The latest business news around the world. Written by Market Business News's very own editorial team to deliver reliable, up to date, and honest news.

CEO or Chief Executive Officer – definition and meaning

A CEO or Chief Executive Officer is the head of a company. The CEO also leads the senior management team. In fact, they often lead the Board of Directors. In other words, the CEO is also Chairman of the Board. We sometimes use the term ‘President’ with the same meaning as Chief Executive Officer. However, this depends on the type of company.

The UK and some Commonwealth nations say ‘Managing Director’ with the same meaning as Chief Executive Officer. However, a growing number of companies today are adopting the term ‘Chief Executive Officer.’

According to Merriam-Webster, a Chief Executive Officer is:

“The person who has the most authority in an organization or business.”

Put simply; the Chief Executive Officer is responsible for a company’s overall operations and performance.

Chief Executive Officer - Five vital functions
These are the five core functions of a Chief Executive Officer. (Data Source: Joel Trammel, CEO and Founder of Khorus)

CEOs should have intelligence, a great deal of energy, persistence, patience, and courage. They should also have excellent communication skills.

A good Chief Executive Officers needs to be both a great manager and leader.

Chief Executive Officer – the top manager

The Chief Executive Officer of a company or organization is its highest-ranking executive manager. They are responsible for their organization’s overall success.

Within that organization, CEOs have the last say. In other words, they are the ultimate authority to make final decisions.

The CEO is also the main link between the Board (board of directors) and the organization’s various parts. The company’s success is the Chief Executive Officer’s sole responsibility. Put simply; if the company fails, it is their fault.

CEOs should focus on just three things and delegate all other duties to their team.

The three things are:

– Set the company’s overall vision and strategy. They should also make sure that all stakeholders know what it is.

– Recruit, hire and keep the best people for the company.

– Make sure the company has enough cash in the bank.

Does Chief Executive Office have freedom?

Stever Robbins, who co-founded FTP Software and was CEO of JobTacToe.com, says:

“CEO is one of the most coveted, and least understood, jobs in a company. Everyone believes that CEOs can do whatever they want, are all powerful, and are magically competent.”

Robbins goes on to explain that this is not the case at all.

A CEO has to meet the needs of all:

– Communities

– Customers

– Employees

– Investors

– The law

Duties only CEOs can do

CEOs can assign some of their duties to others. However, there are several elements that only they can do. Only the CEO can perform the following duties, says Robbins:

Setting strategy and vision

Senior management participates in the development of strategy, while investors approve business plans. However, it is the Chief Executive Officer who ultimately sets the direction.

Building culture

Culture profoundly affects the people in a company, particularly those who get the work done. If the workplace is unpleasant the company’s high performers will drift away. In other words, the CEO must make sure that the organization has the best culture for it to thrive.

Team-building

The CEO hires, fires, and leads the senior management team. The senior managers, in turn, do the same further down in the organization.

Capital allocation

The CEO sets the organization’s budget. According to Robbins: “[The budget] funds projects which support the strategy, and ramps down projects which lose money or don’t support the strategy.”

The CEO’s inspiration

Price WaterhouseCoopers (PwC) says that Chief Executive Officers need role models. These role models help them through challenging times, to communicate across boundaries. They also need inspiration to imagine creative solutions.

PwC carried out a survey. The company asked CEOs who in history exhibited the most leadership.

Below are the top ten people (in order) who CEOs from over sixty countries named:

– Winston Churchill

– Steve Jobs

– Mahatma Gandhi

– Nelson Mandela

– Jack Welch

– Abraham Lincoln

– Margaret Thatcher

– Ronald Reagan

– John F Kennedy

– Bill Clinton/Napoleon Bonaparte (equal 10th)

The qualities of a good CEO

Doug Bruhnke, CEO of Growth Nation, said that great leaders must have the following attributes:

– Listening

– Storytelling

– Passion

– Responsiveness

– Simplicity

– Authenticity and transparency

– Ability to delegate

– A good communicator

– Confidence

– Humor

– Be positive

– Be able to learn and adapt

– To have a feel for the ‘bigger picture.’

Central Banks to have different names for the leaders. The head of the US Federal Reserve is called the Chairman. The Bank of England, on the other hand, is led by the Governor.

CEO vs. Chairman

The CEO is accountable to the board of directors, which is led by the Chairman. In fact, the Chairman ‘chairs’ the board of directors. Shareholders elect the members of the board.

A CEO may also be the Chairman of the Board. For example, James Dimon is CEO, President, and Chairman of JPMorgan Chase, an American bank.