Difference Between Officer and Director

Edited by Diffzy | Updated on: May 05, 2022

       

Difference Between Officer and Director Difference Between Officer and Director

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Introduction

IT and Business are two booming sectors that have the largest corporate ladders. While the hierarchy pyramid may look small, simple, and manageable, anyone experiencing the same on a first-hand basis may not have the opinion! Corporate duties are divided and distributed on a micro-level to manage the company most beneficially. An Officer and a Director are two positions that lie higher up on the pyramid. But how exactly are they different?

Officer vs. Director

The main difference between a director and an officer lies in their duties. An Officer manages the day-to-day operations of a company and supervises them whereas a Director is to manage business affairs of higher levels and importance that oversees the operations of the whole company. The officer manages operations that are comparably smaller than a director since a director sits higher up on the hierarchy pyramid.

Difference Between Officer and Director in Tabular Form

Table: Officer vs. Director
Parameters of Comparison
Officer
Director
Definition
An officer is given comparably smaller, day-to-day operations run by the company.
A director is given comparably higher duties that involve overseeing the management of the company or the organization.
Duties
Signing expense reports, Planning strategies to hit company targets, Reporting the company’s performance to higher officials, etc.
Initiating or approving new programs that improve the company’s performance, Discussing mergers and business deals with other companies, and supervising the lower branches of the company.
Appointment
Officers usually achieve their position through degree, experience and move up the ladder in the same way.
Directors can be appointed by officers who moved up the ladder or through shareholders who choose an experienced person of their choice.
Level of Education
Most officers hold a degree in business when compared to being appointed through experience.
Directors are mainly chosen on their level of experience in the field. There is not much focus on the level of education achieved.
Example Positions
Chief Executive Officer(CEO), Chief Financial Officer(CFO), Chief Inforamtion Officer(CFO)
Internal Director, External Director, Chairman.

What is Officer?

Officers in a company are appointed to oversee the company’s day-to-day operations as they hold significant authority while governing a corporation. This includes legal decision-making regarding the company and its activities. An officer is to actively participate in the company’s agendas that will involve meetings, initiatives, programs, and other activities that’ll affect the performance ofthe company. The number of positions to be filled by an officer is decided by the board of directors along with who is qualified enough to fill the position. Larger companies tend to have a higher number of positions to accommodate the higher number of employees and operations.

What are some common Officer positions?

A particular company and its board of directors or shareholders get to decide which position  they offer to be filled in, to run the company with proper management.

  • President/CEO
  • Treasurer/CFO
  • Vice President
  • Secretary
  • COO
  • CIO/CTO

What are the respective duties?

  1. President or Chief Executive Officer(CEO): They are the highest-ranking officers in the corporation. They manage the branches and officers under them and report directly to the board of directors. While the board supervises the CEO’s actions and decision regarding the company, the CEO still gets a significant say in major decisions and serve as an active voting member. Any strategies proposed are generally taken up with and  approved by the CEO once, even though the decisions are relevant to officers in other positions.
  • Preside over major company meetings along with the board of directors of the smaller branches.
  • Report required information and analyses about the branches to the higher authorities and vice-versa.
  • Approve key day-to-day operations of the company.
  • Sign legal documents that are required by the other corporate officials.
  1. Vice-President(VP): While major companies might demand a vice president, smaller companies function without the position of a vice president. The decision to fill the vice president position lies in the hands of the board. If appointed, A vice president is required to guide the president/CEO concerning his decision for the company. They are also to fill in for the president and manage his duties in the case of his absence or temporary availabilities. In this phase, he acquires almost all the powers of a president.
  • Help and guide the president/CEO through major decisions.
  • Fills in for the CEO when they are temporarily absent.
  • The first candidate is considered when a new CEO is required.
  1. Secretary: The secretary primarily helps congregate meetings among the lower officials, employees, and the CEO, whenever required. The majority of the documentation duties are demanded of the secretary.
  • Organize meetings and prepare minutes for the same.
  • Maintain legal documents and other corporate records.
  • Provide reports and copies of the same for the requested files and documents.
  1. Treasure or Chief Financial Officer(CFO): Smaller businesses refer to the position as treasurer while the larger businesses appoint a CFO. The officer bearing this position will have to oversee all the financial matters related to the company. This might range from managing the cash flow in the company to boosting the same.
  • Manage the branches to align with the appropriate financial regulations as required by the law and the company policies.
  • Maintaining financial records vital to the company.
  • Creating annual/quarterly financial reports of every branch and presenting them to the board or shareholders when required.
  • Discuss financial risks and strategies to overcome the same.
  1. Chief Operations Officer(COO): While CEO is the first in command, the COO is the second in command and acts as their right-hand man. The COO often shares duties with the CEO and is considered a viable candidate for the position of CEO when the situation demands, in the absence of a VP.
  • Supervises the branches and their operations first-hand and reports to the CEO.
  • Chooses the resources and the staff required i.e., hiring of the employees.
  • Deals with promotions and hikes of the staff.
  • Interacts with the employees better to determine the quality and productivity of a certain branch.
  1. Chief Informations Officer(CIO) or Chief Technology Officer(CTO): A company grows when a new technology enters the market. Whether this technology helps the company or will stall them further is analyzed and decided by the CTO. The officer in this position is to oversee all the technological needs of the company, providing newer integrations when required.
  • Evaluates the viability of new technology concerning the company and its operations.
  • Ensures superior conditions of the technology and devices used for the company’s operations.
  • Oversees any requirements for replacements or better technology.

What is Director?

The director of a company, generally appointed by the shareholders, are required to handle fundamental decisions in the company that hold the utmost importance. A director can also be appointed by merit i.e. when employees of a lower hierarchy work their way up the corporate ladder. They act and operate in the best interest of the shareholders and thus, take decisions of the corporation on behalf of the shareholders. When someone takes up their responsibility as a director, they are required to:

  • Handle the company’s assets most profitably.
  • Act as a liaison between the company and the stakeholders.
  • Stitch the company’s policies in a manner that is the most beneficial.
  • Evaluate the company’s needs and the stakeholders’ needs to bridge the gap between them.

What are some common director positions?

Generally, there are three categories of positions that a person employed at a director level can hold:

  • Internal Director
  • External Director
  • Chairman

What are the respective duties?

  1. Internal Director: These are the directors that are selected from within the company, generally achieving the position by working their way up the ladder and gaining promotions. By working their way up the ladder, they gain the advantage of knowing their company inside out. With the advantage of these insider secrets, they can help form strategies better and evaluate what works the best for the company. These insider perspectives can prove to be more helpful than one can assume as the director will know how the employees respond to corporate changes and understand their work culture. They are also referred to as inside directors.
  1. External directors: These are the board members that are outside hires and selected as a director. The purpose of selecting someone outside their company and sometimes, outsides their industry, is to provide the company with some fresh perspectives. A director selected from within the company might have conformed to the company rules and policies, making it harder for them to think outside the box and take risks. Thus, external directors are appointed to put newer ideas on the table 

An inside director might also subconsciously side towards a certain group or be partial. While this may be intentional or unintentional, an external director does not have any experience in the company and thus any opinions given by them shall be unbiased. They are also referred to as an outside director.

  1. Chairman: They hold the highest authority among all the directors and report directly to the shareholders. They hold command over other directors and lower-level officers, communicating closely with the CEO. The CEO discusses all the financial reports, personnel changes, and other initiatives with the chairman, either to gain approval or for presentations and meetings. Newer ideas are also discussed to boost the company’s efficiency through moderating work culture, morale boosters, technology replacements, etc. The chairman is to report the company’s performance to the shareholders and present the same through meetings, along with other prominent management authorities.

Main Differences Between Officer and Director in Points

  • An Officer is appointed to take care of the daily operations of the company. These are usually the lower level of decisions but are important nevertheless. On the other hand, A Director has been appointed the duty of corporate management. They are to oversee the company as a whole and take heavier decisions that will affect the company’s employees and its operations.
  • The position of an officer can offer many categories such as a Chief Executive Officer(CEO), Chief Financial Officer(CFO), Chief Information Officer(CFO), and many more. The position of a director has only three categories: Chairman, Internal Director, and External Director.
  • The duties of an officer are smaller when compared to those of a director. However, this does not reduce their significance in any way since any decision taken by an officer will still affect lower branches. The director’s decision and supervision affect an officer and not the other way round as they are higher up the hierarchy scale.
  • Some duties of an officer include planning financial strategies, managing employees under them, and approving contracts and reports that are relevant to day-to-day operations. A directer's duties, on the other hand, involve higher operations such as signing business deals with other companies, discussing potential mergers, initiating new programs that'll boost the company's efficiency, and other major decisions that’ll possibly affect the whole company.
  • Officers are usually expected to hold a degree in business. However, this does not hold the same for the directors of the company since they are mainly chosen based on their experience in the given field.
  • An officer is usually appointed based on either the level of their education, by moving up the ladder, or through experience in rare cases. Directors are usually employees who worked their way up the corporate ladder and mostly those who are experienced outside hires, chosen by the board or shareholders.
  • An Officer works below a director and manages lower-level employees such as managers and further down. A director is someone who manages such officers since he works above them. Thus, the ‘manages’ the managers.

Conclusion

From the above observations, we can summarize that a director has to interact directly with the shareholders of the company and report the company’s performance. A director’s management reflects on the whole company, until its every last branch. An officer, on the other hand, is given comparable smaller responsibilities. They are appointed by a board of directors and thus lie below the director in terms of hierarchy. They act as liaisons between the directors and the managers of the company, handling more day-to-day operations.

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"Difference Between Officer and Director." Diffzy.com, 2022. Tue. 24 May. 2022. <https://www.diffzy.com/article/difference-between-officer-and-director-214>.



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