Hiring a Managing Director to Run Your Business: The Highest-Stakes Hire a Founder Makes

Hiring a managing director succeeds when the founder writes a brief around the operating gaps the business actually has, budgets a package that pairs a market salary with growth shares tied to future value, and designs a handover with clear decision rights and a fixed reporting rhythm. Hiring a managing director fails, usually slowly, when any of those three is left vague, because the founder is stepping back at the very moment that a poor hire becomes hardest to see.

Why this hire carries more risk than any other

Most senior hires join a business in which the founder is still watching closely, so mistakes surface quickly and get corrected, whereas an MD is hired precisely so that the founder can look away, which means a weak appointment can erode delivery, margin and client relationships for a year before anyone names the problem. The cost is not only the salary but the time lost, the people who leave and the credibility of the next attempt.

It is also worth being clear about what you are hiring. The title matters less than the authority that comes with it, and if you are unsure whether the role is genuinely an MD or something closer to a chief executive, the distinctions are set out in our piece on the managing director versus CEO question. If what you actually need is someone to fix delivery and operations while you continue to lead, that is the adjacent decision covered in our guide to whether a 20 to 60 person business needs a COO, and it is a cheaper and less irreversible step.

The profile to look for in a managing director

The common mistake is to hire a version of yourself, someone who sells well and has energy, when the business you are handing over needs the things you were never interested in doing. A useful profile for a founder-led technology services business at this stage usually includes the following.

• Experience at the next size up, not ten sizes up. Someone who has run a business of perhaps twice your headcount understands the systems you lack, whereas someone from a large corporate often expects infrastructure that does not yet exist.
• Commercial and operational fluency together. They should be able to read utilisation, gross margin and pipeline coverage and explain what they would change, rather than only talking about vision.
• A record of building leadership teams in which managers made decisions without escalating everything, because an MD who becomes the new routing layer has simply replaced you.
• Temperament for a founder who is still in the building, which means the confidence to disagree with you in private and the discipline not to undermine you in public.

When you write the brief, describe the three or four outcomes the MD must deliver in the first year and the decisions they will own outright, rather than a list of personal qualities that every candidate will claim.

Budgeting the package: realistic UK pay

Salary data gives you an anchor rather than an answer. According to Indeed UK, the average salary for a Managing Director is £95,039 per year, based on 395 salaries from job postings in the past 36 months, with a typical range from a low of £51,131 to a high of £176,652 depending on experience, location and the hiring company. In the capital, Indeed UK (London) puts the average at £107,959 per year, 14% above the national average.

Those figures cover every kind of business calling its leader an MD, so an experienced operator capable of running a scaling technology services firm will normally sit in the upper half of that range, with a bonus tied to the outcomes in the brief. Budget for recruitment fees, pension and the cost of any overlap period as well, since these are routinely left out of the first calculation.

Using growth shares without giving away the past

Equity is often what persuades a strong candidate to take the risk of joining a founder-led business, but handing over ordinary shares rewards the MD for value you created before they arrived. Growth shares solve that by participating only in value above a hurdle, typically set at or above the current valuation, so the MD shares in what they help build rather than what already exists.

There are practical points to plan around. Setting up a growth share scheme typically takes 8 to 12 weeks from instruction to implementation, depending on complexity and whether HMRC clearance on valuation is sought, according to Taylor Rose MW, so start the work before the offer letter rather than promising equity that arrives months late. As Sprintlaw explains, growth shares issued to directors are employment-related securities that must be reported to HMRC through the ERS online service, with an annual return due by 6 July following the end of the tax year.

Candidates will also ask about their tax position on eventual sale. First Wealth notes that Business Asset Disposal Relief, which can apply to qualifying shares such as vested growth shares held for at least 24 months, is charged at 18% on qualifying gains up to a lifetime limit of £1 million for the 2026/27 tax year. Being able to discuss that credibly, while pointing the candidate to their own adviser, signals that the equity is real rather than decorative.

Structuring the founder and MD relationship

The relationship works when authority is written down and the founder honours it, which sounds obvious but is where most handovers wobble. Agree in writing which decisions the MD owns, which they own after consulting you, and which remain with you or the board, so that hiring, pricing and client escalations do not drift back to your desk.

A reporting rhythm that tends to hold looks like this:

1. Weekly, a short one-to-one in the first quarter, covering priorities and anything the MD wants your view on, which then moves to fortnightly once trust is established.
2. Monthly, a written report on a consistent set of measures such as revenue, gross margin, utilisation, pipeline and people, so that you judge trends rather than anecdotes.
3. Quarterly, a board or shareholder review against the year's agreed outcomes, which is where formal challenge belongs.

Tell your team and key clients clearly that the MD now runs the business, and then redirect anyone who tries to route around them. The broader handover sequence is covered in our guide to founder succession planning.

First-year milestones that show it is working

Judge the hire against outcomes rather than activity, and agree the milestones before the MD starts. By around 90 days, the MD should have produced a written diagnosis of the business and a short list of priorities you both accept. By six months, the leadership team should be bringing decisions to the MD rather than to you, and the monthly numbers should be reported without your involvement. By twelve months, the agreed outcomes should be visibly moving, and you should be able to take a fortnight away without the business stalling.

Where Vitori fits

Many founders do this well without outside help, and a good executive search firm and employment lawyer will cover much of the process. Where Vitori helps is before and around the hire: using the Operational Scale Framework to establish what the business genuinely needs across Growth, Delivery and Operations, so that the brief is right, and, through the Operator model, embedding to strengthen the operating model so that the incoming MD inherits a business that can be run rather than one that depends on memory. Sometimes that work shows an MD is not yet the right answer, which is worth knowing before you commit a six-figure package. If that conversation would be useful, you can get in touch with us, and either way the goal is the same: a business that runs, and scales, without the founder in every decision.

Common questions about hiring a managing director

How long does it take to hire a managing director?

Hiring a managing director usually takes several months once you include writing the brief, search, interviews and the candidate's notice period, which for senior people is often lengthy. Founders should also allow the 8 to 12 weeks a growth share scheme can take to set up, so equity is ready when the MD starts rather than promised for later.

Should a new managing director get shares straight away?

A new managing director does not need shares on day one, but agreeing the equity terms in the offer and issuing growth shares early makes the hurdle reflect today's value. Vesting over several years, with leaver provisions for good and bad leavers, protects the founder if the appointment does not work out while still rewarding growth the MD creates.

Can the founder stay on the board after hiring an MD?

A founder can and usually does stay on the board after hiring a managing director, often as chair or executive chair. The arrangement works when the founder's role is formal oversight through quarterly reviews and agreed reserved matters, rather than informal involvement in daily decisions, which quietly undermines the MD's authority with the team.