What is a COO?
The chief operating officer (COO) is part of a company’s executive team often charged with implementing strategy, managing change, and overseeing day-to-day operations.
The role of chief operations officers differs across organizations. Overall, their job is to make the chief executive officer’s vision for the company a reality. While the chief executive officer (CEO) focuses on big-picture plans and serves as the public face of the company, the COO typically implements projects and strategies and makes sure day-to-day operations run smoothly. Sometimes COOs are hired to manage major changes at the company, complement the strengths of the CEO, or eventually take over. Good COOs tend to combine an ability to handle complexity with a knack for communicating across departments and being willing to get their hands dirty.
Say a start-up wants to launch a new product. The chief executive officer is swamped with public relations and strategy responsibilities. The chief financial officer is managing the finances for the project. And the chief marketing officer is focused on spreading the word to customers. Who could handle day-to-day operations and implementation? A COO can come in and fill this gap.
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:
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:
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:
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:
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.
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 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.
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.
What is an Option Chain?
An option chain is a handy, interactive tool for investors looking to buy and sell options for a specific security, like a stock. Also called an option matrix, its purpose is to curate relevant information — from pricing details to premiums and expiration dates — and make trading options as seamless an experience as possible.
What is a Federal Housing Administration (FHA) loan?
A Federal Housing Administration (FHA) loan is a home mortgage — designed for low-to-moderate income individuals — from a government-approved lender that is insured by the FHA.
What is CAGR?
Compound annual growth rate (CAGR) is the average rate of growth of an investment over a specific time period that assumes “compounding” ( reinvesting profits at each interval within that time span) — that smoothes out how the growth of the company looks into a single number as if the growth had happened steadily each year over that time period.
What is Modified Adjusted Gross Income (MAGI)?
Your modified adjusted gross income (MAGI) is your adjusted gross income with certain tax deductions added back in.
What is a Reverse Mortgage?
A reverse mortgage allows a senior homeowner to essentially borrow against the equity in their home, getting paid in a lump sum, fixed monthly payment, or line of credit.