A chief executive officer (CEO) is the highest-ranking executive in a company. Broadly speaking, a chief executive officer’s primary responsibilities include making major corporate decisions, managing the overall operations and resources of a company, acting as the main point of communication between the board of directors and corporate operations. In many cases, the chief executive officer serves as the public face of the company.
The CEO is elected by the board and its shareholders. They report to the chair and the board, who are appointed by shareholders.
KEY TAKEAWAYS
- The chief executive officer (CEO) is the highest-ranking person in a company.
- While every company differs, CEOs are often responsible for expanding the company, driving profitability, and in the case of public companies, improving share prices. CEOs manage the overall operations of a company.
- Across many companies, CEOs are elected by the board of directors.
- CEOs of the 350 largest companies in America earn on average $24 million, or 351 times more than an average employee.
- Studies suggest that 45% of company performance is influenced by the CEO, while others show that they affect 15% of the variance in profitability.
Understanding Chief Executive Officers (CEOs)
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. For example, CEOs may work on strategy, organization, and culture. Specifically, they may look at how capital is allocated across the firm, or how to build teams to succeed.
The Difference Between CEO and CFO
The CFO is the chief financial officer of a company. While CEOs manage general operations, CFOs focus specifically on financial matters. A CFO analyzes a company’s financial strengths and makes recommendations to improve financial weaknesses. The CFO also tracks cash flow and oversees a company’s financial planning, such as investments and capital structures. Like CEOs, the CFO seeks to deliver returns to shareholders through focusing on financial discipline and driving margin and revenue growth.
The Difference Between CEO and COO
Often, the chief operating officer (COO) is ranked second highest after the CEO. As the head of human resources, their responsibilities fall on recruitment, legal, payroll, and training along with administrative duties.
The Difference Between CEO and Other Leadership Titles
There are many other leadership titles, some of which may or may not overlap with a CEO. Other common titles include:
- Founder: A founder of a company is an individual that started the company. They helped bring the company into existence, creating the bylaws and articles of incorporation, organization structure, and overall strategy from the first day. A founder can be a title of an individual currently with a company or a title of an individual that started the company but has since left. If the CEO helped start the company, they can also be considered a founder and may be referred to as both simultaneously (i.e. Founder/CEO).
- Chairperson: A chairperson (often called chair, chairman, or chairwoman) is a presiding officer that oversees a group or committee. A chairperson may also go by the title “president”. The chairperson is in charge of managing the group of individuals often assigned a specific task or set of responsibilities. For example, a Board of Directors often has a chairperson to oversee the management of the entire board. A CEO may hold a chairperson position if they directly manage a committee.
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