What is a COO?

Remember the vice principal at your high school…

He’s the one who managed assemblies, coordinated activities and events, and made sure things ran smoothly on a daily basis. Similarly, a COO usually handles logistics and day-to-day operations, freeing up the chief executive (or school principal, in this case), to focus on the big picture.

Some people assume that a chief operating officer is just a deputy, but the position typically comes with important responsibilities. If a company's leaders make a strategic decision, it’s often up to the COO to communicate it to employees and ensure they implement it correctly. Since the COO is in the trenches, he or she is in a good position to understand issues affecting the organization and come up with solutions. COOs also often oversee changes in business processes, such as installation of new technology, meeting staffing mandates, or switching logistics partners.

Usually, a COO’s role is dictated by the needs of the CEO. A company may choose to bring in a second-in-command for a variety of reasons:

• To act as a mentor to a newer or younger CEO
• To succeed the CEO in the future
• To be a partner to the CEO, usually offering a complementary skill set or background
• To manage day-to-day operations so the CEO can focus on the big picture
• To drive change, such as overseeing a critical new business initiative or transformation
• To retain top talent — Someone may receive the role to prevent him or her from leaving

The duties of the COO vary depending on the logic behind the role. A mentor may primarily act as a guide, coach, and sounding board for the CEO, while a successor may slowly take over all of the executive’s duties.

The difference between the chief executive officer (CEO), chief financial officer (CFO), chief commercial officer (CCO), and chief operating officer (COO) roles varies by organization:

• A CEO tends to take a broad view, driving the overall strategy of an organization and representing it to the outside world. He or she holds the highest position within the organization and usually has limited involvement in everyday projects and tasks.
• A CFO is responsible for the financial side of the company. He or she oversees everything related to financial planning, management, and reporting. A CFO is typically the third highest in the chain of command, but that depends on the organization.
• The CCO typically focuses on sales, marketing, and revenue. He or she is concerned with how much cash is coming in the door and the impact of customer service and experience on growth. The CCO role is usually the lowest-ranking of the executive roles mentioned here, but that’s the case in some organizations, especially those with a strong focus on growth.
• The COO typically works across departments to streamline and coordinate company operations. The COO is often the second in command, reporting directly to the CEO. Depending on the company, this may mean that other executives report to the COO instead of the CEO. In other scenarios, only lower-level employees will report to the COO — often the operations team.

Since a chief operating officer’s role depends so much on the company, the required qualifications and compensation also vary. Generally speaking, key attributes of a chief operating officer include:

• Strategic thinker: A COO needs to understand the end game before implementing projects. He or she must plot out the most efficient way to get things done internally.
• Relatable: Since a COO works across many departments, he or she must get along well with others, from executives to individual workers.
• Able to multitask: Unlike a chief financial officer or chief marketing officer, who focus on a specific area of expertise, a COO needs to manage multiple tasks across different departments at any given time.
• Understands complex issues: Successful COOs understand the nuances within each department of a company.
• Willing to get his or her hands dirty: Getting into the trenches is an important part of a COO’s job. He or she must be able to demonstrate intimate knowledge of a company’s inner workings while implementing a new strategy or project.
• Aware of the big picture: Although a COO may be working on internal projects, he or she needs to keep sight of the master plan in order to meet performance targets.
• Gets along with the CEO: Often, the biggest factor in a COO’s success is an ability to gain a CEO’s trust and maintain a strong working relationship.

According to Salary.com, a COO’s salary ranges from $361,432 to $587,803, with the average falling at $464,586 as of October 30, 2019.

Two of the best-known chief operating officers are Tim Cook of Apple and Sheryl Sandberg of Facebook.

Steve Jobs’s heir apparent joined Apple in 1998 as senior vice president of worldwide operations. His role involved managing inventory and streamlining business processes, which ultimately led to Apple outsourcing its manufacturing. In 2005, Cook took over as COO. In this role, Cook oversaw all of Apple’s worldwide sales and operations, including end-to-end management of the company’s worldwide supply chain, sales activities, and service and support. As COO, Cook also managed the company’s Macintosh division and took a significant role in developing strategic relationships with resellers and suppliers. He took over as Apple’s CEO in 2011.

Credited with making Facebook profitable, Sheryl Sandberg became Facebook’s COO in 2008. Sandberg focused on positioning the company as a platform for small business advertising to increase ad revenue and generate profits. She was also responsible for handling staff management, hiring and firing, dealing with political issues, and determining advertising strategy. More recently, Sandberg has managed Facebook’s response to a number of controversies, including around data privacy and its role in spreading misinformation.

According to a recent report by executive search firm Crist Kolder Associates, only 31.5% of Fortune 500 and S&P 500 companies had a COO in 2018, down nearly 17% since 2000.

Over the last two decades, the role of the chief operating officer has changed dramatically and in some ways become less relevant. Here are some of the reasons why:

CEO Reluctance

The COO must be someone a CEO trusts and feels comfortable having as a second-in-command and potential successor, which can make it a difficult position to fill. In many companies, it appears the CEO would rather lead alone.

Board Expectations

In the last two decades, corporate board members have begun to hold CEOs more personally accountable for company performance and problems. The Sarbanes-Oxley Act of 2002 was created to ensure companies, and their officers, were operating above board and following regulations. Thanks to more intense external oversight, boards tend to expect CEOs to more closely monitor the business day to day and stay involved in activities that previously would have stayed in the realm of the COO.

Technology

Technology is taking over many operational roles traditionally in the wheelhouse of the COO. That includes everything from management of business processes, to monitoring employee progress and performance, to hiring. COOs must adapt to this changing environment to survive.

Costs

The cost of hiring another executive can be a financial burden, particularly for a small organization or start-up. If CEOs or other staff can handle the duties of the COO, some companies may choose not to hire one.