In this blog, I’m going to talk about the role of a managing director and why you should hire a managing director to handle the running of your business. If you’ve never considered appointing a managing director, it’s something worth thinking about, as it can have a big impact on your day-to-day operations.
So what does a managing director do and what’s the difference between ‘CEO’ and ‘managing director’? This is something I touch on in Series 3 Episode 13 of The Diary of an Entrepreneur, but let’s talk about it in more detail here too.
What is a Managing Director?
A managing director is a senior management role within your organisation. You might find it easier to think of it as a ‘manager director’ – someone whose job is to give your managers a sense of direction and keep everybody heading along the same path.
It’s a strategic, visionary role. Your MD might have to coordinate a large number of teams and their leaders, as well as report back to you. A good MD has strong organisational skills, excellent time management, fantastic communication (including with subordinates under pressure) and a generally unflappable personality.
What does a Managing Director do?
Managing director responsibilities can be many and varied. A typical MD faces a large volume of tasks coming at them in a constant stream. Prioritising is crucial. At the same time, and MD doesn’t really ‘delegate’ duties in the way a team leader might. Instead, the MD is an instigator, making sure managers are doing what they need to do to achieve your company’s goals and visions.
A more direct answer to “What does a managing director do?” might look like this:
- Give strategic advice to the business owner and boardroom
- Develop and execute strategic business plans
- Implement project- and goal-specific plans as needed
The MD takes the place of the business owner within the day-to-day hierarchy of management, freeing you up to focus on building your brand and liaising with your most important stakeholders. That’s not to say that the MD ‘replaces’ you, but that they release you from those direct management responsibilities over your workforce.
Understanding the difference between CEO and Managing Director
The key difference between ‘CEO’ and ‘managing director’ is that a CEO is typically a more ‘executive’ role whereas an MD is directly involved in the management hierarchy. However, in some cases the titles are interchangeable – it depends on the duties you assign to your MD or CEO.
Generally speaking, an MD is more senior than a CEO. In companies that have both, the CEO may be responsible for investor engagement and public relations, whereas managing director is a role with broad responsibilities across the entire running of the business.
The challenges of not having a Managing Director
I often talk about the challenges of running a business in my Diary of an Entrepreneur podcast. The challenges of not having a managing director are roughly the same:
- You carry sole responsibility for running your business
- You have to manage every member of your workforce
- You have to devise strategy and business plans alone
As your company grows, this all becomes physically impossible for one person to bear. But if all of your managers are subordinate to you, they can’t always give you the sounding board you need. By appointing an MD at a very senior level, you give yourself a visionary instigator who is able to handle some of the pressure you’ve been facing alone.
The benefits of having a Managing Director
The benefits of a managing director are a natural evolution of building a workforce hierarchy. Middle managers can function as team leaders, but you need that single leader – the star at the top of the tree – who can bring it all together into something coherent and cohesive.
You also free yourself from the restrictions of being seen as a senior manager. Instead, you can mix with your teams and your employees at every level, for a better idea of how well your company and its management hierarchy are functioning. All of this is while your MD passes strategy down through the hierarchy so everybody knows which direction you’re heading.
Sit down and define the role of a managing director in the context of your own organisation. What would you need from them? What would you expect? What would you want them to offer in terms of personality and ambition?
When you’re ready to appoint a managing director, make sure you set targets. Your MD might want to set goals of their own too – be open to this and work with them on future strategies. Two heads are better than one.
I believe that with a managing director in place, many small and fast-growing businesses could unlock growth that is simply impossible with one person trying to be the owner, chair and MD all rolled into one.
To talk about any of the issues I’ve mentioned in this article, please get in touch or connect with me via my socials.