What Is a CEO? Definition and Career Advice

By Indeed Editorial Team

Published 2 July 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

You may have heard the term CEO being used quite often in business environments. CEOs are top management officials who are responsible for the continued growth and success of organisations. Becoming a successful CEO takes a range of managerial skills and years of commitment. In this article, we will discuss what is a CEO, what they do, the skills required for the job and how to become one.

What is a CEO?

The highest-ranking official in any organisation or company is referred to as the CEO. They are responsible for making top-level management decisions to ensure the overall success of the company/brand and its business ventures. They may be guided by a team of professionals in their day to day functioning, but the ultimate decision-making power lies in their hands. The job title of a CEO may vary from company to company. Some commonly used titles are CE (Chief Executive), MD (Managing Director) and President.

What does CEO stand for?

CEO stands for Chief Executive Officer. The job title of a CEO may vary from company to company. Some commonly used titles are CE (Chief Executive), MD (Managing Director) and President.

Is the CEO the same as the owner?

The CEO of a company may or may not be the owner of the company. It is common for the owners of small businesses to perform the duties of a CEO, meaning they may manage the day-to-day aspects of the business operation. In larger companies, the CEO may be invested in formulating policies and ensuring that they are implemented with the help of managers. Typically, the duties of a CEO will vary depending on the size of an organisation and the nature of its operations.

Who is higher than the CEO?

The CEO of a company is not usually the highest authority in the corporate hierarchy. CEOs typically report to a board of directors and are responsible for the performance of the company. The board of directors is composed of elected representatives who protect the interests of the company's major shareholders. A CEO will participate in board meetings and may even hold the title of Chairperson of the Board.

The chairperson oversees the company's operations during board meetings. Board meetings may be held several times a year to set performance targets and productivity goals, review financial reports, take votes on major business decisions and assess the performance of staff members and executives. CEOs cannot make major decisions without the approval of the board. In this way, the chairperson is technically higher in position than the CEO, although they may not be involved in the daily operation of the business.

Related: What Is Corporate Culture? (Definition and Different Types)

What does a CEO do?

The duties and responsibilities of a CEO will vary from company to company. However, some fundamental aspects of their job remain the same throughout:

  • Facilitating communication between the shareholders of the company, government entities and the public

  • Acting as a channel of communication between the employees of a company and its board of directors

  • Understanding and implementing the company's mission and vision

  • Facilitating the development of both long term and short term business strategies

  • Monitoring and evaluating the work and performance of managers and staff

  • Staying updated on relevant developments in the market and industry

  • Developing and overseeing CSR (Corporate Social Responsibility) initiatives

  • Identifying and studying potential risks to minimise their impact on business

  • Setting, defining and following up on tangible goals relating to strategy, efficiency and productivity

Skills required for CEOs

To manage companies successfully, CEOs must be highly skilled in a variety of areas. Important skills for CEOs include:

Leadership and management skills

Because CEOs are responsible for directing a company's operations and staff, they must be confident in their ability to lead. They should be comfortable managing every aspect of an organisation, from its employees to its finances.

To build leadership qualities, you can actively volunteer to take up opportunities to lead a team of employees in casual or recreational company activities. Once you become more comfortable leading teams, you can grab opportunities to showcase these specific qualities in professional scenarios.

Related: 10 Common Leadership Styles

Communication skills

Executives create a vision for their company and assign tasks to department managers and their staff. They should be able to explain their goals clearly and effectively. They should also be comfortable speaking publicly, as many CEOs give presentations and lead meetings.

To develop better communication skills, practise reading and writing in your spare time to improve your articulation. Try to translate your written communication skills into your verbal communication through practice. Be formal in all professional communication, and proof-read emails and messages to ensure that the tone is appropriate for the given scenario.

Read more: Communication Skills: Definitions and Examples

Decision-making abilities

CEOs make daily policy and management decisions for entire companies. They should be able to assess situations and make decisions that benefit the organisation and its people.

You can develop decision-making abilities by learning to evaluate all aspects of a problem before making decisions. Be open to taking feedback from peers and re-evaluating your decisions. Try and identify the situations that make you behave impulsively, and take extra care to maintain a rational, comprehensive thought process in such scenarios.

Problem-solving capabilities

Chief executives often face company-wide dilemmas. They should have quick analytical and problem-solving skills to find the best solutions to different types of problems.

Your problem-solving abilities can be developed further by practising problem-solving by giving yourself complex tasks and timed assignments. Any complex problem can be broken down into simpler parts, which can then be handled with relative ease. Establish and develop your own strategies and test them out to see how well they perform in real-world scenarios.

Time management

With their many different responsibilities, CEOs should know how to multitask. They must have good organisational and time management skills to complete each day's tasks, so they can meet their goals.

You can improve your time management skills by making a work schedule and sticking to it. Periodically evaluate your work schedule to identify areas that can be optimised. Although following a strict schedule may seem difficult in the beginning, you will eventually be able to manage your time efficiently with minimal efforts.

Read more: Time Management Skills: Definition and Examples

Tips for becoming a CEO

Most CEOs become top executives moving up from a lower-level to a management position. To become a CEO, you might follow this common path:

  • Get a bachelor's degree. Most CEO positions require at least a four-year degree, preferably in a business-related field.

  • Consider earning a master's degree. If you know that you want to focus on a certain field or manage a large company, a master's degree can give you more credibility and expertise. You can pursue a master's degree in business administration (MBA), economics (MA Economics) or law (MA LLM). Some companies require their CEOs to have a master's degree to get hired.

  • Gain experience. You typically need years of management experience to qualify for a CEO position. First, apply for low-level manager jobs or positions in companies that will allow you to advance to higher-level roles.

  • Take training courses. Many companies offer management training or executive development programmes. You can also take online or in-person courses on business topics that will benefit you as a CEO, such as social responsibility, business ethics, critical thinking and public speaking.

  • Earn promotions. As you expand your expertise and professional network, you should have the opportunity to move from lower to upper-level management positions, ultimately earning qualifications to become a CEO. Some people advance through one company throughout their careers, while others apply to outside positions or get recruited.

Related careers

There are several job titles and positions that have responsibilities similar to that of a CEO and require similar experience. These are some of the common ones:

  • Chief Operating Officer: A chief operating officer (commonly abbreviated as COO) is responsible for supervising and managing the day-to-day administrative and operational functions within a company. COOs are considered second-in-command to CEOs and may report directly to CEOs. COOs may also be referred to using titles like Operations Director or Vice President of Operations.

  • Operations Manager: An operations manager leads the HR (Human Resources) department and supervises high-level HR tasks, like recruitment processes and training programmes. They evaluate the organisational structure of the company and the hierarchy involved to identify areas for optimisation. In some cases, the operations manager may even go by the job title of COO.

  • Administrative Manager: Administrative managers oversee the work of clerical and executive personnel by defining job expectations, evaluating work results and disciplining staff. They may also set protocols for training, counselling and coaching staff for different job roles.

  • Human Resources Manager: These professionals oversee the recruitment processes of a company. They may even take part in the interviewing process to ensure that hired candidates are eligible for job roles and fit into the work culture of the company.

  • Chief Financial Officer: A chief financial officer (commonly abbreviated as CFO) is the head of the finance department of a company. They monitor income, expenditure, profits and contingencies and prepare budgets and guidelines to ensure smooth financial operations.

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