Why do companies need people in charge of the entire company? I get that certain parts of the company (i.e. production, shipping, marketing, etc) need a leader / someone who keeps an overview. But why do they need someone at the top of the company, who’s just there to.. be someone to represent the company? In most cases I’ve heard of, the CEO is in charge of pretty much everything, but barely knows anything about every individual thing the company does. So why not have no CEO, and instead just leaders of individual groups? Why does someone have to be on top of everyone?
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Great comments here. Adding my two cents.
The CEO is responsible for long term direction. Most of the organization is concerned about making the current year work. Someone has to take care of the long term. Decisions involving the overall fate of the company, potential entrepreneurial directions (e.g. acquisitions, bold new directions), and envisioning what the company can become –and leading the organization towards this vision– all fall under the CEO’s domain.
This is why, of all the positions, the choice of CEO has the largest impact on share price. An organization is designed to behave like machinery–everyone should be a replaceable part. Finance guy resigns? Just find someone who has the same “specs” and plug that person in. Not so with the CEO, because the CEO’s own personality, values, leadership and vision can be very singular.
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