Managers vs Directors: What’s the Difference?

Most people think a Director is the Manager of a firm, but then what are the Managers? Is a CEO a different job? What about the Managing Director? Talking to CEO Today, here Janhavi Dadarkar, CEO and founder of Maiora a governance, strategy, risk mitigation and training consultancy, clarifies the various roles. Janhavi is also the programme Lead for the Role of the Director training at the IOD.

A Corporate lawyer by background Janhavi has advised over 200 companies and enterprising individuals from public and private sector and from FTSE 100 to start-ups.

She continues to assist companies through non-executive directorships and advisory positions and is the Programme Lead for the Role of the Director training at the IOD.

An enterprising client of mine recently asked me how she should behave now that her company was growing and she was more than a CEO in name only. I couldn’t help but think that during the last two decades I have been advising corporates and corporate leaders, if only more had asked this question, perhaps they would have understood that being a director or CEO is much more than just a hierarchical change in status and accountability.

The shift from being a manager to director is both a legally recognised change as well as an organisational tool to enable businesses to grow and achieve success. The question my client asked me is so pertinent to CEOs and directors of businesses and corporations of all kinds and sizes if the organisation is seeking to grow and succeed in achieving its objectives. Irrespective of the titles we use in an organisation to recognise a manager versus a director, the importance lies in directors appreciating that they should influence and create value in the organisation through good governance, strategy with sound financials and inspiring leadership. Managers, on the other hand, implement these strategies and ensure the workers follow the direction set by the leadership.

Put simply, directors should articulate the correct path for the organisation whilst managers should ensure those working in the organisation correctly follow that path. My experience with directors is that too often this difference in role is not emphasised enough nor is there a path to assist directors themselves for this transition from senior management to directorship. For smaller and medium businesses, the issues are compounded by the “multiple hats syndrome” as directors hold several functional responsibilities as well as being on the board and entrepreneurs tend to have come from a background where they’ve done everything so letting go is not easy.  Knowing which hat you are wearing as a director requires the ultimate clarity of thought and purpose.

The key lies in organisations and aspirant directors preparing themselves for the transition by ensuring the next generation of directors are clear on the competencies that are required – or have the opportunity and confidence to raise questions if they’re not – and are trained distinctly to build on their skills and knowledge of being in senior management. To my surprise, this issue has not been adequately considered by businesses or academics. In any other profession, there is almost always a matrix of essential skills and knowledge and systems to enable organisations to measure these. But being a director rarely requires a director to demonstrate their competencies. Often, they are assumed given that directors are either from senior positions or in smaller companies directors “inherit” or fill vacancies because “someone has to be a named director”. Moreover, no one to my knowledge, had really comprehensively defined the proficiencies that would apply to directors as differentiated from others.

With this in mind, I was really pleased to see the IOD competency framework and skills diagnostic tool specifically for directors.  It is a construct I would encourage organisations to integrate into their senior persons’ development strategies. But this isn’t the whole story. For SMEs it would be unrealistic to expect a sudden rush to adopt such pathways to directorships. Choosing of directors in SMEs is bound to remain more opportunistic and organic. For all businesses and aspirant directors though some fundamental messages to consider:

• Being a director (particularly being a CEO) means being a leader and creating value not just auditing value. Step out of the implementation mind-set of a senior manager and be more strategic and pioneering
• Spot the right opportunities and ideas even if you are not inherently innovative. Many successful directors/CEOs confess that it was their ability to surround themselves with the right people and processes that gave them the edge to keep innovating
• Being a leader necessitates getting the job done without someone looking over your shoulder and evincing confidence in others to follow the direction you have set. So endeavour to develop your knowledge, skills and outlook

Finally, as directors of businesses in a dynamic world, accept that disruptors are not anarchists, knowledge is not linear and most importantly, inspire business practices that ensure sustainable growth in harmony with the wider community and global eco-system. This principle of integral humanism which in political terms offers an alternative to pure capitalism or communism in the business world means directors must find a medium between pure profit-driven venture versus those that have admirable social goals but forget the nature and need of wealth creation by business.

This is not an easy task, but I hope that today’s CEOs can start to elevate the reputation and understanding of the role of directors so that for the next generation of directors it is more fulfilling and more than just a title change.