Whilst many middle-rank managers aspire to reach the top of the leadership pyramid and become the chief executive officer (CEO), who has the ultimate authority and the best compensation package, a few really know what the CEO role entails.
The general perception in the region is that CEOs are lucky individuals who sit at the top of the organization structure, enjoying good executive packages with the authority to order others, hire and fire at will. This viewpoint could not be further from truth.
Such perception is unfortunately fueled by the fact that some regional CEOs are chosen not on merits but on their relationship with the owner.
The reality is that the success or failure of any organization can simply be attributed to its leadership, with the CEO in the driving seat; financing, human capital, operations, sales and marketing, strategy, culture, compliance with safety regulations, etc. These include facing various leadership challenges, as well as building firm networks and relationships.
A CEO’s duty is what he actually does whilst the CEO’s responsibility is what he delegates, albeit some of the responsibilities that can’t be delegated include the creation of corporate culture or building senior management team. The trend in admired leadership has moved from a ‘self-centric’ to a more ‘team-centric’ approach. The one characteristic that continues to be important is honesty.
Running a company is a job of extraordinary responsibility. The main duty of a CEO is to set a strategy and vision that reflects the aspiration of the Board of Directors. However, the senior management can help develop a strategy. The CEO is ultimately the one who steers the organization toward success; including markets to compete in, who to compete against and lines of businesses to engage in. The CEO sets budgets, forms partnerships, and hires a team to steer the company toward the organization’s corporate objectives.
A CEO’s second duty is building a corporate culture with clearly defined values; he is the primary figure and role model for the company’s stakeholders. The actual work is performed by people who are influenced by the culture and ethics of the company. A less than professional organization can impact trust and productivity amongst its workforce, it can also drive away talent or high performers who have the freedom to choose their workplace.
Although culture is built in many ways, the CEO sets the rules as every action sends a cultural message. For example, his ethics and values set the tone, his dress code suggests how formal the workplace is, his response to failure sends signals about risk-taking, and his rewards shape the culture profoundly.
A CEO’s failure to appreciate the effort and hard work of his team during difficult circumstances or their free time may be interpreted as lack of care, and could subsequently discourage the team from working hard, or reduce their willingness to work outside working hours. A CEO’s praise and encouragement to his team on a job well done can inspire and motivate whilst silence may have the opposite result.
A CEO’s third duty is team-building, as the CEO hires, fires and leads the senior management team. They, in turn hire, fire and lead the rest of the organization. He resolves differences between senior team members and keeps them working as a team toward common objectives. He sets direction by communicating the strategy and vision.
If vision sets where the company is going, values define how the company plans to get there.
The CEO conveys values through actions and reactions. Attention to quality sends a message of valuing quality. People take their stance on interpersonal values; trust, honesty and openness from the CEO’s actions as well.
The fourth duty of a CEO is capital allocation, as he sets budgets within the company. He funds projects which support the strategy execution. He carefully considers the company’s major expenditures and manages the firm’s capital through demonstrating a good return on investment.
Whilst some CEOs don’t consider themselves financial experts, it is their decisions that determine the company’s financial fate.
Ultimately, a CEO’s performance is judged by the growth in revenue and profitability of the organization he’s leading and by the level of satisfaction of the board of directors/investors he’s reporting to.
Business owners and board members have to be very selective when making a critical appointment such as a CEO, as it can make or break the organization. CEOs need to set their priorities right and be a role model for their employees and management alike. Aspiring individuals need to appreciate what is expected of a CEO and prepare themselves accordingly as they advance toward the ultimate position.
(Yahya Shakweh is a vice president at Advanced Electronics Company, Saudi Arabia. The views expressed in this article are the author’s personal opinion. He can be reached on: [email protected])
