How do you become a CEO?
Many of us dream of a plush corner office with big windows overlooking a beautiful view.
The life of a Chief Executive Officer, or CEO, can be glamorous, luxurious, and powerful. Other times, it can be full of stress, anxiety, and bootstrapped hustle.
But it comes with a lot of responsibility and only after years of hard work.
What does it take to become a CEO?
What does a CEO do?
The Chief Executive Officer is the overall leader and manager of a company.
- They delegate many tasks to other executives and the teams that work for them, but they are responsible for the overall success or failure of the company.
- This includes everything from marketing to good production.
- They focus mostly on the business side of the company and have a hand in every decision that is made, whether directly or indirectly through the priorities that they set.
The CEO is often the most influential person in the entire company and sets the tone and expectations for duties, workplace culture, and employee relations.
According to a 2018 study by Harvard Business School faculty Michael E. Porter and Nitin Nohria, CEOs work with a wide variety of individuals within and without the company.
- The job “involves a wide array of constituencies—shareholders, customers, employees, the board, the media, government, community organizations, and more,” they said. “Unlike any other executive, the CEO has to engage with them all.”
The study looked at how CEOs spent their time. Researchers tracked 27 CEOs beginning in 2006, analyzing their work and leisure time to determine what exactly they do all day.
They specifically sought to include how CEOs spent their personal time, as many of them continue to work even after leaving the office.
How does a future CEO get educated?
The path to becoming a CEO is long and requires many years of dedication. This begins as early as your undergraduate education.
Studies of CEOs of the most successful and established companies showed that their education choices impacted their path to the top.
What to study to become a CEO
After analyzing the background of Fortune 100 CEOs and more than 200 other CEOs from companies with a long history (100 years or more), there were a few things that stood out.
- Virtually all had a Bachelor’s degree. While not a requirement in all cases, it is nearly impossible to become a CEO without a college education, especially when so many in the workforce have that credential as well.
- The most common degrees were business, economics, or accounting. Understandably, CEOs with an academic background in a business-related field were prepared to meet the business challenges that they faced as they climbed the corporate ladder. Other degrees that stood out were engineering, science, and law.
- Almost half had a Masters of Business Administration, MBA. The advanced education of a graduate degree was helpful to many seeking the corner office as a CEO. The network that they built in those programs was also influential to their career path and upward trajectory.
Where do future CEOs attend school?
You may think that only alumni of the most prestigious universities go on to become CEOs, but this is not the case.
- Where a CEO earns their Bachelor’s degree varies widely, with many attending public, state universities.
- Their field of study and how they perform are much more important at that stage than having a fancy name at the top of their diploma.
Some argue that being a big fish in a small pond, like at a smaller or less prestigious school, can actually help students achieve more.
- It may be easier to stand out and get more opportunities when you are not in fierce competition with other students, such as you would be at a competitive, top university.
State schools can also be much more affordable, which may offer you the chance to continue your education in graduate school.
Taking advantage of scholarships and cheaper in-state tuition at the undergraduate level is a great strategy if you plan to attend graduate school at a more expensive, prestigious institution.
Graduate degrees to become a CEO
Do all CEOs need advanced graduate degrees?
No, not necessarily, but there are good reasons to pursue one.
- Knowledge is power. Education is always a wise investment and the academic knowledge that you gain from a graduate program helps your career. You also have the chance to learn from professors with years of experience in the field.
- You get a degree. Academic credentials lend you more credibility. Degrees hanging on your office wall show that you can complete a challenging program and have that extra knowledge.
- Networking opportunities. The biggest benefit of pursuing a graduate degree is the network that you join as a student and later as an alumnus. You are able to enjoy unparalleled access to business leaders as a graduate student in a top MBA program and then join the alumni network, which can open doors for the rest of your career.
- Time out of the workforce. Pursuing a degree as a full-time student will most likely take you away from the actual workforce for a couple of years. Some MBA programs offer classes on the nights and weekends, but it is still a time commitment.
- Graduate programs are not cheap. Many students begin later in their adult lives after having a few years of work experience. This increases the likelihood that they have other commitments—a home, a family, a pet. Keeping up with other financial responsibilities can be difficult while also paying for a graduate education.
- 60% of CEOS with an MBA went to a top-tier business school.
- In addition to the excellent education and opportunities during the program, graduates say that the alumni network can open doors later in your career.
If you are considering attending an elite university, it is better to save your money for an MBA program, which will ultimately pay off more in your career.
How to climb the corporate ladder
After business school graduation, what is next for an aspiring CEO?
- Gaining experience in the workplace is the most important thing to focus on during this stage.
Climbing the corporate ladder involves learning, leading, and moving up in responsibility.
Many employees with their eyes on the corner office start at one company and move to another when new opportunities arise.
- It is important to be open to opportunities even if it means leaving your current position or even your current employer.
On the flip side, jumping ship too often or too many times can be a red flag.
- The majority of CEOs are promoted from within the company.
- This is a result of the increasingly complicated structure of large companies.
- Given that it can take years to learn to navigate the corporate hierarchy, learn about products, and make connections, it makes sense that those in positions of senior leadership need to know the ins and outs of the organization that they lead.
Finding the right balance between being open to outside opportunities and gaining experience within one company is important to become a CEO.
It is also critical that CEOs have experience actually leading people in a business role.
Consulting, law firms, and sales are all good starting points, but a CEO must be able to lead small and large groups to accomplish a goal.
What skills should I master to become a great CEO?
There are a few skills that all CEOs need to perform their jobs—business knowledge, financial literacy, a basic understanding of the law.
Other skills, such as interpersonal skills and self-knowledge, help them lead at the highest levels.
- Business: CEOs must have a strong foundation in business know-how, such as how to read contracts, negotiate with other companies, and how to actually run a business. Without these skills, the company will most likely fail in the end.
- Finance: Business, even the most philanthropic, is all about the bottom line. At a minimum, there has to be enough money coming in to pay for the work being done and products or services going out. As the person overall responsible for the success or failure of the company, it is good for the CEO to know the basics of finance.
- Legal: The CEO doesn’t want to get on the wrong side of the law, either as the company or personally. Having a team of lawyers on staff is important but it is good for the CEO to have a basic understanding of the law as it applies to them.
- Media relations: The CEO is the “face” of the company. Being skilled in media relations allows them to put their best face forward in times of triumph and times of struggle.
- Industry-specific knowledge: CEOs cultivate certain skillsets and knowledge that are specific to their company. For example, a CEO at a tech company may not have a computer background but they still need to be able to understand what the company does to effectively lead.
- Time management: CEOs are known for being pulled in many different directions. That is why it is so important they learn how to prioritize tasks and manage their time well.
- How to delegate: A CEO simply cannot perform all of the tasks that it takes to run a successful company. They must learn to delegate and train those around them. This includes striking the right balance of being involved without becoming a micromanager.
- Communication: The heart of a CEO’s job is communicating with those around them—shareholders, employees, customers. A CEO must be able to communicate effectively and efficiently by speaking, writing, and listening.
How to cultivate connections when climbing the ladder
A CEO needs a strong network of connections around them to do their job to the best of their ability. Cultivating those connections is an important part of a CEO’s role.
- Growing a network is best done over the years and can begin as early as undergraduate or graduate school.
- Seek out mentors early in your career to help open doors as you move up towards becoming a CEO.
- Once you are sitting in that corner office, participating in professional networking organizations will help keep those connections strong.
Volunteering is another great way to build a larger network.
Many CEOs value philanthropy. Charitable events, whether you give of your time or money, can be a great way to connect with other executives in your industry and others.
Working with a board of directors as a CEO
If you are on the path to becoming a CEO, you have probably heard of a company’s board of directors.
Who are these people and how do they fit into the overall organization of the company?
- The board of directors is elected by the shareholders to represent their financial interests.
- A board of directors is required for any company that is publically traded.
- The CEO reports to the board of directors on the company’s performance.
- If the CEO is not doing their job to the board’s satisfaction, they have the authority to fire them and find a new CEO.
Some board members hold other positions within the company or work closely on day-to-day operations.
- Others are completely outside of the company and only represent that financial interests of shareholders.
- All board members are involved in major decisions and setting policy that will impact the company as a whole.
Sometimes the CEO is a member of the board and may even be the chairperson.
In all cases, the CEO works closely with the board of directors to determine the direction of the company and how to address potential problems when they arise.
How long does it take to become a CEO?
The path to becoming a CEO can depend on the size of the company and your role within it, as well as the experience that you bring.
- If you are an entrepreneur or small business owner, you are already the CEO—congratulations!
- For larger, established companies, the path can be longer.
A motivated and ambitious employee can become the CEO of a medium-size company in 10-15 years.
- This is based on having a strong academic foundation, taking advantage of opportunities for promotion and leadership, and some luck.
In larger companies, the path to the corner office requires the potential CEO to really stand out from their peers.
- It typically takes closer to 20-25 years to reach the executive level in these organizations.
Some industries value youthful energy more than others.
The tech industry is known for hiring younger, less experienced employees at all levels, including the top executives.
Those with innovative ideas and enthusiasm may find their path to CEO is shorter in these industries.
Mental health for the CEO
CEOs put in notoriously long hours, often working well into the night and on weekends. The pressure to perform and to inspire others to perform can take a toll on anyone’s mental health.
At the same time, CEOs set the tone for how mental health is viewed in the company.
- It is important for CEOs to model what they want to see in their employees, including taking time for themselves.
- Making healthy eating and exercise more accessible at work or providing a healthcare plan that includes mental health services can do this.
CEOs often have to make difficult decisions that have a trickle-down effect on their employees.
- Closing a manufacturing plant, for example, may mean numerous layoffs.
- Downsizing an office may force long-time employees to find other work that has more hours or higher pay.
- CEOs must develop thick skin when making these types of decisions.
- Having a strong team of advisors around, either on the board of directors or other executives, assures the CEO that they have the most accurate information and recommendations when it comes time to make a decision.
This is also where having an experienced mentor can be a valuable asset for a CEO.
Entrepreneur Emma McIlroy discusses the mental health struggles that she has faced as CEO and co-founder of the fashion company Wildfang. “It would be so much easier for me to stand up and not be vulnerable—to just say, ‘It’s all great. I’m a big deal CEO,’” she told Forbes Magazine in an interview. “But that doesn’t help the people coming behind you who are going through the same difficulties.”
Leading a team as a CEO
The CEO is the company’s leader, so it makes sense that leadership skills and experience are a prerequisite for the job.
Leadership goes beyond just managing the tasks of employees, however. A good CEO values and inspires their employees to do their best.
- Recognize and reward top performers. Employees will move mountains for leaders that they feel believe in them. Take the time to recognize stellar performance, whether with financial bonuses or just a hearty handshake from a respected leader, to keep company morale up.
- Provide good compensation. It’s all about the money, folks. Well, maybe not, but it is a big part of the picture for any employee. A good compensation package that includes other benefits such as healthcare or retirement plans will attract top talent and keep them at the company through tough times.
- Inspire growth. Great leaders know that investing in their employees will pay dividends for the company. This can be in the form of providing incentives for continued education or challenging them to set and reach ambitious professional goals. Any opportunity for employees to grow is ultimately a gain for the organization.
It can be lonely at the top.
Having a strong network of fellow professionals at every level helps a CEO perform at their best and make the best decisions in tough situations.
Good CEOs know that they are only as strong as the team around them and create an environment of collaboration and trust.
Becoming a startup CEO: A different path
Is the path different for a CEO at a new company just beginning than that of a CEO at one of the more established companies? Most often the answer is a resounding yes.
Startups are less stable and more prone to fail than companies with a 20-year (or more) track record of performance (and larger financial reserves).
- Startup companies often value innovation and outside-of-the-box thinking over experience.
- This helps them be creative to get funding, get their products or services to new markets, and succeed.
A startup CEO’s first job is usually to fill the growing needs of their company.
- This means finding office or production space, hiring new employees, and securing funding.
- They must do all of this without the benefit of a long history of company performance.
- The challenge that startup CEOs face is how to inspire others to take a gamble on their new company, which is why passion and enthusiasm are so critical to this role.
In a startup, the CEO must also create a vision for the company, as one often does not exist yet.
They determine what is important to the company, what values the company stands by, and set priorities for employees.
Developing the company’s brand, both for the public and the employees who work there, is an important task for the startup CEO.
- Startup founders are usually the CEOs of their companies until the company grows to a point that the founder no longer has the background or expertise to make sound business decisions.
When a company goes public and has a board of directors, those individuals may want a more seasoned executive sitting in that office.
The founder often still has a critical role and may retain the title of CEO.
A warning to startup CEOs
Sometimes, if a startup company raises large amounts of capital from venture capitalists or funds, the investors will replace the founding CEO with someone much more experienced.
This is to ensure the company runs smoothly and the investment is protected. Founding teams will know about this change in roles ahead of time.
It’s important to note that once a startup raises money, there’s a lot more at stake. That’s why the founder might be asked to step down and take a new senior position.
Conclusion: How to Become a CEO
We hope this guide helped you understand how to become a CEO.
If you are an aspiring CEO, be sure to work hard, learn about your industry, make connections, and take care of your mental health.
The road ahead is tough and full of obstacles. We know you have what it takes to make it to the top!