What is the difference between CEO and President?
 

This may be dumb question, but I'm trying to differentiate the skill sets and responsibilities of the CEO and President.

Many times the position is combined (President/CEO), which makes it appear the differences may be minor.

Can anyone help clarify this with a focus on how these two positions should compliment one another for the benefit of the company?

It's a good question, because it has potentially long-term consequences.

In the most general terms, and in most cases, the president reports to the CEO. The CEO is primarily responsible for strategy: long-range planning, company direction. S/he is the most direct interface between the board of directors/stockholders and the company's managers and employees.

The president's role tends to be operational and tactical: S/he keeps the wheels on the car, so to speak, and attends to the day-to-day business of the company. S/he is the manager of all managers.

Now, having said that, the biggest actual difference in most companies will be determined by the legal ownership and structure of the company.

E.g., if one person owns 100% of the stock, then the roles can be defined pretty much however you want. But if the board of directors has real power, and/or ownership is shared, then you have to take this stuff much more seriously, because, in most corporate charters, the CEO is the board's conduit.

In some larger companies where one person owns a compelling majority of the stock, usually that person will carry the title of Chairman and CEO, and s/he will have a second-in-command with the title of President and COO.

On the other hand, if ownership is divided -- in, for example, a VC-backed company -- it's more common to see one person with the title CEO/president, and there will also be a VP Operations, or a CFO who handles the ops side.

This raises another point: It's my suspicion that VCs intentionally avoid separating CEO and president because it creates the kind of confusion your question implies: Investors who have staked millions on a company don't want there to be any public confusion as to who does what.

And, I think they're right: I'd be very careful about splitting the titles across two people. It may be perfectly clear in your internal job descriptions, but it may confuse customers and employees and potential partners, and it may even scare future investors/buyers, because they'll fear there are too many egos in play.

If you do Chairman/CEO plus a President/COO, it's more obvious who's on top, but unless you're a fairly large company -- like $25 million, which is large in the software business -- I think it looks a bit pretentious to have that much baggage at the top. (Potential investors are likely to think the same way, imho: "Why do they need all these high-priced execs? Why don't they hire more sales reps?")

Another connotation: In the software biz, when you see one person with Chairman and a different person with President/CEO in the same company, that often goes with the assumption that the Chairman is the founder who's been pushed out and is now largely out of touch and ineffectual. (Now, don't flame me, all you Chairs out there -- I'm just stating a general public perception.)

Btw, I found a pretty good discussion of the CEO's role on the MAPNP site; they aim to help non-profits, but they have for-profit links, too.

Thanks Bruce
 

I appreciate your reply and references ... Just what I needed.

Be sure and check the bylaws of your company, if you’re a corporation. It will be a starting point on the role of the CEO and whether it is set up to also be the President. If your bylaws aren’t as you wish, you should look into amending your bylaws.

Delaware law is pretty general on this point, so, for Delaware corporations, officers’ titles and duties can simply be as set forth in the bylaws or in a resolution by the Board of Directors that is not inconsistent with the bylaws.

Other States can be more specific. In California, for example, each corporation is required to have at least a chairman of the board or a president or both, a secretary and a chief financial officer, with titles and duties as stated in the bylaws or determined by the board. California law also states that the president, or if there is no president the chairman of the board, is the general manager and chief executive officer of the corporation, unless otherwise provided in the articles or bylaws.

In other words, it may be a good idea to get your company lawyers in the loop on this.

My company is a NYS corporation. I'm the founder, CEO, Chairman and majority shareholder. We've just recently brought in a President.

We both have our own strengths and weaknesses. The President has a strong business background and is knowledgeable of IT, but is not an IT expert; I have a strong IT and science background (and I wrote the patent upon which the company has been built), but am a relative novice when it comes to many business issues.

My BOD has been helpful in the early stages, but we needed someone to manage day-to-day operations, help negotiate contracts, handle bugeting and P&L, establish useful project and account management models/procedures. We've been able to move forward without a President to this point, but it's been a slow haul and we've come to a point that we needed someone with the experience and skill set I just described.

It was suggested to me the this person should become CEO/President and I move to CTO (where my greatest skills lie), rather than having a separate CEO and President.

Considering all the factors, including Bruce's advice, I've decided to remain CEO, at least for now. I'm sure this issue will be revisited when the time is right.

If you've not hired the person yet, I'd keep the decision open.

I.e., an irony here is that the person who could do the most for your company may not take the job unless you give him/her the CEO title. And at the same time, it could be that the person who will take the job without that title isn't really deserving of it -- they're not strong enough to lead.

Keep in mind, you own the company (or majority share, anyway) -- so, ultimately, you can do what you want with it, regardless of your title.

But try to take your applicants' view: If you want me to run the company as president, but you don't want to give me the CEO title -- why not? I'll be suspicious that you're a micromanager and control freak, and you'll always second-guess my decisions.

If you want to hang on to the CEO title -- and believe me, I'm not saying that that is the wrong decision -- why give up the president title? Why not just stay CEO/president and hire yourself a great VP ops or COO? Then, after a year, if the COO really shines, and you really like each other and complement each other and you completely trust him/her (and yourself), then promote him/her to CEO/president -- and you stay on as Chair.

Just thinking aloud here -- obviously, I don't know your situation -- but for the job duties you describe, I don't see why you have to hand out the president's title.

I hear your points, Bruce.

The President has accepted the position and really deserves the COO title in addition. I want to retain CEO for now -- although I told her we can reassess things in the near future -- because all our personnel/associates/consultants have established direct relationships with me and there is resistance from certain key people to having me bow out of the leadership role. I thus find myself supporting her (the new President's) role to our staff and plan to do so until such time she is stable and secure in her position.

The other issue is that most of personnel are not yet salaried, but have gotten sweat equity stock shares. We've had a few sizable contracts with large corporations and a number of small non-profits, but not enough consistent enough to get us out of our cash-flow crunch.

We are, in fact, a virtual company with personnel from around the globe and have only recently come to the point where our three primary product lines are ready for repeatable sales. We're anything but a typical company.

So, I think the President needs time to show she can translate her experience and skills into company-wide action that picks up the pace of marketing and sales. At that point, I'd feel more confident in relinquishing the CEO title to her.

I took a quick look at some New York statutes and see them pointing us back to the company by-laws.

In New York’s Business Corporation Laws, Chapter 4, Article 7, §715, it states that the board may elect or appoint a president, one or more vice-presidents, a secretary and a treasurer, and such other officers as it may determine, or as may be provided in the by-laws. The section also states that authority and duties shall be as provided in the by-laws or, to the extent not so provided, by the board.

Again, your legal counsel may be of assistance in implementing and documenting the path you choose.

Thanks much, Jay!

There is nothing in our by-laws that contradict what you've said.

I will make sure we formally document our decisions.

On the question of CEO duties: We just launched a new service for our Site Members, in partnership with Culpepper and Associates, that can give you a hand with this.

On our Downloads Library page, in the Human Resources section, there's an entry for "Executive Compensation and Job Descriptions." This is a scaled-down version of the Culpepper data, which they've made available free to our members.

This will give you access to 40+ job descriptions for software and IT executives, including, of course, the CEO. (Culpepper has hundreds more for all employee levels, but you'll have to buy Culpepper's regular subscription to get to those.)

Chairman/CEO/President Differences
 

Chairman: Represents the interests of the shareholders through the BOD which he/she chairs - (majority shareholder is always the defacto Chairman)
CEO: This is where the buck stops - the CEO determines strategic direction of the company but might not "run" the company. This person always has the final say in tactical/strategic matters. If the Board is unhappy with CEO, the Chairman can fire.
President: This is the person that runs the company on a day to day basis.