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President Vs. Owner Vs. CEO

by Dale Marshall

There’s sometimes confusion about the division of responsibilities among the three job titles of owner, chief executive officer and president. There’s no legal requirement that a privately held company have any of these titles, and, in most states, corporate governance statutes give corporations broad latitude to name their officers as they see fit, requiring only someone to fill the role of secretary and certify the actions of the board of directors. There’s a real difference between an owner and either of the other two titles, however.

Owner

An owner is sometimes a company's chief production worker.

In most cases today, a company’s owner is identified as such when the company is relatively small. Especially in smaller companies, the owner often acts as a jack of all trades, overseeing marketing and customer relations, proofreading contracts and emptying the wastebaskets at day’s end, as well as any other job that needs doing and doesn’t have someone assigned to it. The best analogy that describes an owner’s relationship with the company is parent and child -- the owner is committed to the company’s success in a way that few employees will ever understand. If the company is big enough to have an executive hierarchy, the owner is the ultimate authority and the court of final appeal.

CEO

The CEO helps define and cultivate an organization's culture.

The CEO reports to, and often chairs, the company’s board of directors. Where an owner is a doer, a CEO is a planner who makes strategic decisions, such as the products to focus on and the markets to pursue. For the myriad details of running a business, though, a CEO must be a delegator who surrounds herself with people who are better at their jobs than she could be and then lets them do those jobs. In addition, the CEO molds the company’s culture to fit the board’s vision. This includes the creation of a succinct mission statement -- a brief and unambiguous declaration of what the company is and does.

President

The president generally leads and coordinates the organization's activities.

A company’s president is concerned with the day-to-day functioning of the organization. A president takes the visions articulated by the owner or CEO and implements them, sometimes by changing departments’ activities as necessary. The president generally is responsible for developing the policies, practices and procedures that govern the company’s routine operations, usually in conjunction with subordinate executives and managers. A president also will be closely involved with the company’s financial management in terms of monitoring the operating budget and planning for future capital and operating expenditures. When there is no CEO, the president is the highest executive within the company.

CEO and President Together

A CEO and president should have clearly defined responsibilities.

When organizations have both a CEO and a president, the CEO is generally the highest authority within the executive hierarchy. The CEO is responsible to the board of directors, which in turn is responsible to shareholders. The president is the CEO’s second in command. When organizations have two top leaders like this, it’s critical that there is a clearly-defined division of labor between the two. If the company has subsidiaries, it’s convenient for one executive to oversee their activities while the other directs the operations of the parent company.

About the Author

Dale Marshall began writing for Internet clients in 2009. He specializes in topics related to the areas in which he worked for more than three decades, including finance, insurance, labor relations and human resources. Marshall earned a Bachelor of Arts in communication from the University of Connecticut.

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