There is no “typical” week, as my job is a non-specialized function. Thus, I typically spend my time working on X (see below), plus facilitate decisions on whatever critical issue has been escalated to my level. I say “facilitate” instead of “make” because sometimes I’m not the best person to make a decision, but instead I push people to sharpen their thinking, confront ambiguity, etc, in order to render a decision, especially on tough issues.
X is defined as an always-varying combination of 1) things in my key areas of personal strength, 2) areas where, especially in a small company, we have not yet hired key people to lead that area but which still need to be done, and 3) areas where quality of execution is not sufficiently developed to achieve key strategic aims.
In #2 and #3, potentially none of those areas may lie in my own areas of personal strength. As such, one other key activity for a CEO is to recruit the right people to the company who have the expertise to lead work in those areas better than he/she can.
Ever since taking this job, I’ve discovered several things that I think result in CEOs being paid a lot more than other corporate officers. It’s been an interesting journey.
1) The CEO is responsible for everything. In a regular job, there are always problems that come up that you don’t necessarily need to be responsible for – it’s your co-worker’s area, or you can kick it up to your boss, it belongs to another department, etc. Even if you are an VP or other executive, a problem may come up that is just in some other exec’s department (e.g. if you are VP of Marketing and a tech problem comes up, it’s the VP of Eng’s issue, and vice versa). If you are the CEO, there is no other such person. Every problem is your problem. Yes, you can delegate, but you are responsible for the person handling it correctly. 100% of problems at the company are your problem. This is true for no one else.
2) You are the public face of your company, no matter how much you don’t care to be. When you think about a company, good or bad, you think of the CEO as the ultimate authority on everything. You probably don’t know the VP of Corporate Communications at Microsoft, or the CFO of Tesla, but I’ll bet you know the CEO’s names. The CEO becomes personally synonymous with the company, especially when someone has a complaint.
2a) In a failure, you must be willing to be the sacrificial lamb to the public. This is something that comes with the job, and is not a job requirement for any other executive position. Sometimes other executives take a fall publicly when something goes wrong, but it is usually because of something egregious directly going wrong in their organization. On the other hand, there are multiple macroeconomic or external disaster scenarios which can affect a company negatively and if the CEO is nothing less than brilliant in overcoming them (not always possible), it’s part of the CEO’s job to resign or be fired, and usually shamed publicly. This is known and accepted as part of the job. If you’ve had any other job, this was probably not part of your job description.
3) The job doesn’t end. In many jobs, the job can end when you go home or on vacation. Even in other crisis-response-type positions (ER, police, fire, datacenter ops), you have on-shift rotations and downtime. Not so for a CEO. Whatever key strategic initiative, ongoing crisis of the moment, or existential threat to the company will always be on your mind, and you are always subject to having a high-priority issue escalated to you. This is related to #1, i.e. you are responsible for everything, in that if there is something that truly requires your attention, no one will say “Wait, he/she’s off-duty, don’t bother them.” You are always on duty; your downtime is when you leave the job.
4) You actually have less power over your environment than you have in any other job. This is a counter-intuitive thing that people often don’t realize about positions of authority. The degree of control you feel you have over your life is a ratio between the size of the sphere of things you can directly control (“Sphere of Influence”) compared to the size of the sphere of things whose effects you need to worry about (“Sphere of Concern”). When you have a front-line, entry-level job, you may feel that you have little power, but the ratio of power-to-concern is quite high: you can affect how you are doing your job, and things you can’t control include your boss, certain things about your work environment, and customers you come into contact with. If you become a manager, you control the entire team (but not really – people may defy you if you are not convincing enough), but now you have to be concerned with things that happen in other teams, elsewhere in the company, and an even larger demographic of customers. As a CEO, you have authority over the entire company (though again not true control over every individual’s free actions), but you need to be worried about all the users and customers, competitors, large-scale industry trends, macroeconomic forces, regulators and governments, the press, etc. Thus, being a CEO requires developing extreme mental equanimity in the face of feeling nearly totally powerless – and still being able to make effective decisions using the limited resources you can control.
These are the things I’ve noticed that separate the job from other high-level executive jobs. Certainly there are other factors, like being good at building relationships with key outside parties, having a lot of industry contacts, and being great at decision-making, but those are true of many executive-level positions. Thus, I believe that the salary differential arises largely from the fact that:
- the CEO role involves a qualitatively higher level of life stress and personal risk-tolerance,
- subsequently far fewer people are willing to take on such a role, and
- the pool of such people intersected with people who are actually good at doing the job is therefore incredibly small,
- intersected further on a per-industry basis (Alan Mulally from Ford could not have been a CEO for Microsoft).
This leads to an acute supply-and-demand problem, i.e. the “I’m not getting paid enough to deal with this shit” issue, wherein plenty of otherwise talented executives who would be CEO candidates are happy to just stick with not taking that extra step – keep in mind that anyone with the combination of characteristics necessary to be a successful CEO has lots of options – so you end up with a highly illiquid market of candidates, and thus boards and compensation committees have to come up with really unique compensation packages to induce those people to take the job.
– Yishan Wong
Theodore Lee is the editor of Caveman Circus. He strives for self-improvement in all areas of his life, except his candy consumption, where he remains a champion gummy worm enthusiast. When not writing about mindfulness or living in integrity, you can find him hiding giant bags of sour patch kids under the bed.