How Do You Become a CEO?

July 4, 2024

A smiling CEO sitting on the edge of a desk in an office.

At the head of every company are leaders driving it toward defined goals. Top roles typically include the chief executive officer (CEO), chief operating officer (COO), chief financial officer (CFO), and chief marketing officer (CMO). Individuals serving in these roles make up the C-suite, with the CEO sitting at the top of the executive hierarchy.

The CEO sets the tone for the rest of the C-suite. These high-ranking executives define the strategic direction and operations of an organization and make the critical decisions that set its direction and affect how the public views it.

But how do you become a CEO? While no single path to the top role exists, becoming a CEO requires strategic decision-making abilities, strong business sense, and impeccable leadership skills. These competencies inspire employees to achieve goals and drive the company toward sustainable growth.

Both experience and education offer significant value, and successful CEOs possess a combination of the two. Experience offers invaluable real-world insight and the ability to navigate complex challenges. The right education can provide a broader knowledge foundation and foster critical thinking skills to make informed decisions.

What Do CEOs Do?

Discovering how to become a CEO begins with another question: What do CEOs do? Typical CEO responsibilities include setting a company’s vision, leading decision-making, guiding strategic direction, overseeing resources, and building a positive work culture. CEOs collaborate with other executives to ensure performance across business functions such as finance, marketing, sales, and human resources. Their role is essential because their decisions can impact a company’s growth, stability, profitability, and ultimate success.

Different variables make every CEO role unique. For example, a technology CEO may focus on staying up to date on emerging technologies, while a financial company CEO may focus on market trends and economic indicators.

The size of a company can also play a role in a CEO’s responsibilities. At a small company, a CEO may be more directly involved in the day-to-day activities, often leading to closer connections with employees. On the other hand, the CEO of a global corporation may have to oversee multiple departments, meaning less one-on-one interaction with employees. A global company’s CEO may also be involved in international operations, negotiations, and navigating regulatory landscapes in different countries.

CEOs often report to a board of directors: a group of individuals responsible for governing a company’s affairs. Boards of directors are common in public companies and can hire or fire the CEO. CEOs, especially those working in public companies, are also responsible for safeguarding shareholders’ investments by maximizing value. They also work to ensure transparency and accountability to help promote a favorable public image of their company. This is important, as consumer sentiment can be a key driver of business growth and longevity for companies.

How to Become a CEO

How do you become a CEO? The path to becoming a CEO varies based on a number of situations, circumstances, and expectations, so there’s no one way to earn this role. But there are commonalities for most journeys.

The initial educational milestone is earning a bachelor’s degree. However, taking the next educational step—earning a graduate degree, such as a Master of Business Administration (MBA)—can make individuals aiming for the CEO chair more competitive.

For experienced managers, more advanced coursework may be needed. Executive MBA (EMBA) programs focus on bolstering experienced professionals’ competencies in key areas of business, providing deep dives into subjects like marketing, accounting, and finance. The flexibility of online EMBA programs enables individuals to apply new skills in their current roles.

Another crucial element in the journey to becoming a CEO is to gain practical experience and actively seek out new challenges. Taking on new opportunities can help speed up progress toward achieving career goals. This means that individuals who aspire to become CEOs should embrace opportunities that can help them expand their competencies and leadership abilities. These opportunities can expose them to different aspects of a company’s operations, providing vital knowledge for advancing to a C-suite position.

Individuals pursuing CEO roles commonly climb up the corporate ladder within a single organization—but aspiring CEOs can also reach their goals by starting their own businesses. Building a company from the ground up creates opportunities for valuable skill development. It can provide a unique, hands-on, trial-by-fire learning experience that helps build leadership skills and resilience.

Board-Elected CEO vs. Entrepreneur

Two primary types of CEO exist. In larger companies, a board of directors composed of executive leaders (typically from both the company and external businesses) elects an individual to lead the organization. In public corporations, shareholders elect the board of directors. Often, CEO candidates also serve on the corporation’s board.

CEOs of large companies can come to be well-known. Take, for example, Satya Nadella, CEO of Microsoft, and Tim Cook, CEO of Apple. Both of these CEOs also serve on their companies’ boards of directors.

Smaller companies can also have CEOs—often entrepreneurs who own their companies. Like a board-elected CEO, the entrepreneur CEO typically serves as the primary business decision-maker.

The main difference lies in the structure of an enterprise. For example, small businesses run by entrepreneur CEOs don’t report to a board of directors. These CEOs sometimes also take on other executive functions like finance and marketing. Over time, as a business grows, these tasks may be assigned to other executives.

Small businesses are often limited liability companies (LLCs), a type of business structure governed by state regulations. While LLCs can have a board of directors, they’re not required to by law. This board can choose to appoint a CEO but is under no obligation to do so.

How Much Do CEOs Make?

When discussing CEO salaries, figures in the millions of dollars come to mind. While that may be true for some highly visible CEOs, the median salary for CEOs was reported to be a somewhat more modest $189,520 as of May 2022, according to the U.S. Bureau of Labor Statistics.

However, CEO salaries can vary widely. For example, Payscale reports that CEOs with about a year of experience had a median salary of around $101,000 as of June 2023, while CEOs with 20 years of experience earned about $196,000. Payscale listed the median CEO salary as about $162,000 as of June 2023.

Location plays a role in CEO earnings, too: CEO salaries in Los Angeles and New York were reported to be about 27% above the median annual average.

The CEO Gender Pay Gap

No discussion of CEO compensation would be complete without mentioning the CEO gender pay gap. Morningstar data reveals slight upward momentum in the number of women in CEO roles in the S&P 500, rising from 4.5% in 2012 to 6.3% today. This slight improvement shows promise, but the report also points to a significant gap. According to the report, for every dollar earned by a male named executive officer (NEO)—individuals in the highest levels of a corporation—female executives earned just 82 cents.

Addressing the CEO gender pay gap begins by understanding that it starts early in a woman’s career. Data from the National Association of Colleges and Employers (NACE) shows that men with a new bachelor’s degree made a median salary of $64,022 in 2020, while women with a new bachelor’s degree earned just $52,266.

Prepare to Lead with an EMBA

Strong C-suite leadership is crucial for a successful business, and organizations are always on the lookout for exceptional leaders with vision, knowledge, and passion. It can take many years for you to become a CEO, but gaining experience by climbing the corporate ladder combined with an advanced business degree can help you develop the knowledge and skills needed to excel in the role.

For professionals ready to embark on this journey, Washington State University’s Online Executive Master of Business Administration program teaches the complexities that shape the modern global business environment. Students in this fully online program can meet their professional and personal obligations while learning about solid business principles, strategy, innovation, and leadership.

Find out how WSU’s Online EMBA can prepare you to advance to C-suite positions.