glossary
What Is the Role of a CEO? Key Responsibilities
Governance GlossaryPublished: February 23, 2024 Last Reviewed: March 12, 2026
Key Takeaways
- The CEO is the highest-ranking executive, responsible for day-to-day management and implementing board strategy.
- The CEO reports directly to the board of directors and is appointed by the board.
- Key responsibilities include strategic leadership, financial oversight, stakeholder relations, and talent management.
- The CEO–board relationship is critical — built on trust, communication, and a shared vision.
- In NFPs, the CEO focuses on mission delivery and financial sustainability rather than shareholder returns.
The Chief Executive Officer (CEO) is the highest-ranking executive in an organisation. The CEO makes major decisions, manages day-to-day operations, and is the primary link between the board of directors and the organisation’s management team.
The scope of the role varies with the organisation’s size, sector, and structure, but the core responsibilities are consistent: set strategic direction, lead the executive team, and report to the board.
Key responsibilities
Strategic leadership
The CEO’s primary job is to set the organisation’s direction. This means working with the board to define strategy, then translating that strategy into short-term goals and operational plans. The CEO determines policy, allocates resources, and shapes organisational culture.
Strategic planning requires a clear understanding of the market, the competitive environment, and emerging risks. The CEO balances growth with fiscal discipline, making trade-offs between investment and sustainability.
Financial oversight
Although the CFO handles day-to-day financial management, the CEO must understand financial reports, budgets, and forecasts well enough to make sound decisions. The CEO is accountable to the board for the organisation’s financial performance.
Operational management
The CEO oversees the implementation of strategy across all parts of the organisation. This includes maintaining service or product quality, driving operational efficiency, and ensuring the organisation delivers on its commitments to stakeholders.
External relationships
The CEO represents the organisation externally — in negotiations, at public events, and with investors, partners, regulators, and the media. They are the face of the organisation and responsible for protecting and advancing its reputation.
Talent management and succession
The CEO hires, mentors, and retains the senior management team. Getting the right people in the right roles has an outsized effect on organisational performance. Part of this responsibility is building a succession plan so the organisation can continue to function if the CEO or other senior leaders depart.
Qualities of an effective CEO
Effective CEOs share a common set of qualities: the ability to lead and motivate teams, strong communication skills across diverse audiences, strategic thinking grounded in practical execution, financial literacy, and personal integrity. They set the tone for the organisation’s culture through their own behaviour.
The CEO–board relationship
The relationship between the CEO and the board defines how governance translates into action. The CEO connects the board’s governance role with the organisation’s operations.
This relationship works when it is built on trust, clear communication, and a shared understanding of roles. The CEO implements the board’s directives, provides accurate and timely information about performance and challenges, and incorporates board feedback into strategic decisions. The board sets expectations, monitors performance, and holds the CEO accountable.
The chair and CEO relationship is particularly important. A productive working relationship between the two supports effective governance; a dysfunctional one can undermine the entire organisation. For more on this, see The Board and the CEO Relationship.
CEO appointment and performance review
The board of directors is responsible for appointing the CEO and defining the terms of employment, including remuneration, reporting obligations, and delegated authority. Once appointed, the CEO’s performance should be formally reviewed at least once a year against agreed objectives.
The review is usually led by the chair, sometimes with input from a nominations or governance committee. Performance criteria typically cover progress against strategic goals, financial results, stakeholder relationships, leadership of the executive team, and organisational culture. Where performance is not meeting expectations, the board needs to act. This may involve a structured performance improvement plan with clear timelines and measurable targets. In serious cases, the board may need to terminate the CEO’s appointment. Avoiding or delaying these decisions rarely serves the organisation well.
CEO succession planning is also a board responsibility. It should not wait until the CEO announces they are leaving. Boards that maintain an up-to-date succession plan, including interim arrangements, are better positioned to manage leadership transitions without disruption.
CEO vs managing director
In Australia, “CEO” and “managing director” (MD) are sometimes used interchangeably, but they are different roles in law. A managing director is a director of the company and holds the powers and duties of a director under the Corporations Act 2001. A CEO who is not appointed to the board does not carry director powers unless separately appointed as a director. However, a CEO will typically qualify as an “officer” of the corporation under section 9 of the Corporations Act, and officers are subject to the same statutory duties of care and diligence (s 180), good faith (s 181), and proper use of position (s 182) that apply to directors. The High Court confirmed in ASIC v King [2020] HCA 4 that the officer definition is based on function and capacity to affect the corporation’s financial standing, not job title. Some organisations have both a CEO and an MD; in others the same person holds both titles.
The CEO role in not-for-profits
In not-for-profit organisations, the CEO’s focus shifts from shareholder returns to mission delivery. The CEO drives the organisation’s social, cultural, or environmental goals while maintaining financial sustainability. This often involves fundraising, advocacy, and careful stewardship of donor and grant funds.
The governance relationship is the same — the CEO reports to and is appointed by the board — but the performance metrics and strategic priorities differ from the for-profit sector.
Frequently Asked Questions
What is the role of a CEO in a not-for-profit organisation?
In a not-for-profit (NFP) organisation in Australia, the CEO is the highest-ranking executive officer responsible for the day-to-day management decisions and for implementing the organisation's long and short-term plans. A CEO reports directly to the Board of Directors and is primarily tasked with driving the organisation's mission, strategy, and operational excellence.
Unlike in the for-profit sector, where a CEO's focus might lean more towards profitability and shareholder value, in an NFP, the emphasis is on achieving the organisation’s social, cultural, or environmental goals.
How is a CEO appointed in a not-for-profit organisation, and who does the CEO report to?
The appointment of a CEO in an NFP organisation is typically the responsibility of the Board of Directors. The process involves identifying the organisation's needs, conducting a thorough search (often with the help of recruitment agencies), and then evaluating candidates against the strategic needs and culture of the organisation.
Once appointed, the CEO reports directly to the Board of Directors. This accountability to the Board is fundamental because it ensures that the CEO’s actions and decisions are aligned with the strategic direction and governance framework established by the Board.
What are the differences between a CEO in a not-for-profit vs. a for-profit organisation?
While the roles of CEOs in both not-for-profit and for-profit organisations involve leadership, strategic direction, and operational management, the context and emphases differ. In a not-for-profit organisation, the CEO focuses on achieving the organisation's mission and making a positive impact on the community, culture, or environment the organisation serves. This might involve fund-raising, advocacy, and stewardship of public or donor funds.
Conversely, a CEO in a for-profit organisation is primarily focused on profitability, revenue growth, and shareholder value. The performance metrics, incentives, and sometimes even the skill sets required for these roles can vary accordingly, although there are many areas of overlap in terms of leadership, strategic thinking, and management capability.
It is worth noting that a not-for-profit CEO still needs to be focused on ensuring the future financial sustainability of their organisation.
Can a CEO of a not-for-profit be a member of the Board of Directors?
The governance structures of not-for-profit organisations in Australia vary widely, and it is possible, although not always common, for a CEO to also be a member of the Board of Directors. However, this arrangement can pose potential conflicts of interest and challenges in maintaining clear lines of accountability.
Best practice guidelines often suggest that maintaining separation between the Board (responsible for governance) and the CEO (responsible for management and operations) helps to ensure more effective governance and management. That said, every organisation is unique, and the decision should be made in the context of what best serves the organisation's purpose and governance model.
Related Terms
Further Reading
The Board and the CEO Relationship
What Is It About the Role of the Chair?
Recommended Reading
Recommended Viewing
Author
- About
-
Better Boards connects the leaders of Australasian non-profit organisations to the knowledge and networks necessary to grow and develop their leadership skills and build a strong governance framework for their organisation.
Found this article useful or informative?
Join 5,000+ not-for-profit & for-purpose directors receiving the latest insights on governance and leadership.
Receive a free e-book on improving your board decisions when you subscribe.
Unsubscribe anytime. We care about your privacy - read our Privacy Policy .