Chief executive officer – the title alone conjures visions of prestige, responsibility and, yes, huge financial compensation. To attain the job of CEO for a large company is the dream for many business people, but how does that dream come true?
There is no short or simple answer to the question, “How do I become a CEO?” Every career is unique, just as every skill set and life experience is different.
There are several traits and accomplishments that CEOs share, however. Enough is known about business executives who made it to the top that a general path can be identified.
Whether that path can be followed by everyone who wishes to do so is not as clear.
Gender Disparity at the Top
To begin with, some people start with a statistical advantage.
Men still are far more likely to become a CEO, especially at the “gold standard” of big business, the Fortune 500 list of companies. According to Fortune magazine, an estimated 79.5% of senior managers at companies on the 2017 Fortune 500 list are men.
The gender disparity at the CEO level is even greater: As of 2017, only 32 (6.4%) of CEOs on the Fortune 500 list were women.
That said, the National Association of Women Business Owners reported that as of 2015, 9.1 million firms in the United States were owned by women, which accounts for 31% of all privately held firms. In addition, 20% of U.S. firms that are worth $1 million or more are owned by women.
The disparity also can be seen in business schools, where U.S. News & World Report data shows 32% of executive MBA students are women. However, according to U.S. News, some business schools reported more women than men enrolled in MBA programs.
Why does gender matter when determining how to become a CEO? Because before setting out to accomplish a thing, it is best to know what obstacles one might confront along the way. And according to a comprehensive study conducted by LinkedIn, a woman with the same credentials as a man needs an average of 3½ more years of work experience than a man to become an executive.
The Path to the Top
That LinkedIn study, conducted in 2016, analyzed the LinkedIn profiles of approximately 64,000 members who became vice presidents, executives or partners at companies with 200 or more employees. The observable traits of their career profiles were analyzed. These traits included:
- Educational background
- Work experience
- Career transitions
According to the study authors, the probability of becoming an executive is 14%. The odds are even more against becoming chief executive officer, yet the authors were able to determine a distinct but challenging pathway to the C-suite, which includes these steps:
Build a well-rounded work background. The authors of the LinkedIn report found that working across job functions can assist in career progress. A successful leader should learn the ins and outs of every aspect of a company.
Stick with one industry. While working in different roles within a specific company can be beneficial, the LinkedIn report found that business people who switched industries suffered a minor negative impact in career growth. The authors speculated that a steeper learning curve and the loss of industry contacts and relationships cost job candidates in the long run.
Get an MBA. The authors found that earning an MBA can give a business professional a career boost worth the equivalent of five to 13 years of work experience. The study also found that other advanced degrees can be beneficial, but the MBA is the most effective form of advanced education.
Geography counts. The city in the U.S. that provides the best opportunities for advancing to CEO is New York, while executives in Houston and Washington, D.C. were less likely to earn that distinction.
CEO Job Outlook and Salary
The U.S. Bureau of Labor Statistics reports that many top executives have a bachelor’s or master’s degree in business administration or related fields. It also cites the importance of developing skills in communication, decision-making, leadership, management, problem solving and time management.
As mentioned, CEOs generally are well-compensated – and not only at the Fortune 500 level.
The Economic Policy Institute found that the average pay for CEOs with the 350 largest companies in the U.S. was $15.6 million as of mid-2017.
The BLS reported that chief executives with companies of all sizes earned a median annual wage of $181,210 as of May 2016. The highest salaries for CEOs were found in the professional, scientific and technical services sector, with a median wage of $208,000.
The job outlook for CEOs is relatively robust. The BLS estimates that between 2016 and 2026, the number of CEO positions will increase by 8%, which is slightly more than the 7% average growth across all job types.
Rarely will a CEO position be listed by an employment agency. If someone does not advance into a CEO position through a series of internal promotions, it is likely he or she became aware of the job through a trade journal, word of mouth or a career placement agent.
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