Chief executive officer

A Chief Executive Officer, or CEO, is the highest-ranking officer in an organization. This person is responsible for managing a company or a nonprofit group. They can work in private corporations or public government agencies. In a business, the CEO works to increase the value of the company. This might mean increasing profits, growing market share, or raising total revenue. In nonprofit sectors, the CEO focuses on achieving a specific mission.

The CEO functions through several key roles. First, they act as a primary decision-maker for business strategy. They must also serve as a manager and an executor of plans. As a communicator, the CEO speaks to the press and the public. They also lead the organization's internal management and employees. The CEO implements the specific goals set by a board of directors. They are ultimately accountable for all major business decisions. These decisions cover areas like finance, marketing, and human resources.

Different countries use different systems to manage authority. In some nations, a dual board system is used. This system includes an executive board for daily business. It also includes a supervisory board for control and oversight. The CEO leads the executive board in these cases. A separate chairperson leads the supervisory board. This separation helps prevent a single person from having too much power. In the United States, the board of directors often acts like a supervisory board. The CEO leads the executive committee, which includes other top officers.

The history of the term "chief executive officer" goes back many years. The phrase was used in a 1782 United States ordinance. At that time, it referred to leaders of the Thirteen Colonies. The acronym "CEO" has a different origin. It likely began in Australia in 1914. The first recorded use of the acronym in America was in 1972. Over time, the role has become a central part of modern business structure.

Many senior executives report directly to the CEO to help run the organization. These individuals are often called subordinate executives or corporate officers. A common title for these leaders is vice president, or VP. An organization may have many VPs for different areas. For example, a VP of finance manages money. A VP of human resources manages people.

Other common roles include the Chief Operating Officer (COO) and the Chief Financial Officer (CFO). There are also Chief Strategy Officers (CSO) and Chief Marketing Officers (CMO).

Some people study the concept of the "celebrity CEO." This idea suggests that certain leaders are treated like stars in entertainment. Journalists sometimes focus heavily on the individual talents of a CEO. They may highlight heroic strategic actions taken by one person. However, some researchers argue this can be a problem. It might lead to "hubris," which is excessive self-confidence. Research from 2009 suggests that award-winning CEOs sometimes lead to lower company performance. This may happen because the focus is on the person rather than the technical bureaucracy.

There are also important discussions regarding pay and diversity. In the United States, CEO pay has risen significantly compared to average workers. In 1965, the pay ratio was 20-to-1. By the year 2000, that ratio grew to 376-to-1. Another area of focus is gender diversity in leadership. In 2018, only 5% of Fortune 500 CEOs were women. By 2023, this number rose to 10.4%. Many organizations are now researching ways to help more women reach these top roles.

Boards of directors use specific tools to evaluate a CEO's performance. They often ask difficult questions about growth and risks. They look at "PESTEL" risks, which include political, economic, and technological factors. They also use "SWOT" analysis to find strengths, weaknesses, opportunities, and threats. These questions help ensure the CEO is following the right strategy. This process helps align the executive team with the interests of the shareholders.