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.
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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
I also include some duties of CEO in that topic.
the 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.)
A very nice and functional guide by Stever that would help us all.
1- what is the best oganizational structure for a retail business such as running a chain of gas stations.
2- 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
Thank 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.
Excellent topic.
Could you please clarify the relations between the CEO & the managing board ?
Thank you it was so clear.
I 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
Dear 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!
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Steve,
CEO job is not also to find money ? for instance in the case of start-up company ?
Lucas, 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.)
Thanks for all your help. this has been enlightening. Pls what’s d difference b/w duties of a managing director and a ceo
I 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.
Me a CEO, yeah that dream died a horrible death.
does a ceo have to have his name on the corperation to own it?
After spending more than 15 years of hard work and I mean hard in any way that you could think of, I’ve never met any CEO with the 4 mentioned points, not even 2 points combined in a one single CEO.
I totally agree with Robbins, and I thank him cause at the end I found someone who’s putting his finger on the wound, I’ve reached top positions but never met any CEO who understand my vision of a leader, it turned out that there’s someone out there saying the same words as mine!
THANKS Stever
I had join as CEO of a company in the Aviation Sector and very soon getting the General Sales Agent of a reputed Airlines. In this regard I need your kind assistance to advise me the beginning of my job so that I would be able to make the company with a big profitable company. We have also MD who is also in charge of the company. Please advise me what can I do with my job.
Regards
Rahman
Thank you for all of your comments. I am the CEO of my own company, which will be opening soon. I am finding that I am wearing everyones hat. I hope this is only because we are not open yet. It is very exhausting!
Excellent information on CEO’s
I think that is actually true in most respects in the current markets
The functions are well brought in a nutshell, to supplement every action and move is only towards business, hence the environmental aspects of devising the policies with the policies of the Governments where adequate controls exists and freedom of operations have to meet the legal and social aspects is also an additional function, of course markets, competitions and other economic parameters also play vital role in devising his strategies.