Role of the Chief Executive Officer

CEO and president

Role of the Chief Executive Officer

CEOs (chief executive officers) have great responsibility for any corporation. Not only are they the face of the business, but they are ultimately responsible for the successes and shortcomings of the business. The chief executive officer is the head of a company and is assisted by other officers. The CIO (chief information officer) and COO (chief operating officer) are part of the chief executive group. 

CEO roles

CEOs do quite a bit throughout the day. However, some of their main roles are the following:

  1. Making decisions and being responsible for those decisions. This is arguably the most important aspect of their job. They are the ones that are ultimately held responsible for the outcomes. Their responsibility also falls into creating both a vision and a destiny for their corporation. Vision is the direction in which the company is headed. Strategy is the process that the business will undertake to achieve the vision. One aspect of the business that the CEO must not undertake is micro-management. Once they stop focusing on vision and strategy to manage specific details, they are no longer performing the duties of a CEO. 
  2. A CEO leads his company. He or she is the one that guides the business towards the vision. In addition, to guiding the business, the responsibility of setting the culture of the company rests as well in the hands of the CEO.  
  3. CEOs are responsible for maintaining capital for their business. They need to ensure that their company has enough money to be successful and be able to meet its obligations. There are several different avenues from which this revenue may arrive. It may come from earnings, equity, or debt. 
  4. CEOs manage risk. Every corporation faces uncertainty about their future. A CEO’s responsibility is to manage that risk so that the company does not appear to be too volatile to invest in. By doing so, not only will the company maintain a more consistent revenue stream, but they will be attractive to current and potential clients. 
  5. CEOs have an ethical and a legal accountability to the owners and shareholders. They are also responsible and accountable to the board of directors and must keep them updated as to the state of the business. 
  6. CEOs report to the board of directors. CEOs do not have free reign to do whatever they would like without consequence. The board of directors has a duty to make sure that the CEO is performing in a manner which is best for the corporation. They must also replace the CEO if he or she is not doing as well as they need to be. 

CEO and president

In order to better understand the role of a CEO, it is important to recognize the structure of a business. A business is comprised of many levels, leading with the CEO. AS listed above, the executive team has several members. Along with the CEO may be many other officers in the leadership team. 

Some of these additional officers may include a CFO (chief financial officer), CSO (chief strategy officer), a CMO (chief marketing officer), CCO (chief corporate officer), CPO (chief procurement officer), or a CRO (chief revenue officer). The CEO and CFO are the top two primary executives in most corporations. 

CEO Duties in a Startup vs a Large Corporation

CEOs in large companies have different responsibilities than they do in a startup. In smaller companies the CEO has to do virtually everything. There simply are not enough people available to do all of the tasks. 

Conversely, CEOs in larger corporations have the ability to delegate tasks. Task delegation is one of the primary roles for upper management like the president and chief executive officer. 

CEO as a Project Manager 

The CEO must also act as the head project manager. There are several aspects of that role which are vital. As the highest ranking member on the project, they have the authority and the vision guide the vision. 

They must also report to the shareholders about the progress and the aspects of each project. The responsibilities come down to:

  • Planning and executing on project ideas

  • Making managerial decisions 

  • Managing overall resources and services

  • Acting as the go-between among the shareholders and the board


Difference between the CEO and the Chairman

The CEO is the number one decision maker for any corporation. All of the other officers will have to answer to him. A successful CEO will delegate responsibilities to other managers throughout the organization. 

Instead of focusing on tactical decisions, they spend their time on strategy, competition, and partnerships. The president, on the other hand, is more responsible for the daily operations and logistical moves. The accountability of the CEO lies in the board. 

As opposed to the CEO, the chairman of a business is the top person of the board of directors. 

The shareholders are the ones that elect the chairman. They are responsible to the shareholders to make sure that the company has leadership in place to be profitable. The board will meet a few times each year to go over the progress and success of the business. 

They will discuss goals, go over results of the finances, have an evaluation of top end management, and hold votes. These meetings are strategic and the board makes sure to go over relevant topics. 

Both the CEO and the chairman hold quite a bit of power. The chairperson technically has a bit more power as the CEO has to answer to him or her. The CEO also needs the approval of the board to make large decisions that have significant influence on the company. 

A small number of chairmen will use their power in order to become more active in a CEO’s daily decisions. However, most chairmen do not spend their time in that way. 

One Person Acting as the CEO and Chairman 

There are also rare cases in which the CEO and the chairman of the board are the same person. For example, Bill Gates was both the CEO and chairman of the board of Microsoft. However, in order to reduce the chance of any ethical violations, it would make more sense to have two people in these roles. The CEO and president ideally will be different people for several reasons. 

A single person could, in theory, cover his or her own fraud. One of the major purposes of the board is to govern the company in a sense. In order to govern well, there should be a separation. Additionally, there are audit independence rules that can limit upper management’s role in the internal audit procedures. 

Having separate people in the two roles can avoid any issues that may arrive. The board is also responsible for reviewing the performance of the CEO. Having the same individual in charge of his or her reviews can only invite conflicts of interest. 

The CEO has several responsibilities and is answerable to several groups of people. He or she will spend their day making decisions that will best influence the future of their corporation and will guide the vision. They will mold a culture and will be held accountable for it. 

They are also responsible for the capital and the risk. They need to manage risk and make sure that their company has enough money to not only stay in business, but be able to make changes that are in the best interest of the entire corporation.