Who is under the ceo of a company

The Chief Executive Officer (CEO) is the highest-ranking executive and head decision-maker in a company. The president is a top-level executive who is usually the second in command, below the CEO.

The CEO's and president's duties may vary depending on a company's size and needs.

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Chief Executive Officer (CEO)

The CEO is the head executive in a company. They are one of the c-suite executives. The c-suite also includes:

• The Chief Operating Officer (COO)
• The Chief Financial Officer (CFO)
• The Chief Information Officer (CIO)

Small companies might not fill all the c-suite roles. It will depend on the business's size and its needs. Large companies usually have at least a CEO, CFO, and COO.

The CEO is the top c-suite executive. They have the final decision-making authority in the company. Their main duties are to make big-picture plans for the company. They pursue long-term goals while avoiding risks. Increasing shareholder profits is another one of their key objectives. They may even make plans to expand and acquire other businesses.

The board of directors elects the CEO, and the CEO acts as the main contact person between the board and the company. The CEO may also need to act on the board's advice when appropriate. At times, the CEO may need to speak to the media and act as the public face of the company.

President

A president's duties may vary from company to company. Sometimes the president also holds other titles like CEO or COO. This depends on the corporate structure, culture, and size.

Often, one person will be both a president and a COO of a company. As the COO, they will be responsible for the company's day-to-day operations. They will also be the right-hand person for the CEO. Overseeing and implementing the CEO's long-term strategies will be key responsibilities for them. The CEO will decide on the COO's other different roles. This will depend on the CEO's needs and preferences.

In the corporate world, a president sometimes leads one segment of a company. Companies that are made of many separate businesses may need multiple presidents. There is often a president leading each of the separate businesses that make up a conglomerate. Below each of those presidents might be vice presidents of the company's segments.

The duties of CEOs and presidents can take on a variety of forms depending on the needs of the company. However, certain key differences between presidents and CEOs are usually consistent.

Key Differences Between the President and the CEO

• A CEO focuses on wealth maximization. This means increasing the value of a company. The goal is to bring the stock prices up and increase shareholder value. Presidents have shorter-term objectives, mainly focusing on profit maximization.
• In companies with both a CEO and a president, the president is the second in command after the CEO.
• The CEO manages the overall direction of the company and makes the final decisions. The president manages daily operations.
• The CEO forms a long-term vision for the future. They are often planning business strategies over a period of years. The president implements this vision and focuses on short-term strategies.

Board of Directors

The CEO reports to the board of directors. The board of directors represents the shareholders, who are the ultimate owners.

The CEO is the top executive in a company and reports to the board of directors. One of the CEO's duties is to be the main contact person between the board and the company. They also may need to act on the board's advice. The CEO is often a member of the board of directors. Sometimes they will even be the chairman of the board of directors. The president may also have a seat on the board of directors. However, they are less likely to be a member of the board than the CEO.

Non-Profit Organization Presidents

A non-profit organization has an educational, scientific, or religious purpose — or another charitable purpose. It also has tax-exempt status. Not all non-profit organizations need presidents or CEOs.

Like in the corporate world, the number of executives and their titles may vary from organization to organization. Smaller non-profits may not have a president or a CEO at all. Instead, the executive director will have the top position. Larger non-profits may employ both a president and a CEO.

If a non-profit has a president, they are often the head of the organization. In those cases, the president will have some unique responsibilities. It will be their duty to ensure that the organization is pursuing its mission and doing work that aligns with its vision. There are also certain tax laws that the head of a non-profit must be aware of. To avoid losing the non-profit's tax-exempt status, it is important to follow these laws.

CEOs and Presidents in Small Businesses

The corporate governance structure can vary from business to business. In startups or smaller companies, there might not be a need for a COO, CFO, or CIO. Instead, the CEO might take responsibility for the day-to-day issues that arise.

In fact, the president and the CEO might be the same person in a small company. The person who started the business might fill the roles of CEO, president, and business owner. They may also be the only shareholder. As the business grows, the owner may become very busy pursuing the company's vision and planning long-term strategies. In that case, they might choose to incorporate. They may also hire people to fill the roles of COO, president, and more.

How a Business Organization Lawyer Can Help

It is not always necessary to hire an attorney when starting a business, but it can help if you have questions.

If you have concerns about employing a CEO or president, or concerns about starting a business, you should contact an experienced business organizations lawyer near you.

Responsibilities of the CEO

A CEO can (theoretically) take on any tasks or responsibilities they wish; indeed, some CEOs, particularly within smaller organizations, tend to be pretty hands-on with some corporate functions.

CEOs may gravitate towards certain functions like marketing or finance, depending on their professional background and expertise. The stage of the company lifecycle matters, too; for example, CEOs at earlier stage ventures may spend a larger proportion of their time fundraising than counterparts at more mature firms.

In practice, however, a CEO’s time and expertise are best spent focusing on a handful of really high-impact, core responsibilities. These include:

1. Setting and Executing Organizational Strategy

Decisions about new product lines, generating (and/or maintaining) competitive advantages, potential new markets, and mitigating risks or seizing on opportunities (among others) all fall under the purview of the CEO.

As with anything in an organization, they will rely on considerable data and input from senior leaders as well as direction and insight from the Board of Directors, but the CEO is the individual that has operational control over strategy and execution.

2. Building the Senior Leadership Team

Effective CEOs are able to attract top talent to their organizations. While they aren’t responsible for hiring or terminating every individual employee, they are responsible for building and overseeing the executive leadership team who, in turn, hire and oversee upper and middle management within their divisions. 

The executive leadership team includes the CFO (Chief Financial Officer), the COO (Chief Operating Officer), and, depending on the nature of the organization, all the other C-suite roles that may exist (Chief Risk Officer, Chief Technology Officer, Chief Strategy Officer, Chief Investment Officer, etc.)

In many organizations, the Board will have final (formal) authority on hiring decisions at the C-level, but, in most instances, the board actually defers to the recommendation(s) of the CEO.

3. Making Capital Allocation Decisions

While division and departmental managers may be responsible for managing their respective budgets, the responsibility for setting and managing the organization’s overall budget in order to effectively execute strategic initiatives ultimately falls upon the CEO.

Furthermore, the CEO will also weigh in on when (and how) to raise funds, as well as how to make the best use of surplus capital. Strategies include repaying debt, distributing capital by way of dividends or share repurchases, or reinvesting in the business.

4. Setting Vision, Values, and Corporate Culture

Corporate culture has many elements that are organic in nature, but the mission, vision, and values designed and implemented by the CEO will ultimately steer that culture in any number of different directions.

The CEO must be very aware of their tenor, their behavior, and every single action they take (or don’t take) – the entire organization is watching. Even decisions around what they wear or how they choose to present themselves and engage with other members of the firm will set the tone for the rest of the organization.

5. Communicating Effectively with All Stakeholders

The CEO is the face of the organization. They may be representing the firm in front of the general public, the press, lawmakers or other regulators, employees, customers, suppliers, or any number of other parties interested in company operations.

Relaying core elements of vision, values, and mission is important, but actually living these values is even more critical. The CEO is never really “off duty” – there is always someone watching or listening. 

Characteristics of a Successful CEO

As with anything, there is no one-size-fits-all formula. But successful CEOs generally have (or exhibit) many of the following characteristics:

• Extraordinary passion. It takes a special kind of leader to be able to handle the pressure and the scrutiny that comes with such a high-profile position.
• Clear vision. Developing a business strategy requires that a CEO be many steps ahead of the general public in seeing and understanding how trends may evolve. 
• Strong leadership. Even with unmatched passion and foresight, the business can’t get there without the right people in place to make things happen. CEOs must be able to attract talented human capital that will support the company’s mission and vision.
• Effective communication skills. A CEO is always under scrutiny and must constantly deliver and reinforce the organization’s message. It’s rare to see a CEO that isn’t comfortable in front of an audience or a television camera.

Corporate Governance

A typical organizational structure looks like this:

The CEO is the top operational decision-maker within an organization, but they report to the Board of Directors (BOD).

All appointments to (or removals from) the BOD are voted on by shareholders of the company. Conceptually, this is what creates a Corporate Governance function within an organization. 

The BOD is a safeguard that provides a layer of protection for (and to generally look out for) the rights and interests of stakeholders. This ensures that the CEO – while a highly-coveted title – does not have complete dictatorial control over the entire firm.

Driven in large part by the emergence of ESG (Environmental, Social & Governance), the nature of board oversight has evolved. While historically, their sole responsibility was looking out for shareholders (often called shareholder primacy), increasingly, boards are being expected to look out for all stakeholders more broadly, including consumers, employees, suppliers, and the general public.

CEO vs. Chair of the Board

The CEO is the top operator in the organization; in other words, they’re in charge of the company. The Chair of the Board, on the other hand, is in charge of the Board. 

The CEO is, technically, subordinate to the Chair of the Board.

In some instances, the CEO also serves as the Chair. However, as scrutiny around corporate governance practices continues to grow, many firms are moving away from that model. 

Since the Board is responsible for evaluating the performance of the CEO, including voting on his or her compensation (and even their dismissal, if warranted), it’s obvious that a potential conflict of interest exists when the CEO is the Chair.

Additional Resources

Thank you for reading CFI’s guide to CEO. At CFI, we’re on a mission to help you advance your career. Some of our most popular free resources include:

• Stakeholder vs Shareholder
• Board of Directors
• C-Suite
• Shareholder Primacy