CEO vs. CTO: What's the difference?

CEO vs CTO

The growth of the company lies in the hands of great leaders. But there’s a query on how to distinguish CEO vs. CTO. While these positions don’t necessarily clash, they need to work hand in hand and make things work.

An organization, especially corporations and big enterprises, needs an effective C-suite lineup. These top-level executives manage important business decisions that can make or break their success in the market. And, two of the most essential positions are the chief executive officer and the chief technology officer.

Now, what are their roles in the business? Are they different from each other? In what aspect do their roles overlap? Let’s discuss these things in this article. 

CEO vs. CTO: Defining Both Roles in the C-Suite

As leaders of a company, both executives need to play their roles efficiently. They do so while withstanding utmost pressure and high demands. 

When they do their jobs effectively, they can both drive the business towards profitability and scalability. So as we delve into their duties, let’s define these positions.

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What Is A CEO?

The chief executive officer (CEO) stands at the highest rank on the corporate ladder. When you reach this milestone, your role involves making major decisions to achieve company goals. 

Now, the duties of a CEO differ from one business to another. However, generally, it involves the person in the position to steer the company’s wheel in the right direction. It means you have to get involved with operational strategies, capital utilization, and overall organizational structure

It may sound like a distinguished position to covet. But being a CEO is not an easy feat. In a study posted on Fortune.com, there is a 22 percent increase in the position’s turnover rate.

This statistic is just for the first half of 2021. Moreover, the report also noted that in 2020, Russell 3000 companies have tallied an 11.6% CEO turnover rate. It was hypothesized that it’s the result of the COVID-19 pandemic as leaders grapple with the challenges of the situation.

The report was conducted by The Conference Board, ESGAUGE, and Heidrick & Struggles. They were tracking 1,095 of the biggest public companies among 14 countries since 2018. 

Now, does being the CEO mean being the owner of the business? The answer depends on the size of the company. 

In some circumstances, the chief operating officer is also the owner especially in startups and small businesses. However, in large corporations, the CEO is more often elected by the board of directors. 

What Is A CTO?

Technological developments for businesses come and go at a dizzying pace. Hence, companies find it critical to organize a structure where one person stays on top of it all. And that’s what the chief technology officer (CTO) is hired for.

The position came to be in the C-suite in dot.com and tech companies in the 1990s. As technology continues to evolve, organizations are forced to adapt to the changing landscape. 

Since then, the CTO takes the highest tech executive position within an organization. In some cases, CTO also means chief technical officer. 

This executive manages the company’s tech needs and development. There are also instances where the chief technology officer is responsible for the research and development department. 

In the previous years, the chief information officer (CIO) functioned as a CTO for many companies. However, as technology continues to evolve, the need for a CTO has become apparent. 

So now, the CIO handles the company’s internal technology needs, if the position is available. On the other hand, the chief technology officer becomes responsible for tech solutions that scale the business externally. It also touches on products and services that help with the company’s interaction with clients and vendors. 

However, for companies that do not have a CIO, the chief technology officer handles both internal and external tech needs. This is especially visible for startups and small businesses that need technology to thrive.

Being the Chief: CEO vs. CTO in Terms of Duties and Other Aspects

After defining the roles, it’s time to look into the responsibilities of a CEO vs. a CTO. Although it may vary based on company size, corporate structure, and workplace culture, there are general duties that these positions handle.

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A Day in the Life of A CEO

A study by Harvard Business Review in 2018 found that 47% of CEOs’ time is spent in the office. While on duty, they allocate 61% of their working hours to face-to-face meetings. However, with the pandemic forcibly pushing for social distancing, are there any changes?

In a follow-up article from HBR, last August 2021, pointed out that CEOs should be wise in juggling their time. It is a scarce resource for them, so they should allocate where it matters most. Now, what does a CEO do in general?

  • Make executive decisions to create and implement the company’s vision and mission
  • Take charge of the planning and implementation of the organization’s overall strategies for operations
  • Evaluate the results of the strategies within a given cycle whether goals were achieved and what milestones were achieved 
  • Serve as a liaison officer between the board of directors and the other executives, if applicable
  • Meet with other executives to seek guidance and streamline all strategies and implementation throughout the whole organization
  • Look into potential business expansion or acquisition
  • Participate in industry-related events and activities to enhance brand image and increase self-development
  • Represent the company to any public or private events relevant to the company 

Looking At The CEO Salary

In 2020, the average annual salary of the CEOs employed by the top 350 U.S. companies earned $24.2 million. On the other hand, the average top CEO earnings were estimated at $13.9 million. 

According to the Economic Policy Institute, it’s a staggering 1,322% net increase since 1978. Comparatively, it’s 351 times the salary of regular staff. 

The salary of the CEO is more stock-related—hence the high-level compensation. Their job and decision-making also have a big impact on how the company will flourish. And since they are leading the organization as a whole, they garner so much compensation. 

Although some may argue that this salary rate can be lowered down, it still depends on the decision of the board. Sometimes, it’s on how much the company can afford to compensate its leader.

KPIs for A Chief Executive Officer

Performance evaluation for a CEO is different from a staff or a manager. But there are still certain metrics that an organization can follow.

But the timeline of the evaluation must be within a reasonable duration, like within a 12-month period. And to create a balanced evaluation process, here are some things to consider.

1. Vision Follow-Through

Before the start of each fiscal year, the company should already have planned a vision. With it comes goals and objectives that the CEO wants to achieve together with other executives.

So when it’s time to evaluate the CEO’s action items, the company notes how the CEO manages the whole corporate strategy. Here are some guide questions:

  • Has the CEO planned a SMART goal and vision for the company within the period?
  • What part of the plan worked? Was there any failure?
  • Has the CEO managed to communicate a clear vision and strategy to both internal and external stakeholders (e.g., customers)?
  • How was the CEO handling overall operations including corporate environment and employee morale?
  • Was the CEO able to lead the company towards its mission and vision?

2. Human Resources Development

People are the most important resources of a company. Hence, as the overall leader of the company, the CEO must capitalize on this idea. 

The chief executive officer must acquire and build a team that is competent in the market. The CEO must also create an environment that enables every employee to grow and perform to their utmost potential. 

3. Finance and Resource Development

The CEO’s ability to bring in proper financial plans and resources is one of the most important considerations for an evaluation. Without capital development and other proper financial resources, the company will not be able to thrive.

  • Was the CEO able to bring in necessary funding resources?
  • Has the executive been able to connect and work with the right service providers that add value to the company?
  • Was the executive able to acquire expertise that elevates the company’s position in terms of market knowledge and financial resources?

Most Influential CEOs in 2021

There are many successful CEOs in the world, but who among them are the most influential ones? Last October 2021, CEOWORLD Magazine released its top 155 chief executive officers from around the world. 

In the top 10, eight are from the U.S., one is from France, and another one from Saudi Arabia. The list is as follows:

  • Elon Musk from Tesla and SpaceX
  • Satya Nadella from Microsoft
  • Mark Zuckerberg from Facebook (who recently renamed the company to Meta)
  • Andy Jassy from Amazon
  • Tim Cook from Apple, Inc.
  • Jamie Damon from JPMorgan Chase & Co.
  • Arvind Krishna from IBM
  • Bernard Arnault from LVMH
  • Albert Bourla from Pfizer
  • Amin H. Nasser from Saudi Aramco

The magazine chooses the top CEOs by reviewing more than a thousand executives in around 96 countries. They look into business performance, market shares, branding and market impact, and the professional’s socio-economic and environmental issue track record.

The Role of the Chief Technology Officer in Retrospect

Tech has a massive impact on businesses when it comes to efficiency, productivity, and profitability. That is why it is the chief technology officer’s job to ensure that the company is coping with the developments. 

The General To-Dos of a CTO

To drive the organization into an optimal competitive advantage, what does a CTO do? It’s a given that different business sizes and industries have varying needs. But there are still general duties that the chief technology officer must do across all companies. 

  • Innovation Leader — The CTO ensures that the company leverages innovative technology to upgrade products and services. This executive is also responsible for the overall tech development strategies and implementation.
  • Business Technology Pacemaker — For businesses that need technology for core processes, the CTO makes sure that everything is optimized and well maintained. This means managing existing tech assets, including websites, devices, and software, among others.
  • Product Developer — This executive needs to use customer intelligence, competitor analysis, and market research data to develop innovative products and services. It comes through strategic partnerships with vendors and other stakeholders in terms of product development and innovation.
  • R&D Overseer — The CTO needs to work closely with the leadership team to manage the tech budget, resources, and requirements. They also have to ensure that data management, including security, disaster recovery, and IT continuity are in place.

Salary Review for A CTO

Compensation for a chief technology officer is often hybrid. At times, it consists of a salary with performance-based bonuses. 

Now, according to the Economic Research Institute, the average range for a CTO’s salary is from $158,070 to $293,424 per year. For top companies in the US, the average pay is $232,603 per annum.

On another note, the salary of a chief technology officer is expected to grow by 16% in 2026. That will make the estimated average pay for the role go up to $269,651. 

Measuring the Performance Of A Chief Technology Officer

Technical acumen is the strongest suit of this executive. But as one of the leaders, the chief technology officer’s performance must also be measured given other conditions. 

In the same manner, as the evaluation for a CEO, the review should encompass a given period. And it should cover the overall duties and responsibilities of the leader. If you want to get some ideas, then here are some areas to consider for a CTO’s evaluation.

1. Organization Alignment

The CTO is the champion of technology and developments for an organization. Hence, the role involves creating a strategy that resonates throughout the company. Now, when you think about evaluating the performance of a CTO, here are some ideas to jumpstart the process.

  • Are tech strategies effective in achieving goals and objectives?
  • Are the company’s existing technologies and innovations in line with the overall business model?
  • Is your current technology at par with the competitors? Is it relevant to the current market?
  • Do people use technology effectively?

2. Internal and External Tech Environment Satisfaction

All departments rely on the CTO to help them resolve any tech-related issues. Whether it’s server downtime, website crashes, or cybersecurity issues, the executive has to create a plan to handle them. 

Others also look up to the chief technology officer in terms of innovative initiatives. At times, some stakeholders also expect the CTO to plan potential learning sessions. This way, everyone involved with the company’s technologies can utilize them to their utmost potential.

Most importantly, the CTO must stay on top of trends and news about tech-related updates. They must incorporate these ideas into a working development model. Remember that tech trends come and go. If your company stays behind, you may significantly lose to your competitors.

So, when it’s time to evaluate the CTO, look into these things and review whether the chief technology officer has done the role effectively.

3. Supportive and Healthy Working Conditions

In some companies, the chief technology officer also handles the recruitment and retention of talents. The executive will screen the right candidates and ensure that every hire is the best decision for the company. 

Not only that, but the CTO also needs to foster a supportive and healthy working environment. This way, every employee will stay with the company for a long time. In turn, it translates to an increase in productivity since everyone is trained on how to work on projects. 

This is only applicable to companies whose CTO also handles the R&D or the engineering department. Therefore, in measuring the executive’s performance, the metrics should include the team culture and morale of those working under the CTO.

CEO vs. CTO: How to Become a CEO or CTO

Are you an owner of a company? Chances are that you have become a CEO or a CTO by now. However, even if you’re not an entrepreneur, you still have a chance to clinch these top executive positions. Here are some ideas to start thinking about.

1. Get a degree

Yes, there are some exceptions like Mark Zuckerberg or Bill Gates. But most Fortune 500 companies look for a relevant educational background.

More often than not, CEOs need to have a degree in business, accounting, or economics. At times, obtaining a master’s degree in business administration (MBA) and other management fields is an advantage, too.  

Now, how to become a CTO? You may need a degree related to computer science, information technology, or engineering. These courses will help you grasp different schools of thought when it comes to technology. 

You may also proceed with an advanced degree in the same field. For instance, a Ph.D. or master’s degree can also help. And lastly, getting an MBA can boost your chances of getting a CTO job. It’s not a prerequisite though unless the company deems it to be.

2. Gain relevant experience

Go out there and get your on-the-job experience to bolster your chances of becoming a CEO or a CTO. If you’re starting as an entry-level employee, make sure to get a promotion to a senior-level management position as the years pass by. Learn the ropes of the business and work your way to the top. 

Typically, it takes at least 10 years of experience to become a C-suite executive. But if you’re exemplary at what you do, then maybe you can lessen those training years. 

3. Learn more as you go along

As they say, when you become a professional, you should never stop learning new things. So attend various seminars, workshops, and other events to hone your skills and knowledge. 

Remember, these activities not only expand your arsenal, but they also help you connect with key players in the industry. You can gain mentors to help you as you move towards the top of the corporate ladder.

4. Start your own business

It’s easier said than done. Starting a business may not be a walk in the park. However, if you want a surefire way of becoming a CEO or a CTO, then be an entrepreneur yourself. 

When you open your own company, you’re the one who shapes its vision, culture, and direction. You can think about your technological advancements and create your own strategies.

Are you planning to become an entrepreneur?

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