#WinningMindspark,  Board Affairs

Is a chairman higher than a CEO?

Yes, in perceived terms. In real terms, no.

The corporate structure is based on a chain of command from lower management levels to most senior.

Level 0– top most level. Shareholders or founders level. The people who appoint the board of directors, who are headed by the board chairman. Often times, the founder may and can appoint himself or herself on the Board. In America, it is common.

Level 1 —Board members. The people who run the business on behalf of the founder or shareholders. Ideally, shareholders appoint board members required. And on their first sitting, they elect their Chairman. In many for profit entities, the Shareholders appoint the Chairman. It is ok.

Level 2– The executive committee (EXCO) which is headed by the CEO. Or President . Or Executive Chairman. Or Managing Director etc regardless of whatever name called.

To answer your question, the Board Chairman is at level 1, which is higher than the CEO at level 2. Usually, the Board Chairman signs the appointment letter or contract of the CEO.

Level 3– Middle Management
Level 4 —General staff etc

Regardless of modern management approaches, levels 0 to 4 are essential to create chain of control for strategy execution.

In reality, the CEO is the person running the comapny. They have all mandate to operate the business. Because they sign on the cheques, they control the critical business assets — people and cash.

Because the Chairman, unless one person doubles as CEO, like Facebook’s Zuckerberg or Amazon’s Bezos, he or she is detached from day to day and therefore lacks executive power to have loyalty and access to cash to have real influence.

So, Chairman is at higher level. But CEO has all the power!

I hope you get the gist.

Copyright Mustapha B Mugisa, 2020. All rights reserved.

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