Flexible monthly business insurance
If someone asked you to think of a CEO, we can probably bet who you've pictured. That's because most people have an idea in their heads of who a CEO is and the types of skills, traits and experiences you need to become one.
But if you’re a business owner, you might be wondering whether that also makes you a CEO. These lines are often blurred, so we’re here to set the record straight.
Here’s our rundown on what a CEO is, what they do, and the responsibilities they have.
What is a CEO?
The term CEO stands for Chief Executive Officer and represents the most senior position in a company. The CEO makes major decisions for the company, steering it to success, and usually acts as the face of the company in the public eye.
Directly below and reporting to the CEO in most companies is the Managing Director, but other reports might include the CFO (Chief Financial Officer), CMO (Chief Marketing Officer) or COO (Chief Operating Officer). This group of executive-level managers with ‘Chief’ in their title is referred to as C-suite or C-level.
CEOs are often found in larger companies and are usually appointed by the board of directors or the chairman of the board.
In smaller companies, the company owner or founder often runs the show, which is why you’ll see many head honchos of startups titled ‘Founder and CEO’. As the company grows, it’s up to the founder (and quite often the board of directors or C-suite team) to decide if they can take on the role and responsibilities of a CEO for the company.
Many founders start companies with dreams of becoming the next big CEO, but as your company grows, you might find that this isn’t a responsibility you want to take on. To read more on this, have a look at our take on making the tricky step from founder to CEO.
What does a CEO do?
What a CEO does varies greatly from industry to industry, but in simple terms, they lead the company’s vision, drive profitability, oversee overall operations, manage structure and direct strategy.
For example, a CEO of an online retail company might be primarily tasked with growth and analysing data to drive sales, while a CEO of a management consultancy could be more involved with strategic planning, streamlining operations and overseeing organisational structure.
In a small business or startup, the CEO is more likely to be integrated into every aspect of the business like launching in new markets, strategy to scale the business, and managing cashflow and revenue targets.
How much do CEOs earn in the UK?
According to Glassdoor, the average salary of a CEO in the UK in 2022 is £92,102, but it depends on the size of a company. At the upper end of the scale, FTSE 100 CEOs were paid on average £2.7m a year in 2020, but a CEO at a startup might be more likely to earn £50-60k a year.
Alongside the salary, there are many perks of being a CEO: bonuses, stock options and freedom over your schedule, to name just a few.
But with great power comes great responsibility and many CEOs find that putting their name to the top of the company results in longer hours, often working anywhere from 60 to 100 hours a week and putting in time on weekends and holidays to stay ahead of the game.
What’s the difference between a CEO and a managing director?
In the UK, the titles of CEO and Managing Director can be interchangeable. The main difference is that a CEO ranks above the Managing Director, who is tasked more with the day-to-day business, executing strategy, implementing operations and monitoring performance.
For a better idea of the distinction between the two, here are some typical responsibilities of each role:
- Managing and implementing the company’s overall operations
- Strategic leadership and developing business strategy
- Maximising revenue
- Defining and maintaining company culture
- Financial management and setting budgets and targets
- Communicating on behalf of the company with shareholders and the public
Managing director responsibilities
- Day-to-day management
- Developing and implementing the CEO’s business strategy and plans
- Supervising executives and managers
- Overseeing the company’s performance
- Monitoring budgets
- Providing strategic advice and recommendations
So, can a CEO be a director?
Yes, a CEO can be a Director, Managing Director or Chairman. Often in smaller companies, a CEO will take on multiple roles and responsibilities.
Bear in mind, that your responsibilities as a director may differ from those as a CEO. You can read more about this in our guide to director responsibilities.
How to become CEO of a company
The most successful CEOs possess key qualities like vision, excellent communication, leadership and management skills, and strong problem solving and decision-making abilities. A good CEO also inspires confidence and motivates employees. If you’ve already honed these skills then you’re halfway there, the next step is climbing the ranks.
These days, the traditional route to become CEO is slowly becoming obsolete. A fast-growing number of people are proving that age and experience don’t matter when it comes to being an effective leader.
That being said, if you’re wondering how most CEOs on the business scene got to where they are, a typical path might look like this:
- Completing a Bachelor’s degree (relevant fields are business, economics, management and finance but many CEOs also come from arts, science and law degrees)
- Gaining 5 to 10 years of on-the-job experience to arm yourself with specialised knowledge of your company or industry
- Building management and leadership skills through supervisory roles
- Developing an in-depth understanding of the business structure of your company
- Either appointing yourself as CEO if you own your business, or being elected by the board of directors and shareholders if you don’t
Although not necessary, it also helps to have an MBA (Master’s in Business Administration) before becoming a CEO.
Do CEOs need insurance?
As leader of a business and someone whose responsibility it is to keep the company financially stable, CEOs should ensure that the business they’re in charge of has complete and correct insurance. Without it, a company could experience a claim that may result in having to pay out large amounts in legal and compensations fees. Depending on the industry, this could include public liability insurance, employers' liability insurance and cyber insurance.
On top of that, CEOs should also consider directors' and officers' insurance, as this provides protection against legal action, fines, penalties, and disqualifications from being a director. You can read more about directors' and officers' insurance here.
This content has been created for general information purposes and should not be taken as formal advice. Read our full disclaimer.
We've made buying insurance simple. Get started.
- 06 October 20223 minute read
Turnover is a key figure for all small businesses. This back-to-basics guide will help you understand what turnover is, when you might use it and how to calculate it.