Skip to content
× FreshBooks App Logo
FreshBooks
Official App
Free - Google Play
Get it
You're currently on our US site. Select your regional site here:

CEO (Chief Executive Officer): Definition, Roles & Responsibilities

Updated: November 25, 2022

Most businesses have a chief executive officer (CEO) who leads the company. This position is the highest-ranking executive when it comes to the organizational structure hierarchy. They oversee business operations and ensure everyone has the resources they need for their roles. The CEO of a company reports to the board of directors. They also serve as a liaison between the board of directors and their company leadership team. A company’s board and shareholders often vote on appointing a CEO.

List IconTable of Contents


    KEY TAKEAWAYS

    • The chief executive officer (CEO) is the top position in a business.
    • CEOs oversee business operations.
    • They report to the Board of Directors (BOD).
    • The BOD elects the CEO in most cases.

    Understanding What Chief Executive Officers Do

    Each company has different expectations for its CEO. Roles can vary a lot based on the size of a company. CEOs of the largest companies often serve at a higher level, while CEOs of smaller businesses are more hands-on. Examples of CEO responsibilities include:

    • Business strategy
    • Organization
    • Culture
    • Problem-Solving

    CEOs work closely with other corporate executives to set business goals. They also assess how solutions are working for their teams and customers and make complex decisions. The CEO often sets the tone for the company by outlining a vision and prioritizing goals. 

    Harvard Business conducted a study that broke down how CEOs spend their time on an average day. CEOs spend around 72% of their time in meetings versus working alone the other 28% of the time. A more detailed breakdown of time includes:

    • 25% of time spent on relationships
    • 25% of time spent on business review
    • 21% of time spent on corporate strategy
    • 16% of time spent on culture and overall organization
    • 3% of time on customer relations
    • 1% of time on managing crises 
    Hit The Ground Sprinting

    CEO Salaries 

    Salaries vary greatly based on company size. The average CEO salary is $24 million among the largest 350 U.S. companies. In addition to salaries, CEOs also enjoy elevated benefit options that may be exclusive to executive team members. These include added value to 401K and pensions, healthcare plans, and paid time off (PTO). 

    CEOs are known for making significantly more than regular employee positions. This is because CEOs often serve as the face of a company and have the responsibility of making crucial business decisions in a time of crisis. 

    Executive Positions Related to the CEO

    The executive-level team in an organization is often called the C-suite. Other senior executives include:

    • Chief financial officer (CFO)
    • Chief operating officer (COO)
    • Chair of board (COB)

    Businesses may assign other c-level officers based on unique needs. However, corporate officers usually make up a smaller group of individuals. This team has other leaders working underneath them.

    CEO Functions vs COB Functions

    The CEO oversees business operations. The COB partners with the board of directors to oversee the company as a whole. Sometimes the CEO and COB are the same people. Most companies choose to have different people in these positions so there is clarity of differences between roles. The board can overrule any CEO decisions with a vote. But, the CEO or COB cannot overrule board decisions in the same way. 

    Set Your Books Up For Success

    CEO Functions vs CFO Functions

    The CFO focuses solely on corporate finance. They create and maintain the company budget and make adjustments as needed to accommodate economical changes. The CFO recommends changes to the CEO and board to strengthen the business. This may include:

    • Assessing risk
    • Offering statistics on the cost of equity and cost of debt
    • Tracking cash flows
    • Overseeing investments

    CEO Functions vs COO Functions

    The COO is usually second in line to the CEO. This person leads human resources and is more hands-on with day-to-day company operations. Their responsibilities include:

    • Recruiting talent
    • Legal concerns
    • Payroll
    • Training
    • Administration

    CEO Functions vs Board Chairpersons Functions

    The board chairman is usually in a higher ranking position than the CEO. They act as a liaison between the board and the CEO. At the same time, the CEO acts as a liaison between the organization and the board. These two individuals work closely together to oversee company performance and make corporate decisions.

    Summary

    Many companies have a chief executive officer (CEO) who leads the organization. This person often oversees business operations and reports to the board of directors. Private companies may hire or promote a CEO. Public companies often vote to elect the CEO. Most of the time CEOs have higher education in addition to industry experience.

    Skip The Crash Course In Accounting

    Frequently Asked Questions about CEOs

    Does CEO mean they own a company?

    Not necessarily, but they can. Some CEOs own and lead their companies. Other CEOs are elected into positions and lead without owning. The latter is common with larger businesses that have many shareholders.

    Who ranks higher than the CEO?

    There is usually no executive that is higher than the CEO. However, the CEO does report to the board of directors, so technically that group ranks higher than the CEO.

    Do I have to have a degree to be a CEO?

    Generally speaking, yes. There are some exceptions, but most CEOs do have a bachelor’s or master’s degree.

    WHY BUSINESS OWNERS LOVE FRESHBOOKS

    553 HRS

    SAVE UP TO 553 HOURS EACH YEAR BY USING FRESHBOOKS

    $ 7000

    SAVE UP TO $7000 IN BILLABLE HOURS EVERY YEAR

    30M+

    OVER 30 MILLION PEOPLE HAVE USED FRESHBOOKS WORLDWIDE

    Try It Free for 30 Days. No credit card required. Cancel anytime.