Not Everyone Should Report to the CEO

by Mar 21, 2023Advisory Groups

Who Should Work for the CEO? You might think the answer is obvious, but it isn’t. In the early days of starting your business, everyone reports to you. It’s just the nature of a small business. But that changes as you begin to grow and scale up your infrastructure. As you add new executives and middle managers over time, eventually, you can’t have everyone reporting to the CEO.

One problem is that every company also has legacy relationships from those early days that linger. That might involve someone who started with the business and doesn’t want to give up their access to the CEO even though their role should report to someone else. People perceive status and power by being near the CEO on the organizational chart.

The result is that you might have too many people reporting to the CEO–which results in the CEO spending time on issues they shouldn’t be spending time on.

The opportunity, then, is to take a fresh look at your organization chart. What would that look like if you were to take out a fresh sheet of paper and redraw who reports to the CEO? Are the people who report to you the ones who should?

If not, it’s time to make some changes.

Mission Critical Functions

Who should report to the CEO? The quick answer is that only those executives who run a mission-critical part of the business should report to the CEO. That person should be someone else’s subordinate if it isn’t critical.

Mission-critical positions that should probably report to the CEO include:

  • The top financial person. This might be someone with the title of chief financial officer, CFO, or even controller in a smaller organization. They are the person who runs the business’s financial scorecard and helps ensure you don’t run out of cash.
  • Chief revenue officer. Depending on the nature of your business, this might be the top sales or marketing person. Or it could be both. It comes down to whoever is responsible for bringing in revenue for the business should report to the CEO.
  • Chief value delivery officer. Notice I am avoiding the term COO, but it could represent them. A lot depends on the nature of the business and how you deliver value to your clients. This job could be someone involved in manufacturing or warehouse management, or overseeing your professional services. In the simplest terms, whoever makes your customer happy should report to the CEO.

Note that these positions are operational and directly related to customer value creation, except for the CFO.

Murkier Waters

Beyond those key positions that deal with the money and value delivered by the company, the options for who should report to the CEO become more nuanced.

Chief Talent Officers and Chief Technology Officers are both positions that typically report to the CEO. But should they? The quick answer is–it depends.

Talent is always essential, for example. But how critical is it to the organization? If you run a professional services firm, and your product is your talent, then your chief talent officer should report to the CEO. Otherwise, perhaps that person might report to your COO or even CFO.

The chief technology officer or VP of information technology: Technology is also critical to every organization. But again, there is nuance here depending on your business sector. If you run a software development business, then it’s likely that the person who leads product development (your designers and developers) should report to the CEO.

But it’s important to distinguish this kind of technology from the infrastructure you use inside the business: email, and phone systems. That role should almost certainly report to someone other than the CEO.

Other positions that probably shouldn’t report directly to the CEO include VP of services, a top sales person, VP of marketing communications, and any other staff job.

Rethinking Your Mix

The opportunity you have in rethinking your mix of direct reports is to ensure that you are spending your time on those issues that are mission-critical to the organization. Everyone else is negotiable.

That might mean changing things up. I have seen, for example, cases where HR managers–people not in executive positions–report to the CEO. The better option here is to move that person under someone else.

On the flip side, I have seen the firm’s top financial person as a subordinate to someone in operations. This is a huge mistake. This person needs to be working closely with the CEO in almost every organization.

The point is that it’s worth considering your organization chart and making the changes you need to ensure that you, as CEO, are working with the people who drive the most critical parts of your business.