So I work for a large bank in the United States. Me and my coworkers always joke that whenever something bad or inconvenient happens it’s the CEOs fault. Though it’s just a running joke it got me thinking, on a day to day basis what does a CEO actually do? I get the “Chief Executive Officer” nomenclature means they more than likely make executive decisions but what does that look like? Are they at their desk signing papers all day? Death by meeting?
Edit: Holy crap thanks for all the answers I feel like this sub always pulls through when I have a weird question. Thanks guys!
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Everyone is answering in terms of what the job description is, but I think it’s more helpful to understand where this role/title comes from, and so why it can be very different from company to company.
Modern Western corporate structures are all based primarily on European Parliamentary systems. Except instead of one person, one vote, it’s one “share,” one vote.
Here’s why:
Say that you and me, plus a couple friends, want to start a company together. It’s going to cost $100k to get it going. But we don’t all have exactly $25k each. I have $50k, you have $25k, and our two friends only have $12.5k each. We all want a say in how the company works because it’s our money, but it’s unfair to say all four of us should have equal say.
So instead, we create “shares” and hand them out proportionately. I get 500, you get 250, and our friends each get 125 for example. Then we “vote” with those shares on what the company should do.
Now as the company gets bigger, maybe more people want to invest money in us and get some shares, and thus votes, into what the company does with that money. Maybe it’s 100 people, all with different amounts they can invest. It’s not practical to call a full vote of every shareholder on say… every person we hire. Or what color stapler to buy. Maybe all of us *have* full time jobs already.
So instead, we have one big vote once a year (or so) among all the shareholders (voters) to elect a set of representatives, like a Parliament. This is the Board of Directors, who’s job is to represent us. But it’s also not practical for that Board to vote on every little decision the company makes either — just the big stuff. (The “laws,” so to speak.) So just like a Parliament, the Board itself then votes on a Prime Minister to delegate authority to about *how* to run the company day to day.
This person is responsible for *executing* the Board’s decisions. And so this person is called the Chief Executive Officer, or CEO. (There is nothing special about this title — the President of the US is referred to as “chief” officer of the “executive” branch too.) Just like a Prime Minister, this person then hires/appoints cabinet ministers, like a Treasury Secretary (Chief Financial Officer), who then hire and manage their own departments. Depending on the company’s rules, they may or may not need a Board vote to confirm other cabinet (Chief “X”) members.
Just like different countries, certain companies give their CEOs total authority on everything. Others give them relatively little authority and Board vote on everything. It often depends on how much political influence a CEO has with each Board member. CEOs with a lot of success, charisma, or political pull with shareholders tend to get a lot more leeway.
CEOs are given 2-4 year (or so) terms, and then the Board votes on CEO again. If the Board doesn’t like them, they lose the vote and thus their jobs. If the Board doesn’t hold them accountable, or votes against the shareholders’ interests, then the shareholders vote to replace the Board at *their* next general election.
CEOs usually demand a certain amount of autonomy during their term, because they might need to make decisions that are unpopular, and don’t want to run every little thing past the Board. And so just like a chief executive of a country, it is often very hard to get rid of them between each election. They do this by requiring a very high vote margin *and* a huge fee to break their contract (basically “impeach” them) before the next elections — i.e. a “golden parachute.”
So the role of a CEO in a company is to “execute” the decisions of the Board. But what those decisions actually are is wildly different from company to company, and depends a huge amount on the company’s bylaws and how much pull/autonomy the CEO has with the Board members and shareholders.
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