Chief Executive Officer (CEO)

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Holding the top position in a company, CEOs are still employees with a specific set of responsibilities. In this wiki, readers will learn about CEOs: their role and responsibilities, how they differ from business owners, the impact of a CEO change, and other Chief positions. 

CEO definition: What is a CEO?

Standing for Chief Executive Officer, the CEO is the individual ultimately responsible for a company’s success and failure. They act as an overseer to various aspects of the company’s operations, including: 

  • Finance
  • Marketing
  • Sales
  • HR
  • Tech
  • Legal

The CEO is also expected to balance the needs of customers, employees, investors, and other shareholders. It is the CEO’s job to ultimately make sure things run smoothly, and they are often the face of the company when it becomes of public interest. They represent the business. 

Alternative names for the title include managing director and president. 

Roles and responsibilities of a CEO

In addition to overseeing operations, a CEO is usually in charge of long-term strategies with the goal of increasing the value of the company to shareholders. 

The breadth and specificity of responsibilities for a CEO will depend on the size and type of company. Smaller companies often require the CEO to take a more active role, involving themselves with lower-level responsibilities like hiring. In bigger companies, a CEOs lower-level responsibilities can be delegated to management or other departments. 

While there is no set list of responsibilities for a CEO, some generally expected ones for all CEOs include: 

  1. Communicating on behalf of the company to shareholders, media, government entities
  2. Leading the development of company strategies (long term and short term)
  3. Evaluating the work of VPs, managing directors, and other executive positions in the company
  4. Keeping abreast of industry competitors and opportunities for expansion
  5. Assessing and minimising potential risks to the company and its reputation
  6. Setting and managing company goals

Difference between CEO and business owner

A CEO is the top position at a company, however they are still an employee of that company. They report to others, remaining accountable to the company’s board of directors or to shareholders in a publicly traded company. 

Owners, on the other hand, are in charge of their entire company. Usually in charge of a smaller business than CEOs, business owners will only be held accountable to their customers, because it is entirely their business. 

CEOs are also appointed the position by a board of directors. They likely have experience in other management positions or running other companies as CEO, and will apply for the job. Business owners have usually founded their business from the beginning and continue to run it. 

CEO’s role in staff hiring and retention

The CEO is responsible for hiring for the other C-level positions in the company. It is the CEO’s job to make sure they put together a team of chief positions that will guide and manage the company responsibly and ensure growth and protection of the company’s reputation. 

Because of their role in hiring other C-level positions, the way these employees perform their duties will also reflect back on the CEO. This is why the CEO usually takes such an active role in hiring for other leadership positions. 

The impact of a CEO change

When a CEO leaves a company, there are certain processes in place to ensure smooth CEO succession. Ideally, the CEO will play an active role in selecting their successor, taking part in the interview and selection stages, before explaining clearly their responsibilities and specific concerns relating to that company.

A CEO’s leaving, especially from a large, well-known company, is often reported on in the media. Consider the coverage of Jeff Bezos’s decision to step down as CEO of Amazon. 

As a result of this public coverage of the change in company leadership, there is often a ripple effect that reaches the stock market and impacts the company stock prices. 

Negative impact on the stock prices can arise from a hasty departure from the original CEO. This suggests to investors that the company or CEO may be trying to cover up something and that it doesn’t bode well for the company’s future, causing its stocks to take a hit. 

Investors will assess the new CEO to the best of their ability, which is why it is often in the interest of the company to publicise the decision with interviews, a biography of the new CEO, and statement of intentions for the company. Investors want to make sure the new CEO has a good reputation and trustworthy employment history. 

Other C-level positions

As mentioned earlier, the CEO is responsible for assisting with the hiring of other C-level positions. Those positions include: 

  • Chief Financial Officer (CFO): responsible for all company financial matters, fully understands the company’s financial standing, often a key contact for investors and shareholders
  • Chief Marketing Officer (CMO): head of sales and marketing, fully understands the needs of the customers, handles advertising and sales-oriented marketing, while also being in charge of customer service and market research
  • Chief Operations Officer (COO): coordinator of day to day operations, does not need to contribute to long-term strategies, handles work processes to ensure a smooth running business
  • Chief Technical Officer (CTO): takes care of IT infrastructure, oversees IT department and purchasing of new software and hardware for the company

Because there are no legal requirements to appointing chief officers, companies may have many more in leadership positions. The format for the title is CxO, with the ‘x’ representing the potential position the officer could fill. Other positions might include Chief Experience Officer (CXO), Chief Legal Officer (CLO), Chief Information Officer (CIO), and more. 

Examples of successful CEOs

The CEO of a major company is often a public figure. This is due to interest from shareholders and the general public who use the company’s services, and it is in the interest of the company to present a positive image, which they often do via the CEO. 

Due to this level of interest on both sides, there have been many notable CEOs throughout history and still continue to be today. Aside from well-known billionaire CEOs like Mark Zuckerberg (Meta), Elon Musk (Tesla, SpaceEx), and former Amazon CEO Jeff Bezos, other CEOs are notable for breaking tradition and rising up from difficult circumstances: 

  • Karen Lynch (CEO, CVS Health): highest ranking female CEO in the Fortune 500 and number 11 on Forbes’ Most Powerful Women in the World, Lynch heads one of the largest health providers in the world
  • Mary Barra (CEO, General Motors): GM’s first female CEO and one of the first female CEOs of any automobile company, Barra is leading the charge to switch to an all-electric car output by 2035
  • Marvin Ellison (CEO, JC Penney and Lowe’s): the only black CEO to have helmed two Fortune 500 companies grew up in poverty and began his retail career as a security guard at JC Penney

Frequently Asked Questions about CEOs

Chief Executive Officer.

The CEO is also expected to balance the needs of customers, employees, investors, and other shareholders. It is the CEO’s job to ultimately make sure things run smoothly, and they are often the face of the company when it becomes of public interest. They represent the business.

CEO is the higher position. The CFO will report their financial findings to the CEO and the CEO was likely in charge of hiring the CFO.

Yes. Two famous examples of this are Jeff Bezos and Mark Zuckerberg. It is often recommended that the chairman and CEO be taken on by different people, however the owner of the company may wish to exert maximum control allowed, and so will seek to be appointed as CEO.

No. The inverse is correct. The board of directors appoints one person the role of CEO, and can therefore fire the CEO if it is a unanimous decision.

Yes. Given that the CEO is an employee of the company, they are accountable for their actions and performance and will be judged by the board of directors.

If the business is a sole proprietorship, the company will cease operations. Otherwise, it will depend on the structure of the managerial roles. If it is a partnership, the agreement terms in the partnership will decide. If it is a corporation, the estate will take control of the company.

As of July 2022, Elon Musk is the highest paid CEO and richest person in the world. However, he rejects his minimum salary of $56,000 per year. Many CEOs take a small annual salary because their worth is in the company.

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