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What is a Managing Director?

Mary McMahon
By
Updated Mar 02, 2024
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A managing director is someone who is responsible for the daily operations of a company, organization, or corporate division. In some regions of the world, the term is equivalent to “chief executive officer,” the person who is the executive head of a company. In other places, managing directors primarily work as the heads of individual business units within a company rather than heading up the company as a whole. Whether managing an entire organization or just a part of one, these professionals have a number of key duties.

Broad Responsibilities

The duties of managing directors vary somewhat depending on the needs of their companies, but personnel organization is usually high on the list. Nearly all are responsible for heading up teams of employees and organizing efforts to meet certain internal and external goals. Directors often also have reporting obligations to corporate directors, shareholders, and the general public, and they may be called upon to discuss the progress of certain projects or the corporation’s stance on specific issues.

The job typically involves a lot of paperwork, too. Directors are usually in charge of authoring final reports and making presentations about the topics within their control. In most cases, this person takes the fall for projects that fail, but will also receive the majority of the credit for major successes. As such, he or she must strive to motivate employees of a lower level to do good work — these people, in many ways, shape the director’s success or failure.

Director-Heads

When referring to the executive head of a company, one of the managing director’s main duties is to serve as a voting member of the corporate board, which can help him or her shape company policies. He or she will also typically handle business operations, including everything from establishing and implementing a business plan to making decisions about the fate of units within the business. Directors are held legally responsible for the actions of their companies in most places, and they may also be accountable to shareholders if the company is public.

As a member of senior management, this managing director is also expected to keep a company solvent and to promote expansion and innovation within the industry. Those who fail to keep a company on the right track may be removed by votes from shareholders or board members, even when a company's failings are not necessarily the director’s fault. This can be an especially big issue when companies suffer due to general economic trends or widespread industry reforms. In these cases, directors must often accept the fact that they could become scapegoats if a company's fortunes experience a downturn.

Divisional and Departmental Leadership

When a company is divided into a number of semi-autonomous units, each unit may have its own managing director. These sorts of leaders typically have skills that are unique to the unit they head, along with connections in the industry which may be useful. For example, at an aerospace company, very different directors might head up the experimental aircraft, commercial aircraft, and spacecraft divisions, with the company choosing people on the basis of experience and qualifications. The goal is to choose leaders who are well suited to handling specific issues and managing people with nuanced expertise.

Non-Profits and Smaller Organizations

Some nonprofits, educational institutions, and government organizations also use this management model, just on a lesser scale. These management professionals often have wide expertise that can be leveraged in a number of directions. Whatever the organization’s need, the director will strategize a way to make it happen — and will recruit the needed personnel, whether inside employees or outside volunteers.

Parameters and Limitations

Though the day-to-day jobs of managing directors can be somewhat wide-ranging, there are some responsibilities that rarely, if ever, fall to these professionals. Financial management is one of the biggest. The managing and finance directors need to be in close contact with each other, however, to discuss issues that will affect company performance and to talk over specific financial needs and concerns that need to be taken into account when making decisions for the company. The managing director is usually considered to be a major player in organizational leadership, no matter the organization at issue; as such, he or she needs to have at least a cursory understanding of most major divisions, even if there is no direct responsibility attached.

Practical Adult Insights is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a Practical Adult Insights researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments

By anon157628 — On Mar 03, 2011

where are the responsibilities of a managing director? this is a very pleasant site as it helps me with my business GCSE coursework a lot!

By anon136039 — On Dec 21, 2010

In private equity and investment banking they are simply investment professionals without much leadership responsibility at all.

By Catapult — On Nov 03, 2010

@panda2006, your point furthers my feeling that in the education industry, the managing director job is the equivalent of the president's job at a college or university. When one considers the number of duties for which people in these positions have to be responsible, and their importance as symbols of their companies and schools, it makes sense that college presidents' compensations, and managing director compensations, are so high compared to other employees, though it could get out of hand.

By panda2006 — On Nov 03, 2010

Considering the importance of the managing director's duties, it is understandable why so many companies are very serious about their managing director searches when the position becomes empty, especially in cases where the previous managing director left because of poor management.

Mary McMahon

Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

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