Chief Executive Officer

Functions of A Chief Executive Officer

The functions and responsibilities of a Chief Executive Officer include Planning, Organising, Staffing, Coordinating, Controlling, Directing, Reporting and Budgeting. In this article, you will learn all these and more.

The Chief Executive Officer

The Chief Executive has fundamental roles in his day-to-day functioning to make the organization grow to an enviable position. He is to create an enabling environment for employees to work through the principle of motivation and considering staffs welfare. He is in charge of the day to day running of an organization and he is also at the apex of the organization.

The Chief Executive Officer is responsible for leading the development and execution of the Company’s long-term strategy with a view to creating shareholder value… The CEO acts as a direct liaison between the Board and management of the Company and communicates to the Board on behalf of management.

Principally, The Chief Executive of an organization perform the following functions:

PLANNING

Planning according to STONER (1982) is the process of selecting our goals and determine how to achieve them. KOONTZ ET AL (1980) noted that it is the selecting from among alternatives, future courses of action for the enterprise as a whole and for every department or section within it. ROBBINS (1988), defined planning as encompasses defining the organizations’ objectives or goals, establishing an overall strategy for achieving these goals and developing a comprehensive hierarchy of plans integrate and coordinate activities.

Planning is also the process of thinking about and organizing the activities required to achieve a desired goal. It involves the creation and maintenance of a plan, such as psychological aspects that require conceptual skills.

Importance of Planning

  1. To Offset Uncertainty By Anticipating Change:

Future uncertainty and change make planning a necessity. With planning, uncertainty is reduced by anticipating change, even when due to certain conditions the future seems certain, managers have to plan in order to select the best among alternatives.

  1. To Bring Rationality And Order To The Organization:

Planning brings a higher degree of direction to the organization as employees know what to do and at what time to carry out their specific tasks.

  1. To focus on objectives:

This is a fact that planning is directed at achieving the enterprise objectives. The major act of planning is to focus on the organizations’ objectives.

  1. To gain economic operation:

Planning minimizes costs of operation, therefore, it emphasizes efficiency by reducing waste and redundancy.

  1. To facilitate control:

This is a situation whereby the objectives serve as a measure of comparison when the goods or products are eventually details. Deviations are noted and corrected.

Example Of Organizational Objectives Includes:

  1. Profitability
  2. Efficiency
  3. Market share or market leadership
  4. Survival
  5. Quality product/services
  6. Maximize dividends or share price
  7. Good corporate citizenship and social responsibility
  8. Employee welfare
  9. Diversification
  10. Growth
See Also:  Ethics In Purchasing - What Is Purchasing Ethics?

In formulating objectives, Robins (1988), believes two major approaches matter

  • Traditional Approach
  • Management by Objectives

Traditional Approach

  1. Top-down Objectives: This is when objectives are formulated at the top forced the hierarchy.
  2. Bottom-up Objectives: This arises from the employee through consensus.
  3. Mixed Approach: This is a combination of the two approaches mentioned above.

Management by Objectives

This stresses the establishment through the participation of objectives that are actionable, clear, verifiable and measurable. Its emphasis lays on the converting overall organizational objectives for organizational units individual members. Management by objective uses goals to motivated instead of single goals to control.

Characteristics of a Good Objective

S—– It should be Specific

M—- It should be Measurable

A—– It should be Attainable

R—– It should be Realistic

T—– It should be Time Bound

Reasons For Ineffective Planning

  1. Lack of Commitment: Top managers often are committed to serious organizations planning. Many of these managers just play lip service to some organizations planning.
  2. Lack of Top Management Support: Planning will be ineffective if top managers did not believe such; the manager will not encourage or support such plan financially.
  3. Failure To Develop And Implement Sound Strategies: Strategies give unified or specific direction to organization plan. Where such strategies are not in place planning will be hampered.
  4. Lack of Meaningful Objectives or Goals: This refers to the complexity of organizations, with no meaning though some seem goods but not achievable.
  5. Lack of Organization Knowledge: This is when the goals and objectives of the organization are not clear to the manager. Developing a good planning strategy will be difficult in such situation.
  6. Lack of Environmental Knowledge: This is a situation whereby management team did not understand the business terrain of the organization. Lack of understanding of the business environment may be a function of unstable/unpredictable government policies.
  1. Failure To See Planning As A Rational Exercise: This is when management fails to see the reason why planning should be carried out.
  2. Over Confidence On Experience: It is true that experience is a very good asset. Management team with a lot of experience may not see the need for planning especially if they have been practising in a similar industry.
  1. Lack Of Delegation: Planning will be at low ebb if duties and responsibilities are not delegated to subordinates.
  2. Resistance To Change: This is a situation when employees want the status quo to remain in fear of the unknown might them resist any change.

Factors That Limits Planning

  1. The problem of rapid change
  2. Psychological inflexibility
  3. Policy and procedural inflexibility
  4. Capital investment
  5. External influence
  6. Time, money and effort.

How To Make Planning Effective.

  1. Planning must be forced
  2. Planning must be organized
  3. Planning must begin from the top
  4. Planning must be definite
  5. There must be participation in planning
See Also:  Outsourcing And Subcontracting

ORGANIZING

COLE (1982) defines organizing as the means by which we arrive at our chosen destination. Cole sees organizing as a process for determining, grouping, structuring activities devising and allocating roles arising for results to both groups and individuals and determining detailed rules and system of working, including those for communication, decision-making, and conflict resolution. DALE (1967) as cited in stoner (1982) defines organizing as a multi-step process detailing all the work that must be done to attain the organizations’ goals.

Importance Of Organizing

  1. To Formalize Authority: Employee should be able to know the amount of authority enjoyed by individuals occupying specific positions. This will guide the performance of each person role in the system. It will clearly indicate who gives order and to what degree.
  2. To Assign Responsibility: Responsibility is the obligation to do something.
  3. To Reduce Duplication of Efforts: Organizing helps to streamline efforts of employees, which further helps in reducing the dual performance of one role.
  4. Reduction of Conflicts: In as much conflict seen as an integral part of organizational progress, it must be reduced to formal or task-related and should not be allowed to degenerate to a personal conflict which will not augur for the system.

STAFFING

This is the managerial function of responsible for the employment of suitable personnel to occupy vacant organizational positions as well as including them to stay long enough for the organization to reap the benefits of their training and experience.

COORDINATING

Coordinating means harmonious interaction (kemper). It involves the reunification of the various divisions to form an integrated whole.

Fayol defined coordination as a harmonizing process, pulling the various parts of the corporation together.

The Need For Coordination

  1. It brings about more specialization
  2. It brings about more standardization
  3. It brings about more formalization
  4. It brings about less centralization.

Problems of Achieving Effective Coordination

  1. Difference In Orientation Towards Particular Goals: Members of different departments develop their own views about how to advance the interest of the organization. To production managers, issues of cost-reduction are important. To salespeople, product variety may take precedence over product quality.
  1. Differences In Time Orientation: Sales and product managers will tend to be more concerned with problems that have to be solved immediately or within a short period of time.
  2. Differences In Interpersonal Orientation: The way departments communicate differ from each other. Production department has the attitude of lest do it now but departments like Research and Development have lest take it easy attitude.
  3. Difference In Formality And Structure: Each subunit has different methods and standards of evaluating progress towards objectives and for rewarding employee.
See Also:  What Do You Understand By Stock Out?

CONTROLLING

Robins defines Controlling as the process of monitoring activities to ensure they are being accomplished as planned and of correcting any significant deviations.

Importance of Control

  1. Change: Since all organization must adapt to change due to unstable environmental factors. Control is inevitable to adapt to such changes, New laws, and Regulations. Such changes create opportunities and threat to organizations depending on how they are controlled.
  1. Complexity: The production of many products by organizations and the geographical spread of such organizations can lead to decentralization. To get maximum profit, all operations have to be properly monitored.
  2. Delegation: When managers delegate tasks to subordinates, appropriate controlling measures must be put in place to subordinate handling the task not to deviate from the set-out norm.
  3. Mistakes: In the process of carrying out tasks, mistakes can arise therefore standing measures must be in place to ensure such mistakes are corrected.

Types of Control

  1.  Feedforward Control: This can be called “steering or predictive”. This is the type of control initiated to detect deviations from some standards of goals and allow corrections to be made before a particular sequence of activity is completed.
  2.  Concurrent Control: This control regulates actions and errors as a project is ongoing.
  3.  Feedback Control: This control relies on a feedback mechanism. The results of completed actions are measured and communicated to the department in-charge for detection of variations from planned outputs.

Directing

This is a managerial action that shows subordinates how and when to do things. Directing function prevents employees from being confused at organizational policies and ensures that employee will perform activities that will bring about organization achieving her set objectives.

Reporting

This is the ability of the management team to communicate decisions to subordinates effectively well and to take such information to the board.

Budgeting

This is management’s ability to allocate to any decision taken amount to be expended within a particular accounting year.

Mintzberg has studied the roles of the administrators and managers. He published his book, The Nature of Managerial Work, 1973. It is the result of the empirical research into how administrators and managers do their work.

Mintzberg identified (3) three group of roles which administrators and managers must play. The roles will be discussed in my next article, ROLES OF A MANAGER.