What is a C-Suite Executive? CEO vs. CFO vs. COO

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CEO vs. CFO vs. COO

Shorthand for a company’s top tier of executives, the term C-suite derives from the first letter of the high-level executive titles used by many large enterprises. The most common C-suite titles are chief executive officer (CEO), chief financial officer (CFO), and chief operating officer (COO). These C-suite leaders, also known as C-level executives, make decisions that can determine success or failure for their companies.

Reaching the top level of leadership in major companies often requires many years of experience as a professional climbing the corporate ladder, demonstrating executive ability along the way. Another way to become a top executive of a large company is to start a small business that gets big. No matter how they begin their careers, C-suite executives must demonstrate both technical competencies and a wide array of soft skills related to communications, leadership, and strategic vision.

Factors that determine the number of C-suite roles in a company include its size and the nature of its business. Trends in technology and consumer preferences also play a role. For example, customers accessing their bank accounts online expect seamless experiences no matter which device they use. If they log in using their laptops, they expect to see account information that matches what they see in their mobile app. For some companies, this may require creating a C-level role to oversee initiatives that involve integrating multiple systems and processes, touching on sales, marketing, operations, and technology.

Major publicly traded companies typically need several C-suite leaders. Standard roles include not only CEO, COO, and CFO, but also chief technology officer (CTO), chief information officer (CIO), and chief marketing officer (CMO). Smaller operations typically only need one C-suite executive, at the most two or three. A small business may have individuals leading key functions of a company, such as finance or marketing, who do not hold C-level titles.

C-suite executives face a wide range of challenges:

  • Coping with market changes driven by unforeseen global events
  • Creating new business models that meet evolving customer requirements
  • Promoting corporate responsibility to help address issues such as climate change and equality
  • Identifying their successors to ensure business continuity
  • Ensuring compliance with changing tax codes and industry regulations
  • Attracting and maintaining top talent, including enhancing the diversity of the workforce to include more women and minorities in leadership roles

To meet these challenges, C-suite executives combine their foundational knowledge of business and technology with leadership skills, ethics, and a strong moral compass. Graduating from a top MBA program can provide aspiring business leaders with essential knowledge and critical skills to thrive amid changing market dynamics.

Top 10 worries that keep C-suite executives up at night

The Evolution of The C-Suite: Titles and Roles

The digital transformation of many business operations — sparked by the rapid evolution of artificial intelligence and the increased availability of massive amounts of data — is changing the landscape for leaders with C-suite titles. These trends create opportunities for executives who have both a solid foundation of technical knowledge and the agility to adapt as market conditions change.

The term digital transformation encompasses the advances in technology and telecommunications that have changed the ways that consumers and businesses engage in transactions. The proliferation of artificial intelligence and mobile technologies, increased use of data in everyday life, and expanding 5G networks offer examples of digital transformation driving change in the business world and society at large. For example, 73% of millennials make many of their buying decisions online, according to Harvard Business Review. The reason, in large part, is that they are digital natives: they grew up using social media and smart devices in their daily lives.

The evolution of today’s market brings a profound change in large organizations in the areas of innovation, digitization, strategy, and ethics, creating opportunities for expansion of the C-suite to address the challenges. This can be seen in the growing number of new C-suite titles and roles. About 80% of CEOs surveyed said their companies had added a C-level position in the last five years, a 2019 report from EY found. Among the top C-suite roles added in the last five years are chief innovation officer, chief digital officer, chief strategy officer, chief data officer, and chief ethics officer. This creates new opportunities both to enter the C-suite and to advance within the C-suite.

At the same time that the C-suite has been evolving to include more technology-related roles, the ranks of executives have become more demographically diverse. Progress remains to be made in this area, however. Bizwomen reports on an early 2019 study that found a slight increase from the previous year in the number of women serving at the C-suite level, from 23% to 25%. Corporate boards of directors have also seen increases in diversity. The number of board seats held by women and minorities at Fortune 500 companies increased from 1,677 in 2016 to 1,929 in 2018, according to a Deloitte report. In a global, more diversified business marketplace, C-suite executives will increasingly reflect the demographics of their employees and customers.

Aspiring C-suite leaders looking to stand out from the competition can build their knowledge and competencies to learn how to innovate and think ahead. A Master of Business Administration (MBA) degree can create opportunities for professionals seeking corporate roles such as CEO, COO, and CFO. A 2018 Harvard Business Review report notes that 32 of the 100 top-performing CEOs held MBA degrees, an increase from the previous year. MBA coursework provides students with essential business and management knowledge. Courses can cover topics such as finance, technology management, innovation entrepreneurship, international management, marketing, and sustainability.

What is the Role of a CEO?

The chief executive officer (CEO) position is the highest-level C-suite role in a company and the highest paid. CEOs are responsible for maximizing business value by setting the vision, long-term goals, framework, and direction of the organization.

Day-to-day responsibilities for CEOs vary according to factors such as the size of a company and the industry in which the company operates. The larger the company, the more likely the CEO will devote significant amounts of time to developing long-term strategy. CEOs at publicly traded companies must answer to boards of directors and work to maximize return on investment for their shareholders. In small to medium-sized companies, CEOs may involve themselves more extensively in the daily work of running the business.

CEOs bear responsibility for the success or failure of their companies. They make crucial business decisions. Successful CEOs typically exhibit strong competencies in these two key areas:

Communicating with audiences of various types and sizes — CEOs must be able to connect with direct reports in one-on-one sessions, with C-suite peers, with media representatives, and sometimes with large groups of employees, customers, or shareholders.

Adjusting to changing circumstances — CEOs must understand their industry and the markets in which their company operates. They need to know their company’s strengths and weaknesses and those of its primary rivals. To succeed, CEOs must be lifelong learners, acquiring knowledge as they climb the corporate ladder. They hone their leadership skills through problem solving and learning from their mistakes.

As for education, many CEOs have a business-related degree, often an MBA. However, educational backgrounds for CEOs can vary by industry. For example, a CEO of a hospital may have an advanced degree in a field of medicine or healthcare administration. Some technology CEOs have programming or engineering backgrounds.

CEO salary ranges may vary according to company size and whether it is public or private. The median annual salary for CEOs is about $156,000, according to PayScale data as of March 2020.

What is the Role of a COO?

The chief operating officer (COO) is the second-highest C-suite executive rank after the CEO. The primary responsibility of the COO is to oversee business operations, which may include marketing and sales, human resources, research and development, production, and other functions.

COO responsibilities vary by company size and type. COOs often work side by side with the CEO and other C-suite executives on strategy. The most common duties of the COO role include overseeing day-to-day administrative operations, different functions of the business, and critical projects.

A COO translates the vision and mission set by the CEO and board of directors of a company into a strategic plan of action. Then, the COO oversees the plan’s execution and manages directors and senior managers tasked with transforming the vision into reality. For example, a CEO may call for improved quality control of products to elevate the company’s reputation. The COO will then develop plans that may include hiring more quality control workers and establishing new policies and procedures for them to follow.

As operations experts, COOs must be problem solvers. Their duties often include the following:

  • Setting performance and quality standards for the production and delivery of goods and services, as well as workplace procedures
  • Leading efforts to streamline the business; for example, directing initiatives to improve communications across the enterprise, foster collaboration, and keep everyone on the same page
  • Improving operating procedures and the role technology plays to enhance performance and make the company run more efficiently
  • Hiring top talent and preparing employees for success
  • Ensuring all areas of operations perform optimally by collecting and analyzing data
  • Implementing strategies to meet both short-term and long-term business objectives

A person who has risen to become a COO has acquired extensive experience in business practices, policies, and procedures, which prepares him or her to direct multiple departments. As the second in command, COOs are typically next in line for the CEO role. Among the best-known former COOs who went on to become CEOs is Tim Cook of Apple Inc. COOs typically have a business-related degree, such as an MBA.

COO salaries vary according to company size and whether the company is public or private. The median annual salary for COOs is about $143,000, according to PayScale data as of March 2020.

What is the Role of a CFO?

The chief financial officer (CFO) oversees a company’s finances. A CFO analyzes financial data, reports financial performance, prepares budgets, and monitors costs. CFOs of publicly traded companies must present financial information to boards of directors, shareholders, and regulatory agencies such as the Securities and Exchange Commission.

A CFO’s day-to-day responsibilities may also include the following:

  • Overseeing accounting and finance functions
  • Assessing investments
  • Supervising staff members who manage functions such as purchasing, debt management, accounts payable, and payroll
  • Reviewing reports about revenues, profits, and losses regularly to develop strategies that can improve financial performance
  • Understanding tax laws and changes in IRS regulations
  • Conducting audits to ensure that all departments are following company standards

Reporting to the CEO, CFOs help define the financial vision for the company. CFOs can serve as strategic advisers to CEOs and other C-suite executives. They make recommendations on strengthening the financial standing of the company through strategic investments. They assess how market forces can impact a company’s revenue and profitability. As part of the C-suite team, CFOs face pressure to achieve three goals: expand revenue opportunities, reduce costs, and strengthen financial controls.

CFOs in public companies must also pay attention to shareholder interests. Today’s shareholders monitor not only a company’s financial strength but also the degree to which its financial practices meet standards for corporate social responsibility.

Before arriving at the C-suite, CFOs have typically served in various accounting and finance roles throughout their careers, including finance director and controller. CFOs usually hold at least a bachelor’s degree in finance or accounting. However, a recent EY report found that 75% of CFOs think the CFO role involves more than working with numbers. According to the report, CFOs are also partners to the CEO. This evolution of the CFO role may encourage individuals seeking entry into the C-suite to pursue an MBA degree.

CFO salaries vary according to company size and whether it is public or private. The median annual salary for CFOs is about $133,000, according to PayScale data as of March 2020.

Room for improvement at the C-suite

How to Become a C-Suite Executive

The path to the C-suite is not always straightforward. Some aspiring leaders move up through the ranks of organizations, acquiring the experience, skills, and knowledge to take on C-suite positions along the way. Others may take a less conventional path and reach the C-suite by starting a business and guiding its growth.

Each C-suite role relates to different functions within a company. Still, every C-suite executive should have a working understanding of all areas of the organization, as actions in one area often affect others.

Essential competencies needed for C-suite professionals include the following:

  • Strong business sense, leadership competencies, and the ability to set a vision
  • Excellent moral compass and sense of ethics
  • Strategic and analytical mindset
  • Effective communication skills
  • Deep understanding of data and emerging technologies

Whether they work at large enterprises or small ones, aspiring professionals often find that an MBA can help set them on the path to executive leadership at the highest levels. MBA graduates can acquire the core business knowledge and habits of entrepreneurial thinking that they will need to thrive in a global economy in constant flux.

 

Recommended Readings

How to Become a CEO

5 Steps to a Career in Management Consulting

Northeartern Online MBA Program

 

Sources

AESC, “Five Tips for Tackling Tomorrow’s Biggest C-Suite Challenges”

CNN Business, “How Many Women Are in the C-Suite?”

Deloitte, Four Faces of the CFO

EY, “Are You a CEO That Will Define the Future or Defend the Past?”

Fast Company, “These Are the Top 4 Ways to Get to the C-Suite”

Graduate Management Admission Council, “Corporate Recruiters Survey Report 2018”

Houston Chronicle, “The Director of Operations vs. the Chief Operating Officer”

IBM, “IBM Global C-Suite Study 20th Edition”

Internal Revenue Service, Large Business and International Tax Center

Investopedia, C-Suite

Investopedia, CEO vs. President: What’s the Difference?

Investopedia, Chief Operating Officer (COO)

Investopedia, Small and Mid-size Enterprise (SME)

Korn Ferry Institute, Women C-Suite Ranks Nudge Up — a Tad

KPMG, “The CFO’S Evolving Role”

PayScale, Average Chief Executive Officer (CEO) Salary

PayScale, Average Chief Financial Officer (CFO) Salary

PayScale, Average Chief Operating Officer (COO) Salary

Raconteur, “What Is the C-suite?”

Ranker, List of Famous Chief Operating Officers

U.S. Bureau of Labor Statistics, Top Executives

U.S. Small Business Administration, Basic Requirements