This article was originally written on June 4, 2021, and was completely rewritten.
In corporations, three roles often stand out like the North Star guiding a ship: CEO, COO, and CFO. No, these aren’t random combinations of alphabet soup; they’re job titles that carry massive weight. They’re the linchpins, the decision-makers, the people who could very well have the fate of an entire organization resting on their shoulders. But what sets them apart?
Who is the CEO?
The CEO, or Chief Executive Officer, is the ringmaster of the corporate circus. The key figure inside the entire company. They set the company’s overall direction, its “True North.”
Core Responsibilities
Their job description might read like a grocery list for running a small country. They develop long-term strategies, make key business decisions, and oversee the execution of company policies. They’re the face of the company, whether schmoozing with investors or squaring off in press interviews.
- Strategic Planning: Charts the long-term vision and direction of the company. Brainstorm with senior leadership to come up with strategies that will win market share or break into new markets.
- Decision-Making: Acts as the final authority in major business decisions, be it expansion plans, partnerships, or acquisitions.
- Leadership: Builds and maintains a strong executive team. Works to cultivate a company culture that aligns with the organization’s goals.
- Communication: Acts as the public face of the company. Engages with key stakeholders, media, and sometimes even the public to disseminate the company’s message.
- Accountability: Reports to the Board of Directors and is responsible for meeting set goals and objectives.
Typical Qualifications
A CEO often comes armed with years of leadership experience, a sturdy educational background—usually an MBA or something equally hefty—and a successful track record. They’re not just plucked from a LinkedIn search; they’ve got the chops to steer the ship.
Role in Decision-Making
When it comes to making decisions, the CEO isn’t just the tie-breaker; they’re the pace-setter. They approve budgets, define company culture, and make calls that can change the course of the company. The buck doesn’t just stop at their desk—it practically lives there.
Who does the CEO report to?
The CEO reports to the Board of Directors. Think of the Board as a council, often stuffed with industry veterans, shareholders, and sometimes even founders. These are the people who’ve got a serious stake in the company’s success or failure. They’re not just passive observers; they have the power to hire and fire the CEO, approve major business decisions, and set the company’s long-term vision.
So, while the CEO is usually the public face and head honcho of daily operations, they don’t sit in an untouchable ivory tower. They’re accountable to the Board and, in some cases, significant shareholders. It’s a relationship of checks and balances. The CEO may have the wheel, but the Board maps out the destination and checks the route from time to time.
May the CEO be the company owner?
Absolutely, the CEO can also be the company owner, especially in smaller businesses or startups. In this setup, the CEO wears multiple hats—decision-maker, strategist, and owner rolled into one. There’s no Board of Directors hovering like a shadow; the CEO is the beginning and end of the chain of command.
However, it’s a different story in larger, publicly traded companies. Ownership gets a bit diluted, with shareholders coming into the picture. The CEO might own a chunk of shares in these mammoth setups but rarely holds complete ownership.
The overlapping roles of CEO and owner can offer more freedom but also greater risk. It’s a double-edged sword: the thrill of ultimate control versus the weight of total responsibility. In contrast, a CEO without ownership might have less personal financial risk but also has to answer to a Board or other stakeholders.
Who is the COO?
The COO, short for Chief Operating Officer, is often seen as the right-hand person to the CEO. If the CEO is the visionary, the COO is the executor, the doer. They handle the “how” when the CEO decides the “what” and “why.” Of course, that may vary from company to company, but usually, that’s so.
Core Responsibilities
Imagine a backstage manager at a theater; that’s the COO. They look after daily operations, oversee department heads, and ensure that the corporate machine runs smoothly. Their fingerprint on nearly everything from logistics to HR keeps the company humming.
- Operational Efficiency: Streamlines processes across departments to improve productivity and reduce costs.
- Team Management: Oversees various department heads, coordinating efforts to meet short-term objectives.
- Quality Control: Implements and maintains high standards across products or services, ensuring customer satisfaction.
- Project Management: May spearhead special projects or initiatives, especially those aimed at operational improvements.
- Risk Mitigation: Identifies potential operational risks and works proactively to solve them before they escalate.
Typical Qualifications
COOs usually bring a medley of experience to the table—management skills, industry know-how, and often a knack for problem-solving. An MBA is common, but real-world experience often speaks louder. They’ve climbed the corporate ladder, maybe spearheaded a few key projects, and proven they can lead.
Role in Operations
The COO takes the vision cooked up by the CEO and turns it into a roadmap. They roll up their sleeves, dive into the operational mess, and come out with systems that work. Whether it’s optimizing supply chains or perfecting customer service, the COO’s decisions have immediate, tangible impacts.
Who is the CFO?
The CFO, standing for Chief Financial Officer, is the chief of corporate finance. Tesla called it Master of Coin, as the Game of Thrones allusion. If the CEO is the compass and the COO is the engine, then the CFO is the fuel gauge. They ensure the company doesn’t run out of financial steam while heading in the right (or sometimes wrong) direction.
Core Responsibilities
Numbers talk, and the CFO listens. From budget planning to financial reporting, they’re the sentinel of the company’s fiscal health. The CFO is the guardian of balance sheets, the cash flow master, and the capital allocation wizard.
- Financial Planning: Prepares budgets and financial projections, often looking several years ahead.
- Reporting and Compliance: Regularly reports financial results, making sure the company complies with laws and regulations relating to financial reporting.
- Investment Strategy: Advises on investment opportunities and potential financial partnerships.
- Cost Management: Scrutinizes expenses and looks for ways to increase efficiency and reduce costs.
- Liquidity Management: Manages the company’s cash position to ensure that it maintains sufficient liquidity to operate effectively.
Typical Qualifications
Financial expertise is a given—usually an academic background in finance, accounting, or a related field. A CPA or similar professional credentials? It’s almost a requirement (but there may be some exceptions, of course).
Role in Finance
The CFO isn’t merely counting and auditing; they’re charting the financial course. Their insights can be a deciding factor in investments, mergers, or even company restructuring. When the CEO contemplates a strategic move, the CFO’s data can make or break the decision.
And they’re all the C-Suite
These big hitters, CEO, COO, and CFO, all hang their hats in what’s often called the C-Suite. Or Executive Suite, the key executives in the company. This is the high-stakes poker table of the corporate world, where each player holds unique cards yet plays for the same pot: the company’s success.
Shared Goals
While their roles are distinct, their objectives are intertwined. Imagine a relay race: the CEO sets the course, the COO runs the middle leg, and the CFO ensures that the baton doesn’t drop, financially speaking. They’re all gunning for the finish line, but their paths to get there are unique slices of the same pie.
Collaboration
It’s not a solo act for any of them. The CEO may lay out the vision, but without the COO’s operational skills and the CFO’s financial oversight, that vision might as well be a pipe dream.
Accountability and Checks
They all report to someone or something: the CEO usually reports to the Board or other shareholders; the COO and CFO report to the CEO; however, in some companies, that may depend.
Diversity in Skills
Why all of these positions are C-Level, the range of their skills is diverse. The CEO may be a visioner, while the COO may be just good at organizing and managing everyday tasks. The CFO may be the master of points, numbers, and figures but be bad at understanding the company’s strategy and tactics.
But don’t take this straightforwardly; that doesn’t mean the CFO or COO would be the bad CEO. Each company and each C-Level executive differs, so that’s just a vacuum example.
However, sometimes, market and analysts follow such guesswork.
When Steve Jobs passed the torch to Tim Cook, markets trembled at the switcheroo. Investors and analysts worried that Cook, a masterful CFO, might lack the visionary flair that Jobs had turned into Apple’s hallmark.
CEO, COO, and CFO compared
| Criteria | CEO | COO | CFO |
|---|---|---|---|
| Definition | Chief Executive Officer | Chief Operating Officer | Chief Financial Officer |
| Reports To | Board of Directors | CEO | CEO |
| Core Responsibilities | Strategic Planning, Decision-Making, Leadership, Communication, Accountability | Operational Efficiency, Team Management, Quality Control, Project Management, Risk Mitigation | Financial Planning, Reporting and Compliance, Investment Strategy, Cost Management, Liquidity Management |
| Key Qualifications | Usually an MBA or extensive experience in management and industry-specific roles | Typically an MBA, background in operations, and extensive industry experience | Generally an MBA, CPA, or extensive experience in finance and accounting |
| Role in Organization | Sets and communicates the long-term vision | Executes and maintains day-to-day operations | Manages financial resources and plans for financial sustainability |
| Accountability | Accountable to the Board and shareholders | Primarily accountable to the CEO | Accountable to the CEO and, indirectly, the Board and shareholders |
| Public Face | Often the public face of the company | Rarely in the limelight, focuses on internal processes | Occasionally interacts with stakeholders, mainly in an informational capacity |
| Common Challenges | Maintaining company vision, managing stakeholder expectations | Streamlining operations, managing departmental goals | Ensuring financial health, complying with regulations |
How to Become a C-Level Executive
There’s never been straightforward advice. That depends, and it’s usually the combination of luck, skills, and communication.
Climbing to the C-Suite isn’t like snapping your fingers and, voila! you’re there. Think of it more like building a skyscraper. You lay the foundation with a solid education and then pile on floors of experience, one job at a time. And you can read this article on HBR; it’s interesting and really useful.
Do you need an MBA? Well, there are a lot of CEOs without an MBA, and even more are with. An MBA is almost like a golden ticket. While it’s not the end-all, be-all, it’s often the cornerstone of a C-level executive’s educational background. But don’t turn a blind eye to other areas: industry certifications, workshops, and specialized training can also give you an edge.
And you should be patient. Entry-level is where everyone starts. Take on roles that expose you to the dynamics of the business world. Work in different departments if you can. The broader your experience, the more skills you’ll bring to a C-level role. And when you change the department, there’s always a chance you get a promotion.
The basic rule is simple: you should do extremely well in every role you take. That’s the cornerstone of further promotions. And maybe one time you will raise as high, to be the C-Level. But that’s extremely hard work.
