The Chief Executive Officer (CEO) is a senior management job that sits securely at the top of the corporate ladder and carries with it an air of authority and influence. It’s easy to believe that the all-powerful CEO can do whatever they want, whenever they want. Nothing could be further from the truth, though. Here. we’ll see the roles and responsibilities of the chief executive officer, including the salary of Google CEO. We’ll also see how the CEO differs from the business owner.
Who Is a Chief Executive Officer (CEO)?
A chief executive officer (CEO) is a company’s highest-ranking executive. A chief executive officer’s core tasks include making major business decisions, managing a company’s overall operations and resources, and serving as the primary point of contact between the board of directors and corporate operations. In many circumstances, the chief executive officer is the company’s public face.
The CEO is chosen by the board of directors and the company’s shareholders. They report to the chair and the board of directors, who are elected by shareholders.
CEO Compensation and Notoriety
CEOs of the top 350 corporations in the United States earn an average of $24 million each year. To put it another way, that’s 351 times the average worker’s income. CEO pay is believed to have increased by more than 1,300% since the 1970s. In comparison, worker compensation has increased by 18%.
CEOs of huge organizations might become famous as a result of their regular interactions with the public. Elon Musk, the founder of Tesla (TSLA), has over 134 million Twitter followers as of April 12, 2023. Similarly, Steve Jobs, the founder and CEO of Apple (AAPL), became such a global figure that, upon his death in 2011, there was a flood of cinematic and documentary films about him.
The leader of an organization may not be titled CEO, as is the case with many ambiguous job titles. They may have all of the responsibilities listed below, but their title may be different.
Roles and Responsibilities of the Chief Executive Officer
The functions and responsibilities of a Chief Executive Officer will vary greatly depending on the company, industry, and size of the business. In general, a CEO is required to perform the following duties:
#1. Create strategic goals and objectives.
The CEO is responsible for developing new strategic plans and policies to bring their dreams to fruition, bearing the weight of the company on their shoulders. By establishing clear goals and objectives, the CEO assists employees and the Board of Directors in better understanding future business growth expectations, both short and long term.
#2. Put proposed strategies into action
CEOs guide and oversee the entire strategic direction of the company, producing high-quality business strategies and plans that match both short-term and long-term goals. It is their responsibility to communicate their approach throughout the organization in order to guarantee that its operations are operating in accordance with the company’s overarching strategy, with the end goal of maximizing earnings, enhancing shareholder value, and boosting market position.
#3. Budgeting and planning
Many people are disappointed that a CEO’s financial responsibilities cannot be transferred to the Chief Financial Officer (CFO). Rather, the CEO must first establish a yearly budget to allocate capital based on parameters such as net income, cash flow, and the valuation they aim to reach.
CEOs then use the CFO’s assistance to calculate future spending, income, and profitability for the upcoming year, taking into account variables such as industry swings. The burden is only alleviated after the CFO manages cash flow and performs fiscal and financial analysis throughout the year.
#4. The field of public relations
The public naturally links the CEO with the company’s face, making them an almost mandatory marketing tool. As the company’s chief representation, the CEO is expected to demonstrate model behavior, with their public values and actions, both good and poor, having a significant impact on the company’s reputation. For example, when Elon Musk smoked marijuana live on The Joe Rogan Experience podcast, Tesla’s stock price dropped 7% as a result of mounting controversy and anxiety over the CEO’s recent and fairly odd behavior.
#5. Contacting the Board of Directors
The board of directors can quickly become either a CEO’s greatest ally or the source of his or her demise. Regular board meetings should keep the board informed of significant – and sometimes tough – company choices, just as expectations must be communicated to staff. Communication between the board and the CEO is critical, and transparency is essential.
#6. Monitoring firm performance
The CEO’s function requires an executive awareness of the company’s performance in comparison to other competitors. Revenue growth, gross profit margins, and cumulative sales can all provide useful information. These can then be utilized to develop additional key performance indicators (KPI) to guide necessary adjustments and assist the organization in attaining its new targets. Furthermore, monitoring the market – whether it entails possible acquisitions or significant regulatory developments in the industry – is critical to assisting the company in overcoming external factors and progressing toward its long-term goals.
#7. Creating a Workplace Culture
Everyone, from interns to managers to senior executives, looks up to the CEO to some level. Creating a healthy workplace culture entails setting a good example. CEOs will acquire respect and act as stronger motivation for employees to reciprocate and do the same for them if they display the same working attitudes that they expect of others. A positive work atmosphere should be consistent with the company’s beliefs, objectives, and goals. CEOs may better drive consistent, high levels of performance across the entire organization with a productive working culture and a clear set of company values.
CEO vs Owner
Huge multinationals and little mom-and-pop shops have little in common. Still, all have one thing in common: the one at the very top of the hierarchy is the one person who determines the enterprise’s ultimate success or failure.
In large corporations, this is usually the CEO. In small enterprises, that job is frequently held by the person with a controlling financial interest in the company, sometimes known as the owner.
Contrary to popular assumption, a CEO is not always the boss of a big international business. They are also not always the owners of a business. Here, we’ll show you the difference between the CEo and the business owner.
Who Is a CEO?
A CEO is directly responsible for a company’s day-to-day operations, marketing possibilities, and overall performance. They concentrate on the strategic performance of the company, which includes establishing the vision and long-term goals. This includes looking for ways to maximize profitability, increase the company’s stock price, and prepare the company for growth.
A sound financial background aids in the development and administration of strategic goals. Because the goal of most businesses is to generate a profit, a CEO should understand how to secure enough cash flow, invest surplus capital, and manage debt.
A CEO should have a solid awareness of how each firm department operates. This is because they think in terms of the big picture. To do so effectively, they must understand how all of the components fit together to form a well-oiled machine.
Excellent interpersonal skills are frequently required for the position. The CEO of a company must be able to interact with, educate, and motivate the team members they lead.
CEOs can be found in a variety of industries and business sizes. This includes anything from start-ups with three employees to massive worldwide conglomerates with thousands of staff.
Who is an Owner?
An owner is a person who begins a business and sees it through to a lucrative operation. They identify and grab a market opportunity for a product or service.
A firm might be owned entirely or partially by its owner. If one person owns 100% of a corporation, that person is the sole owner. If a business owner has a partner who has equity in the company, that partner is a co-owner.
Some business owners are highly involved, while others choose to remain hands-off. One business owner may decide to work directly in their company. Another option is to select a manager to oversee day-to-day operations.
Smaller businesses frequently lack the financial wherewithal to appoint a CEO. That means that when a company is just starting out, the owner is often also the CEO, but without the title. In reality, they may wear multiple hats, including CFO, CIO, COO, CMO, and even a few more C-suite designations.
When the company is large enough, the owner may opt to take on the role of CEO. However, unlike a CEO of a public corporation who reports to a board of directors, a CEO of a private enterprise who is also an owner reports to no one.
An owner is not required to conduct any managerial functions in order to be deemed one. In reality, if a business owner wants to see its full potential, they must be willing to delegate responsibility to others when the time comes. This means that when their company grows, an owner should consider hiring some C-level personnel to ensure that all business operations are completed as efficiently as possible.
CEO vs a Business Owner: The Differences
The board of directors usually bestows the title of CEO on an individual. Owners are sole proprietors and entrepreneurs who own their firms and all of their financial resources.
Ownership is a legal term that refers to someone who owns the majority or all of the shares of a firm. CEO, on the other hand, is a functional term that includes a daily job, duties, and obligations.
Consider a publicly listed corporation to illustrate this point. The shareholders own the company, while the CEO is an employee who reports to the shareholders via the board of directors.
The two terms, however, are not mutually exclusive. CEOs can also be owners, and vice versa. Furthermore, a CEO is not necessarily held accountable to a board of directors.
While it is possible to be a part-time owner, it is usually not possible to be a part-time CEO because being a CEO is normally a full-time obligation.
An owner might take a passive or active role in a firm. Passive means they remain in the background while providing guidance and counsel to their CEO. When an owner assumes some or all of the managerial functions, this is referred to as direct management. A CEO, on the other hand, is nearly usually a direct function with day-to-day oversight as an operational requirement.
A CEO is typically a company’s public face. They may do media interviews, speak at industry conferences, publish pieces for trade magazines, and deliver motivating messages to team members in this capacity. However, in some private businesses, the owner may assume these tasks in place of the CEO.
A CEO is paid, whereas an owner is not. Instead, they get to keep the earnings made by the company.
5 Reasons Why a Business Owner Might Hire a CEO
As a business owner, here are some reasons you might want to hire a CEO.
#1. You are a Visionary.
Perhaps you’re an owner who excels at maintaining the company’s goal and motivating the employees. However, you are having difficulty completing the actual tasks that will lead your business to its pinnacle of success.
This type of owner is a visionary who prefers to work on their business rather than in it. They dislike the day-to-day operational issues that chief executives deal with and prefer to explore fresh ideas and opportunities for their businesses. If this describes you, think about bringing on a senior executive.
Hiring a CEO allows you to focus on instilling a feeling of mission in your team members. At the same time, the CEO would handle all of the organizational details that keep a business running.
#2. If It’s Time to Expand
If you’re an owner trying to scale up but don’t believe you have the management skills to do so, you might consider hiring a chief executive.
This could be the case if you transformed your one-of-a-kind ability, craft, or trade into a compensated career without having much business experience. You were able to make it all work because of the sheer force of your enthusiasm.
However, you definitely don’t want to rely on this natural excitement to power your company’s next stage of growth. Hiring a CEO with significant entrepreneurial experience will enable your company to make the kinds of strategic decisions that will assure the success you desire.
#3. You Want Your Company to Reach Its Full Potential
Another reason to delegate company management to a CEO is when you believe your firm is capable of much more than you alone can achieve. Maybe you can build your business into a $10 million corporation with your inadequate managerial skills. A CEO with more significant experience and understanding, on the other hand, may grow it into a $100 million firm.
#4. You Only Want to Manage One Area of the Business
You may thrive in one aspect of your firm, such as production, marketing, or operations. If this is the case, you could employ a CEO to oversee all of the other essential areas while you concentrate on that one.
#5. You’re Not Good at Math
Assume you have severe arithmetic phobia and are immobilized with panic when investors inquire about complex figures. In such scenario, this may not sit well with them. This is because they need to be assured that the individual in charge is well-versed in financial matters.
Hiring a CEO with a strong financial experience helps boost investor trust, boosting the likelihood that your company will be funded.
Google Chief Executive Officer Salary
Sundar Pichai’s total salary as Chief Executive Officer, Alphabet and Google, and Director of Alphabet Inc. was $225,985,145. $2,000,000 was received as a salary, $0 as a bonus, $0 in stock options, $218,037,684 was issued as stock, and $5,947,461 came through other sources of compensation. This information is based on proxy statements submitted for the fiscal year 2022.
Who Is Higher In Ranking: the COO or the CEO?
The CEO is the highest-ranking management in a company, while the COO is second in the corporate hierarchy.
Is the COO Higher Than The VP?
Because the VP of operations is in charge of long-term operational strategy and the COO is in charge of day-to-day corporate operations, the corporation may regard the COO to be lower in rank than the VP.
What Does a CEO Do All Day?
CEOs are in charge of overseeing a company’s entire operations. Delegating and guiding agendas, driving profitability, managing corporate organizational structure, strategy, and interacting with the board are all examples of responsibilities.
In Conclusion,
The CEO is in charge of significant corporate decisions, overseeing operations, and defining the company’s strategic direction. They are answerable to the company’s board of directors or stakeholders and are frequently the organization’s public face. CEOs often have substantial industry knowledge and are responsible with leading their company to success and profitability.
Related Articles
- HOW TO BECOME A CEO: Skills, Qualifications & Best Practices
- Chief Strategy Officer: Organization Chart, Job Description & Salary
- CHIEF OPERATING OFFICER: Understanding the Roles of a COO and Qualifications
- HOW TO BE A GOOD MANAGER: Effective Steps to Take To Become a Good Manager
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