Close attention to an argument between two young men who have big dreams of owning large businesses someday. The argument was centered on whether it was compulsory to have a Chief Executive Officer(CEO) to manage the affairs of their businesses or not.
One argued that as an owner with a degree holder, with his understanding of the roles of the CEO will handle his business himself.
To him, he cannot trust any other person to handle his business with a level of sincerity and honesty. The other young man countered it by letting him know that there is a difference between an owner of a business and a CEO.
He went further to educate the other man. He told him that smaller businesses are managed by their owners while larger companies are managed mostly by CEOs.
The young man told his friend that even if he wanted to assert a level of control on the company which would belong to him, he should take up the role of a chairman while allowing the CEO to run the affairs of the company with experience and expertise.
He told that as chairman he gets to monitor and know the happenings in his own company without hindering its growth.
In a bid to ascertain how to become a CEO, we will answer some vital questions that will provide you all the relevant information you need to know about the CEO and how to build a profession around it.
Table of Contents Hide
- Who is a Chief Executive Officer (CEO)
- What are the Duties of a CEO?
- Difference between a CEO and An Owner
- What Does a Chief Executive Offer Do?
- How Can I Become a CEO?
- HOW MUCH MONEY DOES A CEO MAKE
- Guide on How to Become a CEO
Who is a Chief Executive Officer (CEO)
A Chief Executive Officer is one who runs the day-to-day operations of an organization. He also has a major role in creating and implementing long-term strategies.
He delegates responsibilities to other employees and also finds the right professionals for each position in their company.
Basically, the CEO title is often used for large businesses. Although the CEO of a large company is in charge of all major decisions within the organization, they usually do not also own the respective organization.
More often, they answer to a board of directors and can be dismissed if their results are below expectations.
So, even though the title of CEO shows high levels of authority and responsibility, it does not necessarily show any level of ownership over the organization.
What are the Duties of a CEO?
A CEO of a company is the topmost ranked executive in that company he is saddled with primary responsibilities which include: making major corporate decisions, management of the overall operations and resources of the company.
Also, acting as the main point of communication between the board of directors and corporate operations and also being the public face of the company.
Moreso, a chief executive officer (CEO) is one of a number of corporate executives in charge of managing business establishments – especially independent legal entities such as companies or nonprofits.
Basically, they find roles in a range of organizations, including public and private corporations, non-profit organizations, and even some government organizations.
The CEO of a corporation or company typically reports to the board of directors and is charged with maximizing the value of the business which may include maximizing the share price, market share, revenues, or another element.
In the non-profit and government sector, CEOs typically aim at achieving outcomes related to the organization’s mission, such as reducing poverty, increasing literacy, etc.
Difference between a CEO and An Owner
The word owner is a very generic word that can be used not only in business but in every day living.
A person, a group, or any entity can become an owner of a business corporation An owner. is someone who has the exclusive rights to use, hold, enjoy, transfer, benefit-from, convey and even let go of some of his or her properties (in business terms ‘“ assets).
Often, owners have implied prime principle responsibility for a certain program or process.
A CEO completely known as the Chief Executive Officer on the other side is a more trivial term.
He is the executive that holds the highest rank in the corporate world. A CEO can be equated to an administrator who has complete control over a company or organization with regard to its management.
He reports to only one body ‘“ the BOD or Board of Directors.
To clarify these differences between the CEO and an owner we should know that the CEO can be the owner of the company but not all the time.
One can be a CEO and owner. All of these depend on the policies of the company, the country where the company operates, and the type of company because the term CEO can vary across the globe.
What Does a Chief Executive Offer Do?
Because the CEO is the rank that has the most important functions in a company or a business corporation, the person occupying such position should :
- Have enough strategies to help him with the direction of his organization. A company without strategy won’t last long.
- As CEO, he has the power and scope to determine the direction of the organization.
- Coach his team members because of the development of his team. He will coach others to step up and move the enterprise forward according to the strategy he has put into play. This can be achieved by having regular coaching sessions with your executive team.
- Successful CEOs are often strong listeners and executors. These CEOs are strategic, but they also show a high level of calmness. They traditionally have grace under pressure and think before they execute.
- The ability to understand numbers and the financial implications is also very important. Having some legal understanding is also very helpful. There are a lot of contracts to deal with, so a better-than-basic understanding of legal agreement structures can be very efficient.
- Making major corporate decisions, management of the overall operations and resources of the company, acting as the main point of communication between the board of directors and corporate operations, and also being the public face of the company are also some of the functions of the CEO.
How Can I Become a CEO?
The CEO is a position of great power and even greater responsibilities and it usually offers significant financial rewards so, to become a CEO it’s a journey of taking many steps and these steps include
Getting a bachelor’s degree most preferably in a business or leadership-related course like business administration.
This does not preclude the not-so-literate owner from establishing and managing his own business enterprise or even other scholars of different academic fields from attaining this goal though the need to study is necessary for the development and sharpening of certain skills and competencies.
Building on-the-job experience means the gradual growth of an employee who has been employed in a company from one lower rank to a higher rank or level.
This climbing might not necessarily be done in one company that is to say that it can be done Across other business establishments s climb does not happen overnight.
A CEO typically requires several years of professional experience.
The competencies honed throughout this long journey typically relate to management skills, best business practices, and leadership — essential qualities that help build a solid foundation for CEO success.
However, the CEO as a very important and sensitive office in a business establishment gets to be occupied by an already existing member of the company because of familiarity purposes.
While gaining on-the-job experience is a long process that requires several years of cultivation, the route to CEO consideration can potentially be shortened by earning a Master’s in Business Administration (MBA).
Earning this advanced degree prepares students for business success by allowing them to take a deep dive into the workings of all the elements of any business, from accounting to human resources management.
The advanced skills developed to prepare students to understand corporate functionality from a top-level perspective, which can make it possible for them to make critical decisions as strong leader.
For instance, CEOs must have strong management skills, since they are routinely tasked with directing an organization’s operations to encourage corporate growth.
This skill goes hand-in-hand with keen leadership abilities, as CEOs must be able to facilitate this growth through the coordination of people, resources, and policies.
Good Communication Skills
CEOs must have strong communication skills in order to effectively discuss and explain their vision to a wide range of individuals, from employees to board members.
Furthermore, CEOs need to be able to communicate in a manner that is not only clear but also persuasive.
Because CEOs are regularly required to make decisions that affect the company’s success, they must have strong decision-making and problem-solving skills.
They must be able to analyze situations, recognize issues, and execute successful solutions to keep the company moving in the proper direction.
HOW MUCH MONEY DOES A CEO MAKE
With the amount of work the CEO has to do in a company, he often receives a base salary of well over $1million.
This is to say that the CEO is rewarded substantially when the company does well and the CEO is also rewarded when the company does not do well this is because large base salaries offer little incentive for executives to work harder and make smart decisions.
Executive compensation which is the salary paid to CEOs is composed of both the executive pay and other non-financial benefits paid the CEOs or an executive from their employing firm in return for their service.
It is typically a mixture of fixed salary, variable performance-based bonuses (cash, shares, etc and benefits, and other perquisites all ideally configured to take into account government regulations, tax law, the desires of the organization, and the executive.
The three decades from the 1980s saw a dramatic rise in executive pay relative to that of an average worker’s wage in the United States, and to a lesser extent in a number of other countries.
Recent studies have indicated that executive compensation should be better aligned with social goals(e.g. public health goals.
The rate of executive pay is an important part of corporate governance and is often determined by a company’s board of directors.
Guide on How to Become a CEO
Becoming the ultimate boss of an organization is the dream of every corporate worker or employee. With dedication, perseverance, and hard work, a person can work his way up the corporate ladder.
Here are some concrete steps a person can follow to enhance his chances of success:
1. Look for skill-building opportunities
A person who has a dream of becoming a CEO someday should start early enough to Aim to expand his decision-making, organizational, communication, and leadership abilities any way he can.
This can be done by getting involved in student government, Joining a debate team, Becoming part of a young entrepreneurs club, Leading a sports team, and Volunteering for a charity or nonprofit agency.
The main reason is to pursue any activity that will expose you to the realities of running a business or organizing and managing people.
2. Get a bachelor’s degree
Unless it a company personally owned, it’s extremely unlikely that a person will be considered for a CEO role if he doesn’t have a degree.
Certainly, some chief executives have gotten where they are by forgoing formal education, working their way up from entry-level positions within their companies, and getting promoted based on experience.
But such cases are relatively rare. In fact, a study of 2,600 American CEOs revealed that 92 percent of them had college degrees; those who didn’t take 15 percent longer to reach the top job.
That said, there isn’t just one educational path that will get you to the corner office. Among Fortune 100 CEOs, some of the most common undergraduate degrees are in engineering, business administration, economics, and accounting. If you’re aiming to enter a specific industry like information technology or health care administration, think about focusing in those areas.
Keep in mind that no matter what you major in, you’d be wise to take courses that can increase your financial knowledge.
Courses like business administration. Running a company requires knowing your way around a profit and loss statement, so be sure to learn as much as you can about accounting or economics.
3. Consider graduate studies
Many chief executives have MBAs or advanced degrees in economics or law. Pursuing higher-level studies can help you develop more in-depth skills and, perhaps more importantly, expand your network of industry contacts.
You can go straight into a graduate program after finishing your bachelor’s degree, but many aspiring leaders accumulate real-world work experience before pursuing additional education.
Conventional wisdom holds that the best way to prepare for a chief executive role is by getting an MBA from a well-ranked school.
Around 40% of Fortune 100 CEOs have MBAs, many from elite institutions like Harvard Business School and the Wharton School at the University of Pennsylvania.
Such Ivy League degrees are often highly regarded because of the selective and competitive nature of those programs. But not all company bosses have such illustrious pedigrees.
If you’re trying to decide whether a particular MBA program is right for you, consider these questions: Does the program offer practical training in organizational behavior and leadership? What kinds of internships are available?
How extensive is the alumni network? Is it concentrated in a particular industry or geographic area? How do graduates of the program rate their experience at the school?
4. Start gaining experience
It’s has been established that the CEO position is not an entry-level job. A person aspiring need to start out at a more junior level in the company or industry that interests you and work his way up.
Look for a position that presents opportunities for growth. Many companies offer management training programs that can boost your odds of advancement, it will be wise to take advantage of available options.
Not paying much attention to whatever level he starts out in, he dedicates himself to learning as much as he can about his organization and its industry. improvement of communication and problem-solving skills should be considered.
He should consider consulting seasoned professionals. Most importantly, complete every task to the best of your ability.
As a person gains experience and rises in the ranks, he should aim for management roles that will allow him to run a major business unit.
Most CEOs work their way up to high-level positions in operations or finance before they get tapped for the top job.
5. Expand your expertise
Developing a broad range of skills and expertise is important. CEOs need to understand how all parts of the company interact, so gaining knowledge in more than one functional area (such as sales and finance) can be very beneficial.
In fact, one study of management consultants who went on to executive roles found that every additional business function learned equated to about three extra years of work.
To do this, Look for challenges that will push you out of your comfort zone and fill in the gaps in your skill
6. Join a board of directors
Many executives serve as unpaid board members of nonprofit groups before taking the reins of a company as CEO.
This is an excellent way to learn about board dynamics and acquire valuable experience in setting strategies, overseeing operations, and helping an organization grow.
You also get the chance to rub shoulders with other business professionals and expand your personal network.
It can be time-consuming (since, in most cases, board members must commit to serve for at least a year), but it can also give you unparalleled insight into the challenges of being a CEO.
7. Be bold—and don’t be afraid to fail
Chief executives constantly encounter challenges that have no prescribed solution. You will need to act decisively even when you have ambiguous or incomplete information. This does not imply taking decisions without thinking them through.
The CEO position of a company is a highly important and sensitive executive rank. It is a position that a person can get to buy only hard work and long-term planning and careful execution of these plans.
These must focus on continuous growth and promotion, exposure to situations to strengthen a person’s expertise.