For organizational success, individuals at every level of the corporate structure must understand their roles and responsibilities. However, people often use the words “Executive Chairman” and “CEO” interchangeably, assuming they refer to the same position. This lack of clarity can result in organizational inefficiencies, power struggles, and misaligned decision-making.
While the Executive Chairman and the CEO hold influential roles within an organization, their responsibilities, pay structures, and levels of notoriety can vary significantly. Understanding the distinctions between these positions is crucial for anyone aspiring to lead or work in a top-level management role.
We’ll explore the differences between the two roles and look at how board management software helps executive leadership govern more effectively.
What is an Executive Chairman?
An executive chairman is a key position within a company’s corporate governance structure. This role is often held by an individual who has previously served as the company’s CEO or has a substantial track record of success in the industry.
The executive chairman acts as a bridge between the board of directors and the CEO, offering guidance and strategic direction. Executive chairs bring their expertise, experience, and leadership to guide the company toward achieving its objectives, while ensuring effective communication and alignment between the board and management.
Roles and Responsibilities of an Executive Chairman
The roles and responsibilities of an Executive Chairman can vary from organization to organization, as the specific duties assigned to this position depend on the company’s structure and its governance policies. Here are some common roles and responsibilities associated with the position:
Leadership and Governance: The executive chairman sets the organization’s strategic direction and oversees its implementation. They work closely with the board of directors and provide guidance and support to senior management, including the CEO and COO.
Board of Directors: The executive chairman often presides over the board of directors to ensure effective governance. They facilitate board meetings, encourage robust discussions, and ensure that decisions align with the company’s vision and mission. They also collaborate with board members to recruit and evaluate senior executives.
External Partnerships: The executive chairman actively cultivates external partnerships, alliances, and relationships that benefit the organization. They represent the company in negotiations with business partners, government agencies, and industry associations to foster collaboration and drive growth opportunities.
Mentorship and Guidance: The executive chairman is a mentor and advisor to the owner, CEO, and other senior executives. They guide complex issues, offer strategic insights, and leverage their experience to support the professional development of the leadership team.
Crisis Management: In times of crisis or challenging situations, the executive chairman plays a crucial role in guiding the organization through difficult periods. They provide stability, ensure effective communication, and work closely with the management team, including the CEO and president to devise and implement crisis management strategies.
Pay and Notoriety of an Executive Chairman
The executive chairman’s compensation package can vary significantly depending on the company’s size, industry, and financial performance. Their pay is typically on par with or slightly below the CEO’s. Currently the average salary for an Executive Chairman in the U.S. is $395,590 per year.
The notoriety associated with the executive chairman role may not be as prominent as that of the CEO. While the CEO is often seen as the face of the company, the executive chairman operates more behind the scenes, influencing the company’s direction without necessarily being in the public spotlight.
What Is a Chief Executive Officer (CEO)?
The Chief Executive Officer (CEO) is the highest-ranking executive in a company’s management team. They are responsible for the organization’s operations, performance, and strategic direction. The CEO reports directly to the board of directors and is accountable for the company’s financial health and growth.
Roles and Responsibilities of a CEO
As the highest-ranking executive in an organization, the CEO is responsible for making major corporate decisions, managing the overall operations, and ensuring the company’s success. Their roles and responsibilities can be broadly categorized as follows:
Strategic Leadership: The CEO defines the company’s vision, mission, and long-term goals. They must develop and communicate a clear strategy to guide the organization toward achieving its objectives.
Decision-making and Problem-solving: CEOs are also responsible for solving complex organizational problems. When issues arise, they must gather relevant information, evaluate alternatives, assess potential risks, and develop an effective solution.
Stakeholder Management: CEOs are the primary interface between the company and its stakeholders, including shareholders, employees, customers, partners, and the broader community. They must build strong relationships and maintain effective communication channels to address concerns, align interests, and foster trust.
Team Building and Leadership: As the top executive, the CEO is crucial in building a high-performing team and providing effective leadership. They must attract and retain top talent, delegate responsibilities, and empower employees to achieve their full potential.
Financial and Operational Oversight: CEOs are accountable for the company’s financial and operational performance. They must ensure effective resource allocation, monitor financial metrics, and drive profitability.
The CEO’s role requires a broad skill set, encompassing leadership, financial acumen, strategic thinking, and effective management of the organization’s resources.
Pay and Notoriety of a CEO
CEOs are typically among the highest-paid individuals within a company. Their compensation often includes a combination of salary, bonuses, stock options, and other performance-based incentives. The average CEO salary in the U.S. is $414,948 per year.
The CEO is often considered the face of the company, representing the organization in the media, public events, and industry conferences. Their achievements and decisions can significantly impact the company’s reputation, making the CEO one of the most visible figures within an organization. The level of notoriety associated with a CEO can vary widely, depending on the industry, company size, and the CEO’s achievements.
Get Started With OnBoard
The executive chairman and CEO hold distinct roles within a company, each with their unique responsibilities. Understanding these differences is crucial for individuals aspiring to leadership positions and those seeking clarity within their organization.
At OnBoard, we understand the importance of effective corporate governance and streamlined board meetings. Our cloud-based board intelligence platform empowers boards and committees to hold more efficient, informed, and streamlined meetings.
OnBoard’s comprehensive suite of features allows board members to:
- Easily access board materials
- Collaborate with fellow board chairs
- Effortlessly schedule and manage board meetings
- Seamlessly conduct virtual meetings
- Keep a comprehensive record of board actions, decisions, and resolutions
- Generate insightful reports
To get started with OnBoard, download our Board Meeting Agenda Template today. This valuable resource provides a structured framework for planning and executing successful board meetings. Experience the power of OnBoard and take your board meetings to the next level.
Frequently Asked Questions (FAQ)
What Is the Primary Difference Between an Executive Chairman and a CEO?
The executive chairman usually holds more influence over board-level decisions and sets the overall direction. The CEO has greater control over operational matters and manages the company's day-to-day activities.
What Is the Typical Reporting Structure for an Executive Chairman and a CEO?
The CEO typically reports to the executive chairman, who serves as the head of the board of directors, ensuring alignment between the board's objectives and the CEO's operational decisions.
Can One Person Hold Both the Roles of Executive Chairman and CEO Simultaneously?
Yes, a person can hold both positions. However, it's more common for them to be separated to maintain a system of checks and balances.
About The Author
- Adam Wire is a Content Marketing Manager at OnBoard who joined the company in 2021. A Ball State University graduate, Adam worked in various content marketing roles at Angi, USA Football, and Adult & Child Health following a 12-year career in newspapers. His favorite part of the job is problem-solving and helping teammates achieve their goals. He lives in Indianapolis with his wife and two dogs. He’s an avid sports fan and foodie who also enjoys lawn and yard work and running.
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