The corporate business structure disperses ownership and control to the shareholders of the company. They are entitled to a share of the profits commensurate to their representation of outstanding shares and exert control in a similar manner. However, the day-to-day operations of the firm are managed by professionals appointed by the board of directors. These professionals are called executives.
Executive comes from the root word "execute" which simply means "to do." Indeed the executive staff is in charge of making sure everything in the company gets done. The most senior executive is the chief executive officer. The CEO is appointed by the board of directors, usually via a vote, and has more authority than any other worker in the company. The CEO is ultimately responsible for everything that takes place, works or fails within the company. Obviously he can't do everything himself and is expected to hire, delegate, outsource or take whatever other action is legal, appropriate and effective. The CEO generally has freedom to make decisions for the company limited only by the law, applicable regulations and the strictures placed on him by the board of directors.
Most companies have more than one executive. Though the CEO holds the most authority and responsibility, other executives are sometimes appointed by the board of directors or hired by the CEO. These positions are sometimes filled according to role and other times filled by breaking the company up into functional units under the same ownership. Under the former system, there may be a chief information officer, vice president of marketing or chief operational officer. Under the latter, there may be regional vice presidents or division leaders. These approaches are not mutually exclusive and an organization's executive staff may be structured by role and location.
The requirements for becoming an executive are quite stringent. Executive staff are the most senior members of corporate firms and their decisions can rescue a struggling company from disaster or doom it to failure. As such, the competition for these positions demands academic credentials, experience and highly polished communication skills. While the standards for various companies will vary, few people reach executive status without an advanced degree or at least a bachelor's from a prestigious school. CEOs and COOs are best served by degrees in management and extensive managerial experience. Executives whose jobs focus on particular aspects of operations may be selected for technical expertise in their discipline. Information technology specialists may become CIOs while people with marketing experience may become vice presidents of marketing.
The pay of executives is generally commensurate with the capitalization of the company they work for and is often heavily influenced by benefits. However, executives are nearly always paid better than anyone else in the company. One interesting aspect of executive pay is the heavy reliance on performance. Equity-based compensation like stock grants or options attempts to tie the interests of the company to those of the executives. In many cases, the aggregate value of bonuses, stock grants, options and other performance-based compensation may far exceed the base salary of the executive.
The working conditions of executives are physically comfortable, but psychologically demanding. Executives work with information and people, not so much machines and environments. While "on-site" walkthroughs of refineries, factories or sites in politically unstable regions may transiently expose an executive to danger or discomfort, work is mostly indoors and mundane tasks are handled by support staff. But, since executive compensation is so heavily tied to company performance, most executives work irregular and extremely long hours. There is also enormous emotional strain and failure of a CEO may not mean only loss of status and pay, but responsibility for shareholder losses or even mass layoffs of workers.
- Photo Credit executive image by CraterValley Photo from Fotolia.com
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