What is a CEO?
The Chief Executive Officer, or CEO, holds the highest-ranking position in a company and is in charge of the company as a whole. The CEO will usually report directly to the board of directors and will implement any decisions made by the board. Often, the CEO will also be a member of the board of directors, and may also be the chairperson of the board.
They will typically be responsible for the strategy, mission, and organization of the company as well as maximizing revenue, market share, share prices, etc.
The CEO may be the owner of a company or may be appointed by the board of directors and is responsible for the success or failure of the company. While the CEO will not go into the details of how each department is run, they are responsible for maintaining a broad oversight of each department to make sure the company maintains its budget and market position.
What is a CFO?
The Chief Financial Officer, or CFO, holds the highest-ranking financial position in a company and oversees the financial operations, budgeting, and financial reporting of the company. The CFO will report directly to the CEO and may also be a member of the board of directors.
The main duty of the CFO is to maintain and improve the financial health of the company by keeping track of revenue and expenses, analyzing financial data, and acting as the liaison between the company and financial institutions. They will make recommendations to the CEO and board of directors and implement financial decisions to strengthen the company's financial strength.
Differences Between a CEO and a CFO:
CEO | CFO |
|---|---|
Highest ranking overall position of a company. | Highest ranking financial position of a company. |
Oversees the operations of the departments and overall performance of a company. | Responsible for finance-related departments and oversees only the financial part of a company. |
Duties are broad, involved, and complex and are set by the board of directors. | Duties involve overseeing financial activites and are set by the CEO. |
Responsible for the general strategy of a company. | Responsible for the financial support of the corporate strategy. |
Reports to the company's board of directors. | Reports to the CEO. |
May come from any background, such as sales or operations. | Comes from a finance or accounting background. |
Is the public face of the company. | Acts as the liaison and builds relationships with financial institutions and private investors. |
Makes decisions based on the CFO's financial analyses. | Responsible for quantitative and qualitative financial analysis. |
Evaluates risks and gains related to business. | Evaluates risks and gains related to finances. |
Finds and prepares employees for management positions. | Finds and prepares employees for financial and accounting positions only. |
Basic Corporate Structure:
Board of Directors:
The board of directors is made of managers chosen from within the company and external representatives that are independent of the company. The members of the board are generally elected by the shareholders and their duties are to monitor the company's management team and ensure the shareholders' interests are being served.
CEO:
The CEO is the top manager and is responsible for the overall operations of the company. While the CEO usually has a place on the board of directors and may, in fact, even be the chairperson, they report directly to the board. The CEO will implement the decisions made by the board and will ensure the company's operations run smoothly.
The CEO is sometimes also the president of the company and so will sit as chairman of the board of directors. However, in order to maintain the independence and authority of the chairperson, the CEO position should be held by a different person.
CFO:
The CFO reports directly to the CEO and is responsible for analyzing financial data, preparing budgets, and monitoring expenses and costs. The CFO is required to report on the company's financial performance to the CEO and board of directors at regular intervals. A CFO may also be referred to as a senior vice president of the company.