chief executive officer CEO Definition, Responsibilities, & Facts Definition
They are accountable to the board of directors or stakeholders of the company and are often the public face of the organization. CEOs typically have extensive experience in their industry and are tasked with guiding their company towards success and profitability. A CEO is the top position at a company, however they are still an employee of that company. They report to others, remaining accountable to the company’s board of directors or to shareholders in a publicly traded company.
- An organization’s board of directors generally hires the CEO, determines compensation and evaluates performance.
- They can lead product-based companies, health care facilities, insurance companies, and more.
- The Chief Executive Officer (CEO) is the highest-ranking executive of any company.
- CEOs monitor the health and productivity of their companies by managing a range of responsibilities, including delegating agendas to managers who are better suited for certain tasks.
- They must have a strong understanding of their industry to guide their company throughout the year.
The CEO is also responsible for hiring C-level members of the executive team and firing those who don’t perform up to the standards set by the CEO. These executives help the CEO formulate strategy and implement the policies and directions set by the CEO and are in charge of managing their functional areas on the CEO’s behalf. The CEO is responsible for making major corporate decisions, managing overall operations, and setting the company’s strategic direction.
Business Management – B.S. Business Administration
Typically, the CEO will work with other executives like the CFO and COO, along with other managers to ensure company operations are successful throughout the year. Along with other executives, they report directly to the Board of Directors and are accountable for their performance. An organization’s board of directors generally hires the CEO, determines compensation and evaluates performance.
- Top executives work in nearly every industry in big and small companies.
- If you’ve got your eye on becoming a CEO, pursuing an MBA or MSML will help you refine your managerial expertise and develop stronger business acumen.
- A CEO is the top position at a company, however they are still an employee of that company.
- In the case of a sole proprietorship, an executive officer is the sole proprietor.
- In these countries, the CEO presides over the executive board and the chairperson presides over the supervisory board, and these two roles will always be held by different people.
Additionally, C-suite executives often require better business acumen because their decisions have a major influence on an enterprise’s overall direction and success. The CEO title most often applies to for-profit businesses whose size in terms of employee numbers or revenue justifies this top position. Some nonprofit organizations also choose to have their most senior person hold the CEO title. Business laws influence whether the title CEO is appropriate within an entity. Corporations, by law, must have CEOs, other chief officers and boards of directors.
CEO Duties & Responsibilities
The role of CEO means working in a high-stakes and high-pressure environment. From navigating partnerships and communicating with stakeholders to overseeing all components of a business, CEOs carry a heavy burden. A top executive’s median salary in the healthcare and social assistance industry was $154,650 in 2021. The path to becoming a CEO is not usually an easy one, and there is not a single, well-defined path However, completing an executive development program can help ensure you get there. Here are three of the top-ranked executive development programs in the U.S.
You’ll need to have a progressive amount of management experience to become a CEO. Try out different companies to see what kind of culture you like and learn as much as you possibly can about the industry. You may not know whether your goal is to become a CEO until you’ve worked within an industry or role for several years. About 70% of CEOs didn’t start their careers knowing they wanted to become CEO. So if you’re not sure whether you’re interested in being a CEO or not, you’re in good company.
For example, the CEO of a political party is often entrusted with fundraising, particularly for election campaigns. On average, CEOs of the 350 largest companies in the U.S. have earned $24 million in annual salaries. Our competency-based model gives you an innovative learning experience you won’t find anywhere else—and our MBA grads tell us they loved accelerating their program to see a faster ROI.
Like CEOs, the CFO seeks to deliver returns to shareholders through focusing on financial discipline and driving margin and revenue growth. Corporate America houses numerous titles of senior executives that begin with the letter C, for “chief.” This group of top senior staffers has come to be called C-suite, or C-level in the corporate vernacular. Working at a smaller organization will help you gain upper-level management experience sooner.
Other positions might include Chief Experience Officer (CXO), Chief Legal Officer (CLO), Chief Information Officer (CIO), and more. Comparatively, the board of directors—led by the chair of the board (COB)—oversees the company as a whole. While the chair of the board does not have the power to overrule the board, the board has the power to overrule the CEO’s decisions. Effectively, the chair is considered a peer with the other board members. In some cases, the CEO and the chair of the board can be the same person, but many companies split these roles between two people because this gives better governance and oversight of the work of the CEO.
A limited liability company (LLC) can structure itself like a corporation and have a CEO, but it’s not required by the laws governing LLCs. The CEO can be the owner, and the owner can be the CEO, so the roles are aren’t mutually exclusive. Successful CEOs and owners often possess similar traits, including business acumen, critical thinking, interpersonal communication skills, passion for the job and loyalty to the company. They also may be responsible for filling high-level positions in their organizations. CEOs monitor the health and productivity of their companies by managing a range of responsibilities, including delegating agendas to managers who are better suited for certain tasks.
The best CEOs excel at innovation, disrupting industries, improving the financial success of their companies and bettering the lives of their employees and society. In technology, for example, highly successful CEOs demonstrate a unique vision, longevity and tenacity, at times generate controversy, and eventually attain iconic status as their brands become household names. CEO is a functional title with daily leadership duties and responsibilities, while ownership is a legal designation.
Is CEO or CFO Higher?
Because of their frequent dealings with the public, sometimes the chief executive officers of large corporations achieve fame. As of Apr. 12, 2023, Elon Musk, founder of Tesla (TSLA) has over 134 million followers on Twitter. Similarly, Steve Jobs, founder and CEO of Apple (AAPL), became such a global icon that, following his death in 2011, an explosion of both cinematic and documentary films about him emerged. A CEO’s role varies from one company to another depending on the company’s size, culture, and corporate structure. In large corporations, CEOs typically deal only with very high-level strategic decisions and those that direct the company’s overall growth.
Education and training requirements vary greatly by employer and industry. Most employers prefer to hire CEOs with at least a bachelor’s degree and a considerable amount of work experience. Many companies prefer to hire from within the company rather than outside. Additionally, the CEO must ensure that the organization’s leaders experience the consequences of their actions whether through reward and recognition or performance coaching and disciplinary actions. Without responsibility and accountability that are actively expected and reinforced, the CEO will fail to attain desired success and profitability. We are looking for an experienced Chief Executive Officer or CEO to supervise and control all strategic and business aspects of the company.
They also drive profitability through effective management while setting priorities that will ensure long-term business success in both short-term goals as well as future planning stages. The CEO is responsible for hiring for the other C-level positions in the company. It is the CEO’s job to make sure they put together a team of chief positions that will guide and manage the company responsibly and ensure growth and protection of the company’s reputation. Because of their role in hiring other C-level positions, the way these employees perform their duties will also reflect back on the CEO. This is why the CEO usually takes such an active role in hiring for other leadership positions.
The Difference Between CEO and Other Leadership Titles
For example, a healthcare organization would require a chief medical officer, and cutting-edge technology companies often employ a chief innovation officer. The CEO or owner of a startup or a small family business generally performs more hands-on day-to-day operations and management tasks than the CEO of a large company. The CEO is always the highest-ranking executive manager in an organization and has responsibility for the overall success of the organization, and is the ultimate decision-maker for a business.
A CEO’s reputation could be reflected in areas like an ability to grow market share, reduce costs, or expand into new markets. When a new CEO takes over a company, the price of its stock could change for any number of reasons. However, there is no positive correlation between a stock’s performance and the announcement of a new CEO, per se. Through 2029, the BLS projects top executives opportunities to grow by 4%, which is about the average growth rate for all occupations.
You will be the first in command in the company and responsible for giving the proper strategic direction as well as creating a vision for success. The board of directors appoints one person the role of CEO, and can therefore fire the CEO if it is a unanimous decision. An owner can play a passive role in the business, providing guidance and advice to the CEO, or a direct role by managing some or all business functions.
Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master’s in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.
Understanding Chief Executive Officers (CEOs)
They must have a strong understanding of their industry to guide their company throughout the year. They must also have excellent communication skills to communicate with other executives, managers and the board of directors. The Chief Executive Officer (CEO) is the highest-ranking executive of any company.