© 2008 Vinny Ribas

 

Two of the most popular comments that I hear from new or aspiring entrepreneurs are “I am not CEO (Chief Executive Officer) material” and “I want someone else to be CEO”. There are many reasons for this, including lack of confidence, fear of moving into uncharted territory, not wanting the responsibility for the whole company, and my favorite – “I can’t ask people (investors) for money!” However, I believe that the main reason that new entrepreneurs shy away from that position is that they do not understanding the real role of the CEO.

 

Here is a composite overall description of the CEO position taken from various sources on the internet:

 

“The CEO is that person in a company who is responsible for implementing the strategic goals and objectives of the organization, overseeing corporate governance and providing direction and leadership toward the achievement of the organization’s philosophy, mission, strategy, and its annual goals and objectives.”

 

Notice how the CEO must have a very broad, “view from the top” mentality. He or she is an overseer, a visionary and a strong leader. Nowhere in the description does it say that the CEO has to do the bookkeeping and/or accounting, and do all of the marketing, and make the widgets, and be the company’s top salesman. It also doesn’t say that the CEO needs to know every job in the company, nor does he have to be an expert in his or her industry. The CEO is the leader, the coordinator and the driver. He needs to know just enough about each major area of the company to know if they are running efficiently, smoothly and profitably.

 

The responsibilities of the CEO fall into 5 major categories:

 

• Board Administration and Support: The CEO helps to choose and develop the company’s Board of Directors. He then acts as the liaison between the Board and the rest of the company. He makes certain that any policies and procedures that the Board approves are passed on to the company’s employees and acted on. When the CEO is also the majority stockholder, as is the case in wisely built companies, then the CEO has the voting power to ignore the decisions of the Board of Directors. However, the wise CEO attracted a skillful, experienced and knowledgeable board whose input he takes very seriously. Listening to your qualified board is the best way to gain the skills and knowledge that will ultimately make you an effective CEO. The CEO reports to the board.
• Product and Service Delivery: The CEO oversees every facet of the development and delivery of all of the company’s products and services, including their design, production, marketing/promotion and quality. Take note that the CEO is the one who oversees everything. The wise CEO has put expert team members in place to perform the actual functions of producing the product or service. Often, a COO (Chief Operating Officer) is put in charge of these actions. He then reports to the CEO. The CEO is responsible for making sure all of his team members work together cooperatively, responsibly and productively.
• Financial: The CEO is directly involved in developing the company’s annual budget and presenting it for Board approval. He is also responsible for insuring that each individual department within the company, as well as the company as a whole, strictly adheres to that budget. He is responsible for making certain that the company is never undercapitalized. This might entail raising capital, taking out loans, refinancing current debt or any other legal means of obtaining capital. The CEO is also responsible for managing any risk that the company faces. In most companies, a CFO (Chief Financial Officer) is employed to directly manage these functions. The CEO is also responsible for risk management. Again, since most risk is ultimately financial in nature, the CFO plays a large part in this process. The CFO provides the CEO with accurate, detailed financial reports that the CEO then interprets to understand the past and current financial status of the company. The CEO then uses these reports to strategize for the future.
• Human Resources: The CEO oversees the human resources of the organization, insuring that the company and the employees comply with all authorized personnel policies and procedures. Often, a Human Resources Director will be employed to execute those policies and procedures. The CEO is also responsible for insuring that the company is abiding by all Human Resources-related state and federal laws and regulations. Again, an experienced HR director knows these laws and is fully capable of insuring complete legal compliance. Often this work is outsourced to an outside HR company. The HR director reports to the CEO.
• Community and Public Relations: The CEO assures that the organization and its mission, programs, products and services are consistently presented in strong, positive image to the public and to its investors. In other words, he is responsible for managing the company’s brand. He is the human representation of the company, its products and services, its culture, and its commitment to the community. Often, a Public Relations specialist is employed to assist in maintaining the company image as well as managing any crisis situations (such as a lawsuit against the company).

 

It is important to note that the responsibilities of the CEO can change as the company matures. In the beginning, the CEO is most likely handling the majority of these tasks and responsibilities. However, from the very beginning, he should have a plan as to how he will work himself out of the day-to-day operations and elevate himself to the role of overseer and coordinator.