What Is a Chief Executive Officer? Plus How To Become One
By Indeed Editorial Team
Published 23 August 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.
To become a chief executive officer (CEO) in a company is one of the ultimate career achievements. Though sometimes a challenging job to perform, many ambitious professionals aspire to reach this high-ranking and rewarding position. Having a good understanding of the skills and requirements to become a CEO can be helpful knowledge. In this article, we explain what a CEO does, the skills required for a CEO, how to build your career in this role and share responses to some frequently asked questions about this position.
What is a chief executive officer?
A chief executive officer is the highest-ranking executive in an organisation. They oversee the overall operations of a company and ensure that it runs smoothly. They are responsible for making top-level managerial decisions that help the organisation meet its goals.
The board of directors and major shareholders of an organisation elect the CEO. The CEO remains accountable to the board of directors for the performance of the company. Besides ensuring the overall success of a company, the CEO also leads the development and execution of growth strategies to increase shareholder value.
Duties and responsibilities of a CEO
The duties and responsibilities of a CEO depend on the size and structure of the organisation. In smaller companies or startups, the CEO may get involved in the company's day-to-day activities, such as hiring new employees or managing the accounts. However, in a large organisation, the CEO often primarily focuses on high-level strategic planning and making major decisions on the company's behalf. They are likely to delegate tasks and activities related to daily operations to different departments and their executives or managers. The typical duties and responsibilities of a CEO include:
Overseeing the working of all the departments
Establishing and working towards the company's long-term and short-term goals
Being aware of the industry developments, expansion opportunities, market landscape and competition developments
Evaluating risks to the organisation to ensure that they monitor and minimise challenges that arise
Communicating with board members, shareholders, government officials and the public on behalf of the company
Setting strategic goals and working towards implementing the vision and mission of the company
Average salary of a CEO
Often, a CEO holds the highest position in an organisation, which typically means they earn a high salary. On average, a CEO can make about $971,463 per year. In addition to monetary compensation, CEOs typically receive a highly lucrative benefits package, which may include annual bonuses, meaning that their take-home earnings could be much more. Their salary also depends on a number of other factors, such as the size of the company and the qualifications and work experience of a candidate.
Skills required for a CEO
A CEO must possess certain traits and skills to become an outstanding leader. Here are some of the most important skills a CEO can develop:
Communication: A CEO possesses strong communication skills to communicate effectively with a wide range of individuals, from employees to board members. As the key person in charge, it's important for a CEO to use concise and easy-to-understand language while communicating with others.
Leadership ability: Being a CEO requires exceptional leadership capabilities to direct the organisation's people, processes, resources and budgets so you can deliver the best results. In addition, they have to motivate and inspire their employees and team members.
Ethics: A CEO with strong ethics can establish an open and honest culture within the organisation and encourage their employees to follow the same, acting ethically in all their actions. This can create a positive image for the company and enhances its reputation with customers and clients.
Decision making: A CEO is usually a strong leader who's comfortable and confident in their problem-solving and decision-making skills. They must be able to analyse a situation, gather input from their colleagues and team members, recognise issues and execute solutions to run the company in the right manner.
Time management: CEOs manage a number of tasks and activities daily. Therefore, it's important that they know how to manage their time effectively to ensure they meet their goals and handle all urgent tasks.
Collaboration: Collaborating and working together with other executives, board members and department heads ensure CEOs have all the best information and ideas to keep the company operating effectively and profitably. They also work closely with their team members to discover new, creative ideas through brainstorming sessions.
How to become a CEO
The role of the CEO varies according to the particular demands of each company and the structure of its board. Here are the typical steps required to become a CEO:
1. Earn a bachelor's degree
The first step towards building a career as a CEO is to get a bachelor's degree. Except for those who launch their own businesses, most organisations require that a prospective CEO have a bachelor's degree. Even though you can pursue a bachelor's degree in any subject, many choose to pursue a business-related degree such as economics, finance, marketing or business administration to prepare for a leadership role.
2. Build your work experience
For those who have earned a bachelor's degree, the next step would be to obtain work experience to advance their career. You may start in an entry-level or graduate position in a company and eventually progress to higher levels after getting sufficient work experience.
Being a CEO typically requires several years of work experience, where you learn the best business practices, management skills and leadership qualities to build a solid foundation. In addition, having several years of work experience is also a good way to improve one's flexibility, adaptability and communication skills, all of which are important traits for successful leadership.
3. Earn a master's degree
While not a mandatory step, you can still benefit from earning a master's degree in business administration. It can make you more attractive to an employer and may shorten the time you take to become a CEO. Earning this advanced degree prepares you to understand all the elements of a business which is critical to becoming a strong leader. Most universities require you to have some work experience before you can apply for their master's program.
4. Get certifications
Though not a mandatory step, you can still pursue certifications within your industry. These credentials can improve your knowledge and show the employers your dedication to the profession. Connect with a professional network that can guide you in determining the right certifications for your career ambitions.
5. Continue your learning and development
As a CEO, it's important to invest in continuous learning and development to grow professionally. Learning from peers, enrolling in courses, discussing with mentors and practising new skills are some ways a CEO can build their knowledge and skills. You may also job shadow other employees at the organisation to understand more about operations.
Frequently asked questions about being a CEO
Here are the responses to some frequently asked questions about becoming a CEO:
Who is higher than the CEO?
CEOs are the highest-ranking executive in an organisation. They rank higher than the vice president and even the managing director. A CEO is also responsible for managing the other C-level executives, such as the CFO, COO and CTO, among others. The CEO reports directly to the board of directors and the chairperson of the board of directors. The board is responsible for recruiting, selecting and evaluating the performance of a CEO.
What is the difference between a CEO and a COO?
The fundamental difference between a CEO and a COO, or chief operations officer, is the structural hierarchy in an organisation. The CEO holds the highest rank in a company and the COO reports directly to them. More notably, the CEO is the head of the organisation and makes the ultimate decisions for the future of the business, while a COO shares their advice based on the functions and operations of a company.
What is the difference between a CEO and a CFO?
The chief financial officer, or CFO, manages the financial side of a business. They occupy the highest-ranking financial position in a company and report directly to the CEO. While a CEO oversees the entire operation of a company, a CFO manages financial aspects such as budgeting, financial operations and financial reporting of a company.
Salary figures reflect data listed on Indeed Salaries at time of writing. Salaries may vary depending on the hiring organisation and a candidate's experience, academic background and location.
Explore more articles
- What Does an Assistant Accountant Do? (With Requirements)
- How To Become a Human Resources Business Partner in 6 Steps
- What Does a Cashier Do? And How to Become One (Plus Skills)
- How to Become a Crime Scene Investigator (With FAQs)
- What Does a Visual Merchandiser Do and How to Become One
- What Does a Curatorial Assistant Do? (With a List of Skills)
- How To Become a Physician Assistant (With Qualifications and Skills)
- How To Become an Environmental Manager in 7 Steps
- A Day in the Life of an Actuary: A Definitive Guide (Plus Skills)
- What Is a Systems Analyst? Definition, Skills and Salary
- 21 Highest-Paying Construction Jobs: With Duties and Salary
- What Is An Environmentalist Career? (With Tips and Examples)