board.
5. CEOs are often seen in action as they are active decision-makers in terms of company operations.
6. The CEO’s job security is dependent on the satisfaction of the Chairman and the board.
7. In some companies, the Chairman and CEO is same person.


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2 Comments

  1. There is a fine line that needs to be clarified here and elsewhere regarding the role of the Board of Directors and “management” as a whole.

    The Board of Directors actually represents the shareholders or owners of the entity, and is head by the Chairman of the Board. In that manner they are the ones who hire the management team (head by the CEO). Thus setting a hierarchy between them is a bit off-key. The chairman is elected by the board (or happens to own everything) whereas the CEO is highest hired employee.

  2. Thank you for the nice article.
    Actually i want to know why companies go for
    1: CEO and C level, or
    2: Chairman, managing directors and directors, or
    3: President, Vice president and directors

    Many thanks in advance

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