What Is a Chief Executive Officer (CEO)? Definition and Role
Updated December 21, 2022
What is a CEO?
To answer the question, "What is a CEO?", it's important to first understand the acronym. CEO stands for "chief executive officer." A chief executive officer governs the strategic direction of an organization by making top-level managerial decisions. While they may seek opinions from other C-level officers, directors or managers within the organization, the success of the company generally depends on their strategic direction. Some CEOs may have the title of president, managing director or executive director. If the CEO is the leader of a publicly traded company, they answer to the board of directors and the stakeholders.Related: Learn About Being a CEO (Chief Executive Officer)What does a CEO do?
CEOs generally have several duties that include providing general leadership and strategic guidance for the company and its employees and helping to expand company operations and ensure long-term success. Here are some typical CEO duties:Overseeing the organization's budget
The CEO works with the chief financial officer and executive management to create a budget that positions the company to achieve financial success. They may adjust department allocations to optimize growth as well as eliminate groups and services that aren't producing returns. They also manage and mitigate expenses and identify opportunities to expand or reduce the company budget to meet revenue goals.Related: COO vs. CEO: What's the Difference? (Plus Responsibilities)Managing company resources
CEOs also help manage the company's strategic resources. Aside from money, organizations have resources in the form of industry connections, suppliers and vendors, labor and employees and sometimes investments. The CEO can help manage and distribute these assets as necessary for the company, providing guidance to other C-suite employees as to how to best use each resource for maximum benefit. For example, a CEO might enact new overtime policies to better maximize the company's labor force.Related: 8 Tips for a Good CEO Succession Process (Plus How It Works)Setting the organization's strategic direction and revenue goals
The chief executive officer may drive change within the organization as part of the strategic direction and setting revenue goals. They are typically in charge of reporting on progress toward these goals to the board of directors and stakeholders. They might also enact specific requests from the board of directors or shareholders to increase profits and revenue, such as cutting labor costs or reducing material costs.Related: How To Be a Good CEO (Plus Job Duties and Necessary Skills)Leading a team of C-level officers and working with management
An important part of the CEO's job is providing leadership and guidance to other people in the organization, especially the executive team. The CEO sets the course for the business and works with top-level executives to pursue and achieve goals both the short and long-term life of the company. The CEO helps ensure that everyone shares the same vision and understands the strategic initiatives in place to help the business achieve that vision.Related: CEO vs. Chairperson: What Are the Differences?Functioning as the company's face and enhancing its image
CEOs also serve as the public face of a business. They might answer to the public for business practices, product quality and other concerns, or answer questions about the company's future and how it interacts with or serves the public. This can include interviews, press conferences and other public appearances. The CEO is also part of the public relations management for the company, helping to connect with the public and ensure they understand the company's purpose.Related: 8 Possible CEO KPIs to Measure CEO and Business PerformanceWatching industry changes, potential upheavals and assessing areas of opportunity
CEOs watch the changing landscape of the industry and decide when it's best to explore or invest in emerging market areas. If an organization has reached a saturation point of its current demographic, the CEO may launch an effort to explore other ideas through preliminary data collection and research. They also monitor company progress and market share to identify expansion, merger or acquisition opportunities to better position the business to dominate its industry.Related: Top 12 Qualities Every Successful CEO SharesGet recommendations for your resume in minutes
Skills for CEOs
CEOs have various skills they apply in leadership, budgeting, public relations and financial management. Here are some examples:- Communication and interpersonal skills: CEOs speak to a variety of people at many different events. They understand the basics of interacting and speaking with other people and how to deliver a message.
- Decision-making: The CEO is responsible for the direction and revenue of the company, even if they are not directly implementing the pieces of the strategic plan. The decisions they make influence direction and revenue streams, requiring strong decision-making and analytical skills.
- Independence and leadership: CEOs typically possess strong leadership skills and independence, bringing a unique kind of thought process to the company. They also lead the company into the future, requiring a strong understanding of how to motivate and inspire others.
- Creativity: CEOs use creativity to navigate complex and unique problems, provide unique perspectives on leadership and generate ideas to benefit the company. Creativity is a skill they typically improve through years of managerial experience.
- Problem-solving: CEOs often have the final say in major company decisions, including solutions to problems. Other executives may look to the CEO for guidance on any major issues the company faces, and the CEO must understand how to analyze a problem, create potential solutions, implement solutions and review solutions for improvements.
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