Leadership - CEO
CEO
General
The chief executive officer (CEO) is the most important role in the management of an organization or company.
Many executives believe a strong corporate brand carries more weight in the market than the CEO’s reputation.
Many believe that the individual CEO is never bigger than the company.
In addition, many executives believe CEO integrity is of paramount importance and a high number think that their own companies’ CEOs have strong moral values.
CEOs and successful executives must do more than demonstrate integrity.
Leaders must serve as positive role models for their employees—blending a strong moral compass with the flexibility to adapt to new circumstances.
Executives usually feel the CEO has a direct impact on their job performance.
Developing and retaining people are the most critical strategic priorities facing top executives.
While many small companies start with someone combining the roles of CEO and chairman, as the company grows this becomes a risky formula.
This dual role presents a massive risk to any reasonably sized organisation.
Many think that this situation must be avoided.
The two roles are an essential part of delivering shareholder value and ensuring the necessary corporate management.
The non-executive directors are in a position to resolve this anomaly.
Often share price erosion is the result when a single person covers the two jobs.
Smaller companies and start up companies initially tend to have the same individual as both chairman and CEO.
This can be OK while the business is small.
A small business has an advantage in that it can move very quickly as a result of the very short decision-making processes.
In a small company, the CEO knows most of the people, the systems, and customers in the business and therefore can make well-informed decisions very quickly.
As the business grows, its complexity makes this more autocratic style inappropriate.
If the CEO is not fully committed to leadership training then it is likely to fail elsewhere in the organisation.
It is up to the guy at the top to develop a plan for leaders today and leaders for the future.
Definition
The title ‘chief executive officer’ nearly always depends on whether a business is a corporation or not, that is, whether or not it has a board of directors.
In an organization that has a board of directors, the ‘chief executive officer’ is (usually) the singular organizational position that is primarily responsible for carrying out the strategic plans and policies as established by the board of directors.
In this case, the chief executive officer reports to the board of directors.
If there is no board of directors (for example, a sole proprietorship, partnership, etc.), the ‘chief executive officer’ is often the singular organisational position (other than partnerships, etc.) that sets the direction and oversees the operations of an organisation.
Titles
The CEO position can also be called the President, Executive Director, Chief Administrator, etc.
These titles may apply even if it is a corporations or not.
Skills required
The chief executive officer is the overall, primary management and leadership role in the organisation.
It's critical that chief executive officers demonstrate strong knowledge and skills in a wide variety of areas.
The chief executive officer must have a basic knowledge of the industry they are in and the surrounding political, social, economic and technical environment.
In a larger organisation the chief executive officer will have a team of senior executives that are responsible for marketing and finance etc.
The CEO's job is critical in terms of the successful delivery of the business.
The chief executive officer tends to be the highest paid staff member, reflecting his or her importance to the business.
Hero
The chief executive officer is no longer looked upon as a possible celebrity or hero.
There are often scandals and discoveries of poor practices but most executives retain a positive view of their CEO's moral values.
They, and the workforce expect a lot, backed up with high integrity.
Many consider integrity, being a positive role model, and vision of the chief executive officer has having higher importance than day-to-day management skills or job security.
The chief executive officer should focus on governance and innovation.
The relatively short lifespan of the average chief executive officer means that many now see the position as less attractive.
This can be a problem in terms of mentoring and trying to fill the role in the future in terms of succession.
Mentors
The chief executive officer must supply a strong lead in mentoring and succession planning.
The organisation should employ extra efforts in these areas in particular because of the shortness of tenure of many positions.
Retaining the best people and development of the potential of individuals is very important.
In general, reducing costs and maintaining shareholder loyalty are not as highly praised as corporate governance and innovation.
Maintaining the status quo can be a recipe for failure as your competition moves forwards.
Many scandals are the result of poor governance.
The chairman
The chairman runs the board.
The chief executive officer runs the business.
The chief executive officer reports directly to the chairman, but is responsible for ongoing decision making in the business, in effect delivering the strategy agreed by the board.
An autocratic boss may be more likely to ignore danger signals especially if he or she has been in the position for some time.
However, this is less likely to happen when there are frequent discussions and debate between chairman and CEO.
The chairman is responsible for hiring and firing the chief executive officer, usually with board approval.
He or she has to monitor the performance of the CEO while providing necessary support and guidance.
The chairman’s role is discussed in a little more detail elsewhere [see Chairman].