April 2010                                                                                              Issue 2

BoardWorks International

 

 
 
 
 
ArticletopQ and A: What's In A Name - GM or CEO?

What's in a Name?Question: Can you give me some advice on the differences between the titles 'general manager' and 'chief executive officer'?  We are currently pondering this issue for my position.
 
Answer: As far as titles go it is really a matter of choice; there is nothing hard and fast.  The terms are often used interchangeably. In recent years, however, it has become more common to use the term chief executive for an organisation's principal paid employee.  There has developed a wide sense that a 'CEO' role carries more status and has a 'bigger' job.

While once used widely, the GM title today may reflect a quite deliberate attempt to differentiate it from the chief executive role.  It may be used, for example, to signify that the board does not want a 'chief executive' perhaps because it is unwilling or unable to grant the type of authority that is often assumed to go with that title.  This might be the case, for example, in a family-owned company where family members continue to retain substantial operational decision-making authority. 
 
In other situations it may simply be a reflection that the organisation is still small and under resourced and board members need to shoulder a lot of direct responsibility.  At this stage in the organisation's development, directors may see the principal officer as having primarily an administrative support role. 
 
Other situations in which it is common to use the term general manager are those in which board members have an undelegatable operational responsibility.  For example, the board members of many government and quasi-government organisations (often those with the word 'Commission' as part of their title) have specific decision-making responsibilities.  In those cases it is common for the principal officer to carry the title general manager. 
 
In the private sector when the chief executive is the 'Managing Director'' (i.e. is a member of the board) it is also not unusual for there also to be a 'general manager' performing a supporting role.  It is increasingly likely, however, (particularly in larger organisations) that this key supporting role would now be called the 'chief operating officer'.
 
In conclusion, common usage today would suggest that the principal officer reporting to the board is called the chief executive.  The choice of a title is, however, far less important than the delegation of authority from the board to its principal officer. This should be clear and unambiguous.  The extent of this delegation may fluctuate, along with the title, over time.
BoardWorks International is a specialist governance effectiveness consultancy dedicated to assisting governing boards to provide effective strategic leadership to their enterprises and to fulfil their fiduciary and stewardship responsibilities to their stakeholders. It is also our aim to make 'board work' a satisfying and enjoyable experience for all who serve on or provide support to, governing boards.