What does a CEO do, anyway?
At my first job, a 20-person computer company, the CEO sat in his glass-walled office while the rest of us busted our butts creating the product. I used to look at him and wonder, “What does a CEO do?”
Now that I coach CEOs, I know. Sadly, many of them don’t.
Many people confuse a CEO’s responsibilities with duties. A CEO is responsible for everything that happens in a company, even making sure the trash gets emptied. But if a CEO did nothing but empty the trash, we would say they were doing a poor job. We might decide to fire them, hire a janitor, and take the rest of what we were paying them and use it to buy snacks for the lunchroom.
A CEO’s duties are what the CEO actually does. Some things, they can have other people do. For example, the CEO probably hires a janitor to take out the trash, leaving them free to do more CEO-like things. And that’s where we find there are four duties that the CEO can’t delegate, either because of legal reasons, organizational reasons, or leadership reasons.
A CEO’s first duty is setting strategy. Strategy tells the company what business they’re in and how they plan to make money doing it. When Bill Gates decided Microsoft would make software, instead of being a dry-cleaning company, that was a strategic decision (although some people would say he took us to the cleaners anyway). When a CEO is sloppy with strategy, you end up with companies getting into all kinds of silly businesses, like steel companies buying chains of lingerie stores. When a CEO is good with strategy, everyone in the company knows what business they’re in.
Which brings us to the CEO’s next duty: building the senior team. All the executives report to the CEO, so it’s the CEO’s job to hire, fire, and manage the executives. From coaching CEOs, I would say this is the most important skill of all. When a CEO hires an excellent senior team, that team can keep the company running. That team can–and often does–even set strategy, though it’s the CEO who has the final “go-no-go” decision on strategy.
The CEO’s third duty is setting the culture of a company. Some CEOs encourage people to work together, treat each other with respect, and make the company a nice place to work. Other CEOs encourage competition, back-stabbing, and playing favorites. It’s not always a conscious decision, though. CEOs set culture by being role models. People watch them closely for cues. As children, we watched our parents. As adults, we watch our CEOs. The Vice-Chairman of a Fortune 500 company once told me that the most important tool he had was modeling the behavior he wanted.
A CEO’s final duty is capital allocation, a fancy way of saying “spending money.” Since the CEO signs the checks, they choose the projects that live and die. This is also why they can’t delegate strategy, because the projects that get money are the ones that determine the strategy.
To recap, a CEO is responsible for everything. But even though they are responsible for everything, they only have four duties that can’t be delegated. First is setting the company’s strategy. Second is hiring, firing, and leading the executive team. Third is setting the culture of the company. And last is writing the checks and allocating capital.
I hope you’ve found this a useful overview of a CEO’s job. For more details, visit http://www.SteverRobbins.com/articles/ceojob.htm.
that point obout CEO is exilent but explain more include some daily life esample thanks
April 2nd, 2008 at 3:08 amI also include some duties of CEO in that topic.
April 2nd, 2008 at 3:16 amthe first is CEO also recomment yealy budjet for board and manage organization resources with in that bujet
the second responsibility of CEO is effectively manage human resource according to some authorized policy and procedure comform law and regulation.
CEO porovide the effective managment and the employee of the corporation and established efficient control and co-ordination organization operation and policies.
developed and maintain sound structure of the organization. and give report regularly to the board about officers proformance.
In my podcast, I tried to highlight only the duties a CEO can’t delegate. There are many more things in a CEO’s job, typically. In the examples you give above, duties are the CEO’s responsibility, and are often carried out by several members of the executive committee. (For example, CFO for budget setting, VP of HR for HR policies, etc.)
April 2nd, 2008 at 1:50 pm1- what is the best oganizational structure for a retail business such as running a chain of gas stations.
October 21st, 2008 at 12:25 am2- how much power the CEO has over the Managing Director. in other words, what is the deviding line between them?
If you consider the duties of a commanding officer which is to ensure all junior officers are aware of the battle plan and who is to be where at what time and what is expected of those junior officers you stand a good chance to compete in the war. Meaning communication plays the greatest role for a CEO.Same in business, if your team knows the plan it is much easier to compete in the business world
December 30th, 2008 at 11:59 amThank you for the article. I divided my tenth grade reading class into 3 businesses. They each have ranks within such as CEO, CMO, CTO, COO, etc. This helped me to explain their roles.
January 1st, 2009 at 10:44 pmExcellent topic.
January 6th, 2009 at 6:31 amCould you please clarify the relations between the CEO & the managing board ?
Thank you it was so clear.
February 4th, 2009 at 10:24 amI was very confused on the function of a CEO now I know. I can clearly choose my career
Hi, this is Dr.Mohd.Mujtaba Yousuf from Pakistan actually I am going to start a new Alternative medicine Company, at very begining i was doing Import/Export,Treading business only but now iam going to make my own company,i have one office in Pakistan and other one in China and i have registered my both offices from there governments. Actually i want to know about management planings, staff management and about there ranks in sequence such as C.E.O, Director,M.D…etc, because i have no any idea about business management.
Thank you for your time
Regards
February 10th, 2009 at 11:38 amDear Mr. Mujtaba, I recommend reading some books like “The E-Myth Revisited” by Michael Gerber to get a sense of what is involved in starting your own company. For details about the different professions, the fastest way to learn might be to take a long-distance class in business management if that is a possibiity. You can think of all positions in a company as being about making decisions. The CEO makes decisions around the areas in the CEO job article. The Chief Financial Officer makes decisions about how the company raises and spends money. etc. In a small business, the titles are usually given at the CEO’s discretion, and the actual job descriptions may be very fluid, depending on the needs of the company. Google “MBA Handbook” and you may find various books and publications that can help with the details. Good luck!
February 15th, 2009 at 10:54 am[...] Related podcast “What is a CEO’s job?” [...]
February 24th, 2009 at 7:38 pmSteve,
CEO job is not also to find money ? for instance in the case of start-up company ?
June 18th, 2009 at 6:44 amLucas, you’re right–in a startup, the CEO’s job is also to help raise money. Note, however, that it can be delegated to business brokers, investment bankers, etc.
Raising money is a commodity activity, though, and should be recognized as a necessary but low-value-added use of time. (Every business has to raise money, so the mere raising of money in no way distinguishes one entrepreneur from another. It’s simply a task that must be done, like paying bills.)
September 5th, 2009 at 10:42 amThanks for all your help. this has been enlightening. Pls what’s d difference b/w duties of a managing director and a ceo
September 6th, 2009 at 11:06 amI wanted badly to become a CEO and for a very long time ever since I saw the 1987 film, The Secret of My Success with Michael J Fox. It was about this kid working in a mailroom and ending up in the boardroom. That resonated with me because at the time I was working in a mailroom. I envisioned myself as that characted. Unfortunately instead of taking that fast track to success, I got on the slow train to nowhere with no stops.
December 17th, 2009 at 4:18 amMe a CEO, yeah that dream died a horrible death.