Who are directors and officers and what do they do?

Management has an important job. It’s their responsibility to run the organisations which make the world go round. Their work is often glamorised, sometimes controversial, but never easy. Let’s take a look at what their role really involves.

Directors and officers are an integral part of each and every business. They are responsible for managing an organisation’s operations and monitoring its ongoing performance. You may encounter them in your own workplace. Or at the very least, you’ve read about them in the paper or seen them on TV.

At the top end of town, they are the men and women who make important announcements for large corporations and the high-flying entrepreneurs that influence the world we live in. People like Microsoft’s Bill Gates, Amazon’s Jeff Bezos, and investing legend Warren Buffett are some of the biggest names that come to mind. At the grass roots level, they can be anyone who owns or manages one of the thousands of small and medium enterprises that are at the cornerstone of each and every industry.

Directors and officers are in charge of planning, organising and directing an organisation’s financial and human resources to ensure that its business objectives are met. Just like the conductor of an orchestra, they make sure that each area of an organisation’s operations plays together in tune, to ensure a successful performance.

What do managers do?

Directors and officers, also often referred to as ‘managers’ or ‘executives’, are relied on for controlling organisations with a broad range of corporate structures, such as:

• Public companies
• Private companies
• Non-profit organisations
• Charities
• Government departments
• Universities and other academic institutions

As the goals and objectives of every organisation is different, the managerial abilities of its directors and officers are applied according to the purpose of its function. A company, for example, exists to deliver a profit to its shareholders, while a non-profit organisation may focus on creating positive outcomes for the community.

Whichever the case, it is the directors and officers of these organisations that drive them forward and who are ultimately responsible for their success, or in some cases, failure.

Leading an organisation from the front

Appointed to a position of leadership, directors and officers provide inspiration and guidance to the people around them. They encourage employees to contribute their best abilities and provide a guiding hand to their efforts. Generally accomplished professionals in their own right, managers bring years of knowledge and practical experience to an organisation’s operations.

An example of an experienced manager is John Borghetti, the CEO of airline Virgin Australia, who famously began his career in the mailroom of Qantas. Another is Mark Zuckerburg, who despite his young age, founded Facebook from the modest confines of his college dorm room and grew it into the worlds largest social network, and second most popular website on the internet.

All organisations, from airlines through to abattoirs, present their leaders with unique challenges. Some are large and have clearly defined roles for its managers, while others may be smaller and require executives to ‘wear many hats’; blending many management roles into one. Nevertheless, it’s important to understand that directors and officers do, at least in theory, have separate and distinct purposes. Below, we look at each and provide a brief overview of their role.

Directors

A director is a person who is appointed as a member of the board of directors. The board of directors, or ‘the board’ as it is commonly known, is the highest management authority of an organisation. The board is a group of experienced leaders who are entrusted with governing an organisation, and providing it with strategic direction. The board is delegated its authority by an organisation’s constitutional documents and aims to represent the interests of shareholders.

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Members of the board

In their position of senior leadership, the board of directors establish broad policies surrounding corporate governance and make decisions on major organisational issues. While the specific responsibilities of directors vary depending on the type of organisation they control, their tasks often include:

• Appointing and reviewing the performance of the Chief Executive Officer (CEO)
• Approving annual budgets
• Ensuring the organisation has adequate access to finance
• Keeping shareholders informed of important matters
• Determining the compensation of senior executives (including their own)

An organisation’s corporate structure typically determines how its directors are appointed to the board. An organisation with shareholders, such as a public company, requires its shareholders to elect the individuals they believe to be most qualified for the position. Private companies and non-profit organisations, on the other hand, may permit more flexibility in the selection process, often allowing the board to appoint and remove members at its own discretion.

To ensure that the board provides balanced and capable leadership, two types of members are considered:

Executive directors

Executive directors are members of the board who are also employed within an organisation as corporate officers. They are involved in an organisation’s day-to-day activities and oversee the management of its employees. Through their intimate knowledge of an organisation’s operations, executive directors aim to ensure that the information presented to the board provides a true reflection of its affairs.

Non-executive directors

Non-executive directors, by contrast, are not involved in the day-to-day management of an organisation and instead act as external advisors. Their role is to independently monitor the board’s operation, and provide impartial judgement on strategy and performance. As such, non-executive directors usually consist of industry experts and experienced leaders from the community.

Corporate officers

Corporate officers, often known simply as ‘officers’, are employed by an organisation to manage its day-to-day activities. They are responsible for all aspects of an organisation’s physical operations, including the management of its employees.

Experienced operators

Corporate officers are generally experienced in a specific area of an organisation’s operations, such as finance, accounting, technology, supply chain, marketing or sales. Their position is considered to be more ‘hands on’ than that of directors, however, they are often required to make decisions on both a macro and micro level; the degree of which depending on the scope of their role.

Corporate officers are delegated their authority by the board of directors, with responsibilities ranging from top-level management through to front-line positions. The highest ranks of corporate office are often referred to as the C-Suite, consisting of the Chief Executive Officer, Chief Financial Officer (CFO), Chief Operations Officer (COO) and other similar positions. In the United States, these roles are sometimes referred to as Presidents or Vice-Presidents.

Middle and front-line management

In addition to traditional C-Suite positions, corporate officers also exist in middle and front-line management. Middle management generally focuses on implementing an organisation’s strategy and reporting the results to senior executives. These positions include roles such as general managers, branch managers and divisional managers.

Finally, at the bottom of the chain of command, reporting to middle management, are various forms of front-line managers. These lower leadership positions often consist of department leaders, supervisors and foremen, who are directly responsible for coordinating the efforts of an organisation’s employees.