Difference Between Chairman vs CEO

Difference Between Chairman vs CEO

Commerce is the center of the world economy. Billions of people on the planet are employed by millions of companies, and they’re job stability and salary grade depend on how that specific company performs. Each individual in the organization plays a significant role to enable its growth, or at least, maintain its’ income stream, from the highest position up to the lowest one.

We call the head of the firm several names. Among these are the CEO, CFO, Chairman, Director, and President. Because of these several terms, we can’t help but wonder what the differences between these terms are, and if they equally represent the highest rank in a company. This article will help answer this wonderment by providing the difference between chairman and CEO, two of the most commonly used terms to describe the “big boss”.

In this article, we will answer the question, “what is the difference between chairman and CEO?” Through evaluation, we will also delineate the difference between chairman and CEO and president. What are their common grounds and major variances? We will start by defining each, and then, by laying out their characteristics in a chart.

Definition of Chairman

The definition of chairman can be better understood by breaking down the word into its root. The term chairman is a compound word that combines the terms chair and man. This signifies a “man” who is sitting on a chair, and a chair is often a representation of a high spot in any institution, whether it be political or commercial.

The term is a noun, and in this case, to an individual. Some believed in the tale that the term came to be because the households in the 17th century only have one chair, and that chair is designated to the most vital being in the room. However, this tale was later debunked, and they clarified that the term actually refers to someone who is in charge and sits in the seat of power.

In the context of business, the chairman is a part of the board of directors. This means that he/she is part of the decision-making body and has a say in company verdicts. The chairman, in this scenario, can also be the individual who presides over an assembly. This just goes to show that the said person is a vital persona and can be considered one of the superiors.

However, it is imperative to note that his/her decision cannot overrule that of the board. Therefore, he/she has no real power unless the board agrees with him/her. Now, let’s look into the role of the CEO.

Definition of CEO

CEO is an acronym of the three words, chief executive officer. By just looking at the words that form it, it is clear that he/she is a person of authority being an officer with high ranking. The definition of CEO, according to the Cambridge dictionary, is an individual with the executive authority in terms of policymaking and management. The said individual oversees the entire organization, making sure that policies are well-implemented, and that the company is heading in the right direction.

While it seems that all decisions come from him/her, he/she actually reports to the board of directors, and the board has the power to replace him/her should they feel that he/she is unfit. This role usually requires eloquent and extensive managerial or marketing experience as it entails leading thousands of people and strategizing to ensure that the business will survive and overcome the competitive market.

In the context of finance, the CEO is accountable for optimizing the company’s financial capacity, enhancing the company-wide tactics, enveloping an organizational culture, and representing the business. Truly, this individual’s role requires skill, wit, and tolerance. How is it different from the chairman, then?

Main Differences Between Chairman vs CEO

Based on their definitions, it is apparent that they both represent high-ranking positions on the corporate ladder. However, the best way to get hold of the facts about these two personas is through a table with main differences.

Basis of ComparisonChairmanCEO
Definition/sPresides meetings, guides the boardHeads the company, chief executive officer
Part of SpeechNounNoun
ScopeLeads the board of the directorsLeads the company
Decision-making capabilityDependent on the majority of the boardMaybe influenced by the board
Position AcquisitionVoted upon by the boardMay or may not be voted upon by the board
RankLower than the CEO unless he or she is also the CEOHighest-ranking position

Difference Between Chairman and CEO: Conclusion

The definition of these two characters may be similar, but they are evidently not the same. The difference lies majorly in their decision-making power. The CEO can make major pronouncements on his/her own, the chairman may not have this supremacy. If we’re the rank one vs the other, the CEO will definitely win. Either way, they both play a vital part in a large organization’s success, and without one of them, it may fall apart.