When you think about executives, you may think of a CEO or a company president. In some companies, though, the chief operating officer is the one who actually keeps things running.
A COO typically falls just below the CEO in a company’s organizational structure. A COO may also hold other titles, such as company vice president. A COO is usually an experienced professional with proven leadership ability. Adding a COO to your company can alleviate the workload of your CEO and help your organization grow more quickly.
TL;DR (Too Long; Didn't Read)
Chief operating officers are often responsible for the internal operations of their company.
What Does a Chief Operating Officer Do?
If you’re considering hiring a COO, you should know the answer to the question, “What does a COO do in a company?” Every COO position is different, and the exact responsibilities vary by industry and by company.
In general, a COO oversees the day-to-day operations of a company. She is focused on the internal workings of the operation, from production to human resources. This allows the CEO or company president to focus on long-term business planning, company goals and the outward concerns of the company.
The COO will work closely with the CEO and other executives such as the chief financial officer. The CEO sets a company’s priorities, but the COO carries out those responsibilities. On a typical day, a COO may meet with the CEO, create company policies and work with high-level managers to ensure those policies are implemented.
The chief operating officer role is considered by some to be a thankless one. A COO does much of the work to keep a company running or growing, but the CEO often receives much of the credit. When there is a challenge with an aspect of company operations, it’s the COO who needs to fix it.
Ultimately, the role of a COO is determined by the needs of the company and the CEO. A COO should complement the CEO. He may have expertise in areas that the CEO doesn’t. This helps bring balance to a company’s leadership team. If a tech company is expanding into a new area, they may recruit a COO with experience in that area. For example, if a tech company is expanding into the health care market, they may look for a COO with a proven record in health care.
What Degree Do You Need to Be a COO?
A COO typically has a minimum of a bachelor’s degree. The bachelor’s degree may be in business or in the field in which he works. For example, a tech company’s COO may have a bachelor’s degree in business or a bachelor’s degree in computer science.
COOs may also have a master’s degree. A master’s in business administration is a popular choice for many high-level executives. You can get an MBA even if you don’t have an undergraduate degree in business. It allows you to hone your business skills and be more marketable for an executive position.
Experience is just as important as a degree when it comes to a COO position, though. Most COOs have extensive managerial experience. They should have a track record that shows they’ve improved their company’s position. This might mean growth in their company’s revenue or improvement to company processes.
What Are the Characteristics of a Chief Operating Officer?
A COO plays an important role in her organization. To carry out that role, she should have excellent communication skills. She should be able to communicate with employees at all levels of the company, from other executives to employees on the front lines. She should also be persuasive. She will often need to advocate for her position and for initiatives that she feels will help her company grow.
A COO should also be decisive and focused on solutions. She will often be called on to solve problems, and she may need to make difficult decisions to solve those problems. For example, if her company is facing lower revenues, she may need to oversee the laying off of employees. She should be comfortable reviewing the available data and making quick decisions based on the information that’s available to her.
A successful COO should be an excellent leader. She will need to coordinate with employees and executives across different departments. She will be expected to conduct herself with honesty and integrity. If she makes a mistake, she should be able to take responsibility for the error and move forward with rectifying her mistake.
A COO should also be able to work without a lot of accolades. She should be able to put the company first. She will often be overshadowed by the company CEO, who is the public face of the company. If public recognition of her achievements is important to her, she may not be the best fit for a COO position.
What Types of Companies Benefit From Having a COO?
Companies across various industries can benefit from having a COO. A COO is particularly important in large, rapidly growing companies. In companies that are focused on rapid growth, the CEO is often focused on external factors, such as acquiring other companies and building relationships with other brands. A COO can keep internal company elements in line while the CEO focuses on growth.
Do startups need a COO? It varies depending on the startup. For example, many tech startups have younger CEOs with less experience. In this scenario, a COO may mentor the CEO and help the CEO learn to navigate the business world. While a CEO may have the vision the company needs, he may not have experience in handling the day-to-day operations of a large organization. A COO can handle these operations while mentoring the CEO.
Your company may also benefit from a COO if your CEO works better with a partner. The work of a CEO can be isolating. He’s faced with important decisions daily that can impact hundreds or even thousands of people. Some executives work best with a partner to help them hash out and develop ideas and reflect on decisions.
Companies often promote high-level executives to the position of COO if the executive is being courted by a competitor. Losing a high-level executive can put your company in a difficult position. Some people are simply hard to replace. Promoting a key executive can help ensure you don’t lose a vital employee to a competitor.
If you think your company’s CEO is planning to step down, you may want a COO who has the potential to become a CEO. In this example, the COO is being mentored by the CEO and is being groomed to take over as CEO. As a COO, the executive can learn the ins and outs of the company and prove that he has the leadership qualities needed to serve as a CEO.
What Is a Chief Operating Officer Salary?
According to the Bureau of Labor Statistics, the median annual salary for a top executive is $104,700. This means that half of all top executives make more, and half make less. How much does a COO of a small company make? It depends on the location and industry of the company. Cities with a high cost of living, such as New York City or Los Angeles, will pay more than cities with a lower cost of living. Tech companies may pay more than other industries.
COOs may also be paid in other ways. They may receive stock options, expense allowances and access to company vehicles. They may also receive bonuses based on their company’s performance. This, combined with other benefits such as health insurance and a retirement plan, can significantly increase their income.
It’s also important to keep in mind the number of hours a COO works. Top executives often work more than 40 hours per week. A work week of 60 hours or more is not unusual, and working in the evenings and on the weekends should be expected.
What Is the Job Growth Outlook for a COO?
The Bureau of Labor Statistics anticipates an average level of job growth for top executive positions through 2026. They anticipate that these positions will grow at a rate of 8 percent. The job growth is due to a combination of the creation of new companies and the expansion of existing ones. The creation of new companies has slowed down, though, which is why job growth isn’t faster than average.
Additionally, changes in technology have made it easier for a CEO to handle day-to-day company operations. Email and online meetings have made it easier for a CEO to deal with outside concerns as well as internal ones, so some companies may not see a need for a COO.
Those looking for a COO position should expect a high level of competition. These positions have high pay and are often a stepping stone to a CEO position. Positions that are advertised outside a company will often have numerous qualified applicants. Many companies promote COOs from within or hire recruiters to assist with the process.
What Is the Process for Hiring a COO?
If your company has had a COO before, you already have a sense of the scope and responsibilities of the position. If you’re introducing a COO position, though, your first step is to clarify your reason for bringing on a COO and what responsibilities you expect the COO to carry out. Since a COO works closely with the CEO, you should involve the CEO heavily in the hiring process.
You should clearly outline the responsibilities of the CEO versus the COO before you begin looking for a candidate. There should be clear boundaries for each position. Once you have a clear sense of what you expect the COO to do, you will know what qualities to look for in a COO. If your company is struggling, for example, you will want a COO with experience in turning around companies that are facing challenges. If your CEO is new to running a large organization, you will want a seasoned COO with a decade or more of experience.
You should consider internal and external candidates. An internal candidate has the benefit of already knowing the ins and outs of your organization. An external candidate has the benefit of offering a fresh perspective on your business and inside knowledge of how similar organizations work.
A recruiter can help you vet candidates. You can also use informal channels like referrals to find qualified candidates. Once you find a promising candidate, you will want to conduct an interview. You may want to conduct a multistage interview process that includes meeting with the CEO, meeting with the executive team and getting a sense of how the COO would implement changes at your company.
You should also carefully review references for your top candidate. Speak to people to whom the candidate has reported as well as people who have reported to the candidate. This will give you a sense of the candidate’s managerial and communication styles.
If everything seems like a good fit, it’s time to begin salary negotiations. Have a clear sense of how much you are willing to pay, but keep in mind that a top candidate may have multiple offers. Consider offering other benefits such as stock options, a retirement plan and performance-based bonuses.
Once you’ve hired a candidate, anticipate some adjustment time. Your executive team will need to adjust to his input and style. If the COO position is new, there may be some tension as employees adjust to reporting to the COO rather than the CEO. A good COO can be a critical part of your company’s growth, freeing up the CEO to foster relationships and focus on your company’s long-term goals.
- Investopedia: Chief Operating Officer – COO
- Entrepreneur: 4 Common Traits of the Best Chief Operating Officers
- Bureau of Labor Statistics: Top Executives
- Villanova University: 5 Leadership Skills Found in Managers
- Entrepreneur: When It's Time to Hire a COO – and How to Get It Right
- Redwhale: What I Learned About Hiring a Chief Operating Officer