Behind every company sits the Chief Executive Officer (CEO), who occupies one of the most glamorised jobs in the business world. Read on to discover 7 key responsibilities that this role entails.
Sitting comfortably at the top of the corporate ladder, the Chief Executive Officer (CEO) is a senior management position that undoubtedly carries with it a certain air of authority and influence. It’s easy to assume that the all-powerful CEO can do everything however and whenever they want. However, nothing could be further away from the truth.
Who is a ‘CEO’?
‘CEO’ is an acronym for ‘chief executive officer’, which is the highest-ranking executive of any given company. Think Jeff Bezos to Amazon, Elon Musk to Tesla, and Michele Buck to Hershey’s. The CEO is responsible for the overall success of the business, including the vision, mission, direction and overall strategy.
Who is higher than a CEO?
The CEO answers to the Board of Directors (BoD), a group of individuals who are elected by the company’s shareholders to look after their interests. They are directly accountable to the shareholders and have the ultimate governing authority within the management structure. Far removed from the day-to-day operations, their responsibilities include selecting and appointing a CEO, supporting and reviewing that CEO’s performance, and analysing and approving major policies and decisions.
Can a CEO be fired?
Yes – and it happens more often than you’d think. 2017 was a particularly eventful year, with scandalous tales behind Uber and The Weinstein Company resulting in the very public dismissal of their respective co-founders and former CEOs – Travis Kalanick and Harvey Weinstein.
The decision to fire a CEO is made by a vote of the company’s board, with little that can be done by a founder that doesn’t hold controlling shares of the company. Reasons for firing a CEO range from poor performance or loss of influence over the team to relationship issues with the board or improper conduct. And then there are occasions when companies simply outgrow their CEO’s capabilities.
CEO Roles and Responsibilities
1. Develop strategic objectives and direction
Carrying the weight of the company on their shoulders, the CEO is responsible for devising new strategic plans and policies to bring their visions to reality. By setting out clear aims and objectives, the CEO helps employees and the BoD to better understand upcoming expectations for business growth, both in the short and long-run.
2. Implement proposed plans
CEOs direct and oversee the business’s overall strategic direction, developing high-quality business strategies and plans that align with both their short-term and long-term objectives. It’s their duty to communicate their approach across the company so as to ensure that its operations are working in accordance with its overarching strategy, with the end goal of maximising profits, increasing shareholder value, and improving market position.
3. Budgeting and forecasting
To the dismay of many, not all of a CEO’s financial responsibilities can be passed on to the Chief Financial Officer (CFO). Rather, a yearly budget has to first be set by the CEO to allocate capital in consideration of factors like net income, cash flow, and the valuation they wish to achieve.
With the help of the CFO, CEOs then consider variables such as industry fluctuations in calculating potential expenses, revenue, and profitability for the upcoming year. Only then is the burden lifted, with the CFO managing cash flow and performing fiscal and financial analysis throughout the year.
4. Public relations
The public naturally associates the CEO as being the face of the company, making them an almost obligatory marketing tool. As the business’s primary representative, the CEO is largely expected to exemplify model behaviour, with their public values and actions, both good and bad, having a great impact on the reputation of the company. For example, when Elon Musk smoked marijuana live on The Joe Rogan Experience podcast, it led to a 7% dip in Tesla’s stock price, due to growing controversy and concern over the CEO’s recent and rather bizarre behaviour.
5. Communicating with the Board of Directors
The board can easily become one of two things – a CEO’s greatest ally or the cause of his/her demise. Just as expectations must be communicated to employees, the board should be kept informed of important – and sometimes difficult – business decisions through regular board meetings. Communication between the board and the CEO is of the utmost importance, with transparency being key.
6. Tracking company performance
An executive understanding of the company’s performance, relative to other competitors, is a key part of the CEO’s role. Actionable insights can be derived from revenue growth, gross profit margins, and cumulative sales. These can then be used to shape further key performance indicators (KPI) to guide necessary adjustments and help the company meeting its new targets. In addition, monitoring the market – whether that involves potential acquisitions or significant regulatory developments in the industry – is crucial to helping the company withstand outside forces and progress towards its long-term goals.
7. Establishing working culture
From interns to managers to senior executives, everyone looks up to the CEO to a certain extent. Creating a healthy working culture means leading by example. By exhibiting the same working attitudes you expect of others, CEOs will gain respect and serve as better motivation for employees to reciprocate and do the same for them. A positive working environment should sit in line with company values, visions, and goals. With a productive working culture – and a clear set of company values, CEOs are able to better drive consistent, high levels of performance across the whole company.
Wrapping Up
So there you have it! Contrary to popular belief, the CEO lifestyle doesn’t just revolve around private jets, million-dollar mansions, and Michelin star restaurants. From financial planning to competitive strategies, CEOs work day and night behind the scenes to run – what they hope to be – a successful business.
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