What Is a Managing Director? Guide and Career Advice

By Indeed Editorial Team

Published 30 August 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Managing directors play a crucial role in the management of a company. They are responsible for its profitable growth, innovation and expansion. By understanding the role a managing director plays in a company and the responsibilities they must undertake, you can decide if it is a career that might suit you. In this article, we can find out what is a managing director, what the job entails, how it differs from that of a CEO, the required skills and educational qualifications and how to become a managing director.

What is a managing director?

A managing director is a senior-level manager in a company who is responsible for its day-to-day operations. They oversee the performance and functioning of the different company departments and receive reports from their department managers. In turn, they report to the chief executive officer (CEO) and the board of directors. They work in close cooperation with C-level executives like the CEO, the chief operating officer (COO), the chief technical officer (CTO) and the chief financial officer (CFO). With their input, the managing director can create business policies and strategies to help the company achieve its goals and earn profits.

Related: The Importance of Delegation of Authority in Management

What is the role of the managing director?

The managing director has a leadership role in the company. As a senior-level manager, the managing director must undertake a wide range of management duties and responsibilities. These include planning, directing, controlling and overseeing the daily business operations of the company departments to ensure their smooth functioning and supervising department heads and managers. They have to inform and update the CEO and the board of directors about budget targets, business strategies and industry developments, and they may work with them to develop and implement effective policies for business growth and expansion.

They may develop research programmes, public relations strategies and marketing initiatives to promote the company. Additionally, they may act as the company's representative at public events and in business negotiations with other companies, suppliers, vendors, customers and government officials.

Related: Your Guide to The Functions of Management

What does a managing director do?

A managing director does the following work:

  • Manage the company budget and allocate its resources

  • Create strategic business plans to meet the company's goals

  • Promote research and development to boost business growth

  • Track trends and technology advancements to stay competitive

  • Interact with clients and liaise with company shareholders

  • Meet with the public and engage in promotional activities

  • Ensure that the company's policies comply with legal and industry regulations

  • Monitor the company's progress and report to the CEO and the board of directors

Related: A Quick Guide to Operations Management Responsibilities

Is a managing director the same as a CEO?

Although both are senior-level leadership positions and part of the board of directors, a managing director has a different role in a company than a CEO. The key differences are:

  • The managing director works under the CEO in most companies, while the CEO is the highest-ranking position in the company.

  • The managing director reports to the CEO, the board of directors and the company shareholders, while the CEO reports only to the board of directors.

  • The managing director manages and directs the daily business operations of the different departments within the company, while the CEO sets business goals and is responsible for the decision-making in all business matters.

  • The managing director implements company policy and participates publically in the company's promotional activities, while the CEO develops and implements strategic plans to benefit the company.

  • The managing director monitors the company's business performance and identifies ways to improve it, while the CEO receives reports from the managing director and creates policies to achieve its long-term goals.

  • The managing director oversees the work of the company's department heads and managers, while the CEO monitors the work of the C-level executives.

Related: What Is a CEO? Definition and Career Advice

Is CEO higher than managing director?

A CEO holds the highest position in a company or an organisation. They are therefore higher up in the hierarchy than a managing director. In most companies or organisations, the managing director works under the CEO and reports to them on day-to-day business matters.

Difference between managing director and executive director

The differences between an executive director and a managing director are:

  • A managing director implements the company's policies, while an executive director works with the board of directors to develop the company's business initiatives, programmes and policies.

  • In the hierarchy between an executive director and a managing director, the latter has a higher rank. The managing director also has the authority to dismiss the executive director.

  • A managing director reports to the CEO and the board of directors, while an executive director has to answer to all senior managers.

What skills should a managing director have?

A managing director can benefit from having the following skills:

  • Communication: A managing director needs to have strong verbal, written and listening skills for regular interactions with department heads, managers, C-level executives, the board of directors, company shareholders and customers.

  • Interpersonal skills: As they have to meet with a wide range of people, it is important for managing directors to know how to get along and collaborate with different personalities.

  • Leadership: To motivate and inspire people to work with them to achieve shared business goals, managing directors need to be patient, firm, dependable, positive and capable of constructive criticism.

  • Strategic thinking: To ensure the company's long-term growth, a managing director has to assess its current situation and implement changes to make essential improvements in its different departments.

  • Management skills: While directing and monitoring the company's everyday activities, a managing director has to anticipate issues and developments that might affect the business and overcome them by planning ahead and hiring qualified people to handle matters.

  • Decision-making skills: Managing directors have to make sound and sometimes difficult business decisions to benefit the company and justify its policies. They often have to assume responsibility for the outcome of their decisions.

What educational qualifications should a managing director have?

There are no specific educational qualifications for becoming a managing director, but an advanced degree may be essential. Many managing directors have a bachelor's degree, a master's degree or a doctorate in business, business administration, management, economics, commerce, accounting or finance. They may also need to have technical proficiency and extensive work experience in their industry.

What is the salary for a managing director?

The national average salary of a managing director is ₹5,59,638 per year. The exact pay may differ according to employer, location, experience, skills and educational qualifications. The remuneration is likely to be generous for positions with greater responsibilities. Managing directors may also receive bonuses and shares in the company.

How to become a managing director

While there are different pathways to becoming a managing director, you might benefit from following these steps:

1. Get an advanced degree

You can get a bachelor's degree, a master's degree and a Ph.D. in business, business administration, business management, finance, accounting, commerce or economics. It may help to have industry-specific degrees in arts, science, medicine or engineering. It is also essential to read a lot and be well-informed on business trends, developments and other industry-related matters.

2. Gain work experience

Find a job in your industry and steadily advance in your career. For the managing director position, work experience, advanced knowledge and practical skills count for more in the selection process than educational qualifications. To reach the managing director position, you may need to have at least 10 to 30 years of relevant work experience.

3. Develop business expertise

Sound business capabilities are essential for a managing director since they are responsible for managing the day-to-day operations of all the company departments. You may benefit from learning about the management of finances, production, sales, marketing, human resources and other business activities. It may also help to understand revenue generation and to become technically proficient.

4. Create a personal brand

To successfully take charge of a company's business affairs and motivate its employees to work together to achieve business goals, a managing director has to have wide recognition and immense personal influence within the company. It can time and effort to create such a personal brand. You can make a start by working with reputable national and international companies, participating in high-profile projects, developing communication and collaborative skills and cultivating a reputation for being ethical, diligent and competent.

5. Complete professional director training

Institutes like the Indian Institute of Management and the Indian Institute of Corporate Affairs offer professional director training courses that you can take in-person or online. You can learn about broad structure, the role of boards in business ventures and acquisitions, board-level negotiation dynamics and fair governance framework in corporations. Additionally, you can learn how to succeed as a managing director, address management challenges and add value to a company.

6. Find good business mentors

A senior-level and more experienced business executive can be a good business mentor to offer the guidance you need to advance in your career. You may be able to find a mentor by networking with decision-makers and developing valuable business relations from the beginning of your career. Attending business conferences, seminars, lectures, training programs and workshops may assist you with expanding your business contacts.

Please note that none of the companies mentioned in this article are affiliated with Indeed.

Salary figures reflect data listed on Indeed Salaries at time of writing. Salaries may vary depending on the hiring organisation and a candidate's experience, academic background and location.

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