CEO meaning: Definition & Role of a Chief Executive Officer

Leadership mastering the art of not taking things personally
Product Manager – Coachyz
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Executive coaching can be beneficial to every business executive, which includes the CEO. Of course, even outside the business world, everyone has heard about CEOs. This is understandable since it is the one corporate position that has always received the most media attention. However, there are several misconceptions about CEOs, discrepancies between expectations and reality that need to be addressed and bridged. So let’s see together in detail: What is a CEO? What are they tasked to do? What makes a good CEO?

What is a chief executive officer (CEO)?

CEO: definition

The Chief Executive Officer (CEO) is the highest-ranking executive position within a company. As such, CEOs wield substantial authority and accountability. They are tasked with steering their organization towards its strategic objectives. They also orchestrate major corporate decisions and serve as the mainstay between the board of directors and operational team leaders.

So yes, in a company the CEO is the ultimate decision maker on the operational side of the business but a CEO also reports to the board of directors so they are not omnipotent.
Besides, it is worth noting that this title is bestowed by this very same board because they are the main shareholders of the company.

In the USA, having a CEO is required by law for corporations but not for Limited Liability Companies (LLCs). Generally speaking, CEO is a position created within sizable organizations. The UK equivalent to the CEO title is Managing Director. Originally meant for for-profit organizations, now CEOs also sometimes exist in non-profit organizations.

In essence, the CEO is the face of the company, embodying its vision and mission while spearheading efforts to expand its reach, enhance profitability, and, in the case of publicly traded entities, increase shareholder value. This pivotal role encompasses so many responsibilities, ranging from overseeing day-to-day operations to charting long-term trajectories for growth and innovation. A CEO’s job description can differ from an organization to another but more on that later.

Differences between CEOs, other leader titles and other high-level executive positions

CEO, president, founder, owner, chairperson

It can be difficult to navigate the intricacies of corporate titles and functions: some of them might overlap, some can change depending on context or company size. So let’s review the most common ones and see how they are related to the CEO position.

Every business has at least one owner. If there are more than one, the appropriate term is part-owner. An owner is someone who owns at least a share of the company. It is a legal status while CEO is a position. Board directors are all company owners and they hire the CEO. However, the CEO can also be owner or part-owner of the company.

The founders are people who created or co-created the company. They are the initial owners but they can remain owners as long as they own financial stakes in the organization. A founder is often at least remembered as the individual who established the company’s vision. A CEO can be a founder, as is usually the case at least at the inception of an entrepreneurship project.

A chairwoman or a chairman can refer to two distinct roles:

  • the head of the board of directors : chair of the board;
  • the head of a specific department or committee.

Only big companies have chairpersons.

In a similar manner, a director can be :

  • a member of the board of directors;
  • a high-level executive, in this case their hierarchical ranking depends on the company.

President is the most variable title. It can refer to the second-in-command (then it has the role of a COO) but in some organizations the president is higher than the CEO/vice-president. A president can also be the head of a group or a department.

The C-suite: CEO vs COO, CFO and others

The CEO is appointed by the board of directors but managing an entire company requires a full staff of top-level executives. Over the years, this staff has been nicknamed the C-Suite because all of its members are Chiefs. They are hired by the CEO and report to them (and also sometimes to the board).

Here are a few examples of positions, a C-suite can comprise:

  • Chief Operating Officer (COO), the second-in-command, they assist the CEO;
  • Chief Financial Officer (CFO);
  • Chief Communications Officer (CCO);
  • Chief Compliance Officer (CCO);
  • Chief Creative Officer (CCO);
  • Chief Human Resources Officer (CHRO);
  • Chief Information Officer (CIO);
  • Chief Legal Officer (CLO);
  • Chief Marketing Officer (CMO).

In small companies, CEOs tend to do the job of the whole C-suite all by themselves, even though it’s dangerous for them and their organization both.

What are the consequences of a CEO change in a company?

The CEO has a significant influence on company performance: when a CEO transition occurs, it can elicit diverse reactions from the market such as significant stock prices fluctuations as investors assess the incoming CEO’s leadership capabilities.

Undoubtedly, CEO turnovers carry more downside risk than upside, especially if they are unexpected. Market reactions may be influenced by uncertainties surrounding the new CEO’s ability to effectively lead the company. Investors pay close attention to factors such as:

  • the incoming CEO’s familiarity with the industry;
  • their past record of value creation;
  • potential impacts on the company’s strategic direction.

To reassure investors, companies often publicize CEO transitions, providing information about the new CEO’s background, intentions, and credibility.

Besides, to ensure a smooth CEO succession process aim to alleviate market uncertainties. Ideally, outgoing CEOs actively participate in selecting their successors, delineating responsibilities, and addressing specific company concerns.

What are the CEO’s roles & responsibilities?

As we pointed out before, the CEO roles and responsibilities change from one company to another because business size, internal structure and type of industry greatly influence what the top executive needs to do (and who can help them). This is the reason why we chose to provide you with a few examples of tasks and challenges even the most successful CEOs might be confronted with.

Examples of CEO’s tasks

Strategic direction

One of the most important parts of the CEO job is to formulate comprehensive long-term strategies that outline the company’s vision and direction. These plans encompass overarching goals, growth targets, and market positioning strategies.

Another strategic role of the CEO: collaborating with lower-level managers to gather insights into market trends, customer preferences, and operational efficiencies. Then the CEO integrates these insights into strategic planning processes to ensure alignment with organizational objectives.

In every business, things move fast and it’s even more the case for large companies. This is why CEOs continuously assess and adapt long-term plans in response to evolving market dynamics, competitive pressures, and internal capabilities. They remain agile in adjusting strategies to capitalize on emerging opportunities and mitigate potential risks.

Implementation of plans of action

When there is no COO or when the C-suite relies on a small roster, a CEO can oversee the translation of strategic plans into actionable initiatives and projects. They work closely with executives, directors, other chiefs or chairpersons to ensure effective implementation across all levels of the organization.

Similarly, CEOs allocate resources to support the execution of strategic initiatives, for instance:

  • capital;
  • talent;
  • technology, etc.

They prioritize initiatives based on their alignment with organizational goals and potential impact on business outcomes.

CEOs can be in charge of establishing key performance indicators (KPIs) and metrics to measure the progress and success of strategic initiatives. They track performance against targets and intervene as needed to address any deviations or obstacles to implementation.

Media and public relations

This set of tasks is also typically given to another C-level executive, namely the Chief Relationship Officer (CRO). Yet, some CEOs do it themselves.

Indeed, CEOs may serve as the primary spokesperson and ambassador for the company, representing its brand values and corporate identity in the media and public forums.

At any rate, a good CEO cultivates relationships with key stakeholders, including journalists, industry influencers, and community leaders, to enhance the company’s reputation and visibility.

Interacting with leadership

Another key aspect of the job is to set a collaborative leadership culture by engaging with other executives to gain insights into various aspects of the business. This can be done by promoting:

  • open communication;
  • cross-functional collaboration;
  • knowledge sharing among top executives.

By the same token, a CEO should ensure alignment of leadership objectives with strategic priorities and organizational goals. They also should strive to facilitate discussions and decision-making processes to achieve consensus and unity of purpose within the C-suite.

Monitoring financial performance

Just like with a plan of action, a CEO is also tasked to closely monitor the company’s financial performance, but this is primarily the task of the CFO (Chief Financial Officer):

  • revenue growth;
  • profitability;
  • cash flow management.

All of this through analyzing:

  • financial statements;
  • forecasts;
  • budgetary allocations

The goal here is to identify trends and potential areas for improvement, which they might be tasked to design solutions for (as seen above).

Accountability with the Board

This one task is specific to the CEO (or the COO if the CEO is unavailable). CEOs provide regular updates to the board of directors on the company’s performance, strategic initiatives, and major developments. They maintain transparency and accountability in governance practices, ensuring alignment with the board’s expectations and fiduciary responsibilities.

A CEO also actively seeks guidance and feedback from the board on strategic decisions, management strategies, and coaching practices. They leverage the board’s diverse expertise and perspectives to enhance decision-making and mitigate risks.

Setting the culture

The founder defined the values and the CEO has to articulate and reinforce them at an organizational scale. Additionally, CEOs lead by example, embodying the desired behaviors and attitudes that reflect the company’s identity and aspirations.

Finally, a CEO needs to create a positive work environment that promotes employee engagement, collaboration, and innovation. They champion initiatives to recognize and reward employees for their contributions and support initiatives that enhance workplace diversity, inclusion, and career development.

Challenges faced by CEOs

As we just saw, a CEO leads many battles at the same time. They need to have an eye on multiple chessboards and keep track of them regularly. Subsequently, it is not surprising that they should be prepared to deal with a variety of challenges. Here are a few of them.

Navigating uncertain economic conditions

CEOs must steer the company through economic uncertainties, including recessions, inflation, and geopolitical tensions. In these harsh circumstances, they need to make strategic decisions that mitigate risks and capitalize on emerging opportunities amidst fluctuating market conditions.

Adapting to technological disruptions

AI, blockchain, automation, social media, there are many examples of challenges that come with emerging technologies that CEOs need to learn to grapple with. Indeed, in this day and age, if they want to be successful CEOs, top ranking executives must navigate digital transformations while ensuring the organization’s infrastructure, workforce, and processes remain agile and adaptable.

Managing stakeholder expectations

The interests and expectations of various stakeholders, including shareholders, customers, employees, and regulatory bodies can collide and as a matter of fact, they often do. To balance them out, a CEO needs to communicate effectively, build trust, and maintain transparency to create positive relationships and enhance stakeholder value.

Attracting and retaining talent

The labor market can often prove to be rather competitive and CEOs encounter difficulties in recruiting and retaining top talent. Then to attract and retain skilled employees and reduce the churn rate, the challenge is to develop attractive employment packages, provide opportunities for career growth and development, and develop a supportive work culture.

Navigating regulatory compliance

CEOs are responsible for ensuring the company complies with an ever-evolving regulatory landscape, spanning areas such as:

  • data privacy;
  • environmental sustainability;
  • corporate governance.

If they want to avoid penalties and reputational damage as well as mitigating legal risks, they must keep up with regulatory changes and implement compliance measures.

Concerning environmental sustainability, social responsibility and corporate ethics specifically, the pressure has gone increasingly over the past few years, reflecting a structural change in the society. This is why today more than ever, CEOs need to integrate sustainable practices into business operations, reduce carbon footprint, and uphold ethical standards.

Managing organizational change

Encountering resistance and obstacles is common for leaders when implementing organizational changes like restructuring, mergers, or cultural transformations. It’s essential to effectively communicate the reasons behind these changes, address employee concerns, and provide necessary support and resources to facilitate smooth transitions and minimize disruptions.

Dealing with crisis situations

Crises do happen to everyone, so any Chief Executive Officer should be prepared to manage such events:

  • product recalls;
  • cybersecurity breaches;
  • reputational scandals.

They must respond swiftly, communicate transparently, and implement effective crisis management strategies to protect the company’s reputation, restore stakeholder trust, and mitigate financial losses.

Balancing short-term and long-term priorities

CEOs face the challenge of balancing short-term financial performance with long-term strategic objectives. They must make decisions that optimize shareholder returns while investing in innovation, research, and development to ensure the company’s sustainable growth and resilience in the face of future challenges.

What being a good CEO means?

Effective CEOs, whether leading small enterprises or global corporations, possess a diverse skill set crucial for driving organizational success. Most of the key attributes among good leaders are directly tied with the challenges and tasks we just reviewed.

  • Communication: CEOs must articulate their vision and directives clearly to ensure alignment across all levels of the organization and drive progress effectively, they also must use effective communication techniques in order to consistently convey the organization’s message, inspiring confidence and trust among stakeholders;
  • Relationship-building: Building strong partnerships with stakeholders, employees, and other leaders is essential. CEOs inspire trust and loyalty through their interpersonal skills and credibility;
  • Passion: CEOs’ enthusiasm for their business not only motivates employees but also attracts customers and public attention, fostering a positive organizational culture;
  • Curiosity: Actively engaging in all aspects of the business and maintaining a thirst for knowledge enables CEOs to continuously learn and innovate, driving the organization forward;
  • Critical thinking: CEOs make informed decisions by critically evaluating options based on research, data, and evidence, ensuring the organization’s success and growth.
  • Analytic thinking: Anticipating and understanding evolving trends allows CEOs to develop strategies that position their companies ahead of the curve.
  • Sense of negotiation: in the collective representation as in reality, the CEO is the businessman incarnate, and as such any CEO absolutely needs to master every negotiation skill in the book and then some.
  • Creative thinking: They solve complex business problems with innovative solutions.
  • Long-term vision and goals: CEOs create and champion a compelling vision for the future of the organization.
  • Demonstrating resilience: CEOs navigate challenges with determination, preparing the company for future changes and uncertainties.

In essence, the CEO embodies the driving force behind a company’s success: they orchestrate strategic decisions, they stimulate growth, and navigate complex challenges. Their role is not limited to being the final decision-maker. They also serve as the face of the organization, they balance stakeholder interests and enforce the long-term vision. Through effective communication, strategic thinking, and resilience, the CEO is a captain in the storm of uncertainty and change and greatly contributes to their organization’s legacy in the corporate world.

At coachYZ we believe that every business leader has an untapped potential waiting to be harnessed so that they can become the best version of themselves and make their vision a reality. Everyday, we help CEOs, managers and decision makers do things differently to make the most of their great skills. If you want to join them, start your coaching journey !

Leadership mastering the art of not taking things personally
Product Manager – Coachyz

Coaching remains an essential tool in our toolbox, despite the ever-changing professional world. In the digital age, our approach has evolved from simply informing journalists to delivering rich, engaging content directly to our target audience. Good coaching must be personalized, relevant and adapted to the digital world to ensure optimal online visibility. What’s more, the incorporation of multimedia supports such as videos, images and interactive links can considerably enhance its impact. 

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Not necessarily. When the business is first launched, yes, the CEO is usually one of the owners. In small businesses, if there is a CEO, they also tend to be the owner. However, CEOs are commonly found at the head of corporations because the law requires corporations to have one. In any case, the CEO is appointed by the board of directors, which comprises the owners of the company.

It depends on the company. Although in most cases, CEO is the number one executive. President is the most loosely attributed title: in some businesses, they are the number two, in others they are the head of a department, in some other instances, the president can even be the highest executive.

The abbreviation COO stands for Chief Operating Officer. In essence, they are the second highest ranking executive of a corporation. They report to the CEO. The COO is in charge of the daily operations and has a more hand-on approach than the CEO who has the responsibility of setting the course of the company.

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