What Does CEO Mean and What are the Functions of the Chief Executive Officer?

What Does CEO Mean and What are the Functions of the Chief Executive Officer?

In the world of business and corporate management, becoming the CEO of a company is the dream of the most capable leaders. Being CEO represents having reached the pinnacle of career success. I explain what it is to be a Chief Executive Officer and the keys to becoming one of them.


What is a CEO in a company?

As I mentioned, people with the soul of a leader inevitably aspire to be CEO within a company. But not all that glitters is gold, and if it is true that being the Chief Executive Officer of a company carries great power, it is also true that it carries great responsibility and great stress. And it is that, in a simplified way, we can say that the great role of the CEO consists in simultaneously satisfying the needs of shareholders, employees, clients, collaborators, and legal and social entities. Not a simple topic.


The functions and responsibilities of a CEO vary according to the characteristics of the company he represents depending on elements such as the organizational structure and the size of the company. In smaller companies, the CEO takes on practical roles in certain departments of the company based on his experience and more technical skills.


In contrast, in larger companies, the CEO generally only deals with the high-level corporate strategy and the most relevant decisions of the company, delegating and controlling the rest of the tasks to the C-Suite level managers as CFO, CMO, COO, and CIO.


If you do not know the meaning of these acronyms well, do not worry, consult our article CFO, CIO, COO, and other acronyms of high positions.

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Roles of a CEO: the keys to becoming an Executive Director

These are the main functions that every CEO should have and that I will further develop in-depth:

  1. Great business and innovative vision
  2. Analysis of capacity for decision making
  3. Leadership and management of large teams
  4. Talent recruitment
  5. Bargaining power
  6. Motivational ability

Establish the orientation and strategy of the company

Setting the long-term direction of the company is one of the most important tasks of a CEO. We refer to establishing the vision, the purpose of the company, that is, its reason for being, and the values that will delimit the red lines that should never be over-passed.


As part of the company’s orientation, it is the direct responsibility of the CEO to build a healthy and appropriate corporate culture, establishing insurmountable values, and in turn, assumed naturally by practically the entire organization.


In addition to setting the orientation, it is also the direct responsibility of the CEO to design and define the strategy at its two main levels, that is, the corporate strategy that responds to the question of “Where will the company compete?”, And the competitive strategy that responds to the “How will you compete?” question.


A good CEO can balance and keep the company focused, dedicating 70% of its resources to its Core Business, and being able to encourage and promote its directors to take the remaining 30% to areas of innovation.

Building C-Suite level management

On the one hand, we have that a company must not grow faster than its ability to find the right people for the right jobs. And on the other hand, we have the pressure exerted by the shareholders on the CEO for growth. With these two elements, we conclude that it is indisputable that the main function of the CEO is to build the best of the management teams at the C-Suite level.

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It is therefore the function of the CEO to choose his managers, as well as their training and sufficient freedom of action so that they can carry out the necessary tasks in favor of achieving the vision. The CEO should delegate but must do so before the best management team.


Balance of resources

The resources of an organization such as capital, people or tools are limited, however, they are essential for the proper functioning of the different departments. A balance of resources towards one or the other department marks the organization’s priorities.


It is the direct function and responsibility of the CEO of an organization to balance resources between departments to achieve the desired purpose. It is also their function to request more financing from shareholders, if necessary, through the board of directors to increase the available resources.

Equilibrium of generated value

The CEO of any organization is elected by the board of directors of a company, who are the representation of the shareholders, that is, the owners of the company. The CEO is usually also part of said board of directors and, on numerous occasions, holds the presidency of it.


These facts make it the responsibility of the CEO to create value for shareholders, but it is also his responsibility to create value for the workers and for the society in general that surrounds the organization. This makes the CEO a true tightrope walker in creating value.


This is not easy at all, since in many cases there are opposing forces in terms of objectives between shareholders, staff, and society. Shareholders want growth to increase their profits. In many cases, this growth implies greater pressure on workers for productivity and efficiency. And in addition, growth implies a higher production that in many cases translates into an increase in pollution.

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To these four main functions of the CEO, we can add others such as the ability to motivate the staff with a focus on objectives, the development of activities at the level of public relations with markets or public administrations, the management of higher-level human resources, the control of financial and fiscal management, as well as the detection of trends that may pose an opportunity or threat to the organization.


What to study to be an Executive Director?

As we have mentioned, some people are born with the soul of a leader and who stand out in all areas of their lives for their strategic planning and management nature.


To become CEO of a company, accredited experience in leadership and management of people, resources or even markets is necessary. The business world is a very competitive sector where added value and the competitive difference between people are very decisive.


That is why training is essential to highlight and validate the knowledge that not all profiles acquire. Having an MBA opens many doors, due to the reputation of this degree, the associated networking, and the quality of the training.


This training in Business Management and Administration is essential to start working in lower positions of team and organization management. Without a doubt, if your goal is to become CEO, this is the training that will take you professionally to the top of any organization.

Who said they wanted to be the CEO of an organization? Those of you who, despite everything we have seen here about the functions and tasks of a CEO, remain convinced, deserve all my admiration and respect, and I sincerely wish you the best of luck. I encourage you to share with your community and thus be able to count on the leaders that as workers and society we need.


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