CEO or Chief Executive Officer is among the top job positions in the world of business. It is a senior management job, which carries great influence and authority. Do you want to know more about this position? Read more.
Who is a CEO?
CEO, which means Chief Executive Officer, is the top-ranking executive in a company. You can think of Elon Musk of Tesla, Jeff Bezos of Amazon, as well as Michele Buck of Hershey’s. A CEO has the responsibility for the company’s overall success, including the mission, vision, overall strategy, and direction.
Is there a higher position than CEO?
A CEO is responsible to BoD (Board of Directors), a group of people elected by the shareholders of the organization to observe after their interests. The Board of Directors is accountable to shareholders and has governing authority on the structure of management. The responsibilities of BoD include supporting and reviewing the performance of a CEO, selecting and appointing the CEO, and analyzing and approving big decisions and policies.
Roles and responsibilities of a CEO
The roles and responsibilities of a CEO include the following:
Implements proposed plans
A CEO oversees and directs the overall strategic direction of the business. They develop efficient succession planning with long-term and short-term objectives. A CEO is responsible for communicating their approach within the organization to make sure that operations work according to its overarching strategy. It also includes boosting shareholder value, increasing profits, and enhancing market position.
Development of direction and strategic objectives
The CEO carries the company on their shoulders. They create new policies and strategic plans to transform their visions into reality. A CEO sets clear objectives and aims, which helps BoD and employees understand future expectations for the company’s growth.
Forecasting and budgeting
Unfortunately, not all financial responsibilities of a CEO can be shared to CFO (Chief Financial Officer). The CEO needs to set a annual budget for the allocation of capital while considering factors like cash flow, net income, and valuation they want to achieve.
CEO considers variables like industry fluctuations for calculating revenue, potential expenses, and profits for the following year. The CFO also helps the CEO in cash flow management and performing financial and fiscal analysis for the entire year.
Communicates with the Board of Directors
The board can be the greatest ally of the CEO or can cause their demise. The CEO is responsible for communicating with the Board of Directors.
The board needs to be informed about business decisions through regular board meetings. Communication between the CEO and the board is crucial, and transparency is a key.
The public sees the CEO as the representative of an organization, making a CEO an almost mandatory marketing tool. The CEO is considered the primary representative of a business. With that, they are expected to represent model behavior, public actions, and values, both bad and good. Thus, it can greatly affect the company’s reputation.
Establishing working culture
Another role of a CEO is establishing working culture. From trainees to senior executives, everyone looks up to the CEO to a specific extent. By showing similar working attitudes you expect from others, the CEO can win respect and serve as a role model for employees to do something similar for them.
With a positive working environment, employees can be more inspired to improve their performance. A working culture should be in line with company visions, values, and goals. With a clear set of company values and a productive working culture, the CEO can drive consistent and high-performance levels across the entire organization.
Monitoring company performance
A comprehensive understanding of the organization’s performance is another critical role of a CEO. Actionable insights can be developed from cumulative sales, gross profit margins, and revenue growth. These are useful in shaping (KPI) key performance indicators for guiding essential adjustments.
In addition, it will help an organization to meet new targets. Monitoring the markets that have important regulatory developments in the market can help the organization resist outside forces. The company can also progress and achieve long-term goals.
Can a CEO be fired?
Are you curious whether a CEO can be fired? Well, the answer is yes. One example is way back in 2017 when the respective co-founders and former CEOs of Uber and The Weinstein Company, Travis Kalanick, and Harvey Weinstein, had public dismissal.
The decision to fire a CEO was made by a vote of the board of the company. Some reasons to fire a CEO include lack of influence over the team, poor performance, improper conduct, and relationship issues with the board. There are also instances when the companies outgrow the capabilities of the CEO.
What are the qualities of a good CEO?
An effective CEO needs the best set of skills to be successful. They need to has soft skills and hard skills, and industry-specific talents. The following are the qualities of a good CEO:
A good CEO should understand the industry of the company. They should know its history and challenges to stand out in their leadership position.
A CEO should possess a good leadership ability to ensure that everyone performs their job effectively.
A successful CEO needs to have excellent communication skills. They should be adept at communicating information and understand what is being communicated to them.
With strong problem-solving skills, the CEO can assess a situation and formulate effective solutions to challenges.
Effective data analysis is essential to predict trends and determine market inefficiencies. A CEO who has effective data analysis can identify and evaluate opportunities that can help the company grow.
Empathy skills allow a CEO to understand the motivation of their team.
To sum it up, the life of a CEO is not just about luxury. They also have many roles and responsibilities to achieve the goals of a company. Are you an aspiring CEO? Then, you should be familiar with the job position’s roles and responsibilities which we mentioned above. CEO has an essential role in the success of a company.