He also received , stock options. A chief operating officer COO is an executive member of a firm that is tasked with managing the day-to-day operations and administrative functions of the firm. COOs are not common in government, though some governors have COOs that serve the same function in a company: to manage the day-to-day operations of the governor's office. A CEO is the top-most ranking person at a firm that is responsible for the long-term health and direction of the firm while a COO is the second-highest individual in the firm that reports to the CEO and is responsible for the day-to-day operations of the firm.
COOs have a strong educational background combined with extensive work experience. A strong COO will have worked in a variety of positions, particularly in a specific organization, to understand all of the different parts of a business and how they work together. This allows them to pinpoint specific issues and gaps within the organization.
Having experience managing people and teams is also imperative to be a COO. In addition, COOs should be great at communication, flexible, and strong leaders. The salary of a COO will vary greatly depending on a variety of factors. These factors include the company they work for, their experience, and their contract. On top of that, COOs are paid bonuses and profit-sharing plans. Not all firms require a COO; however, those that do often benefit from the specific skill set that a COO brings to a company, such as strong analytical, organizational, and communication skills.
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Develop and improve products. List of Partners vendors. Your Money. Personal Finance. Your Practice. Popular Courses. Business Business Leaders. Table of Contents Expand. Key Takeaways The chief operating officer COO is a senior executive tasked with overseeing the day-to-day administrative and operational functions of a business. Skills required to be a COO include strong analytical, managerial, communication, and leadership skills.
There are generally seven different types of COOs that are best suited for different situations and different companies. Skill Set Instead of having one or two skill sets, most successful COOs have multifaceted talents, enabling them to adapt to different tasks and solve a range of issues.
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This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Executives and other leaders—collectively known as upper management—hold the primary decision-making power in a company.
The broad purview of the job allows an heir apparent to learn the whole company: its business, environment, and people. Similarly, in the time after Rex Tillerson was appointed to the number two position at Exxon, observers noted that he was increasingly exposed to the public—a deliberate effort to facilitate his succession to CEO Lee Raymond. Certainly, being identified as a likely heir does not represent anything approaching a guarantee.
Regardless of whether each left because he was passed over for the CEO position, because the timing was not as advertised, or because he found greener pastures, the succession plan unraveled. Finally, some companies offer the job of COO as a promotion to an executive considered too valuable to lose, particularly to a competitor. It recently announced that its president and COO, Peter Chernin, had signed a new employment agreement preventing a rumored move to rival Disney. With this strategy, an organization may try to hedge its bets by stopping short of identifying a specific heir or setting a time-table for leadership succession, in an effort to keep its high-potential executives intrigued about what the future might hold for them, should they stay on board.
Understanding the roles distinctly, however, and considering their differences reveals a few things clearly. As they reported in the October issue of Strategic Management Journal, a review of ten years of data on companies showed that firms with a CEO-COO structure had underperformed relative to their industry peers. Is the structure itself to blame? Put another way, is the COO part of the problem or part of the solution?
Hambrick and Cannella offered both explanations, and other theories could be constructed. Our work suggests that divining answers from such broad surveys is inherently difficult because the nature of the COO job is so deeply contextual. After a COO departs, it often appears that his or her duties have been divided up among top managers without much disruption. When Steve Heyer left Coca-Cola, his responsibilities were dispersed in this fashion, and the position was not filled.
This makes finding suitable candidates difficult for executive recruiters as one of the authors can attest. More important, it stymies the CEOs and boards who must select among the candidates. The existence of seven different roles suggests at least seven different sets of attributes on top of the basic—and infinitely variable—requirement that there exist a personal chemistry between the COO and the current CEO.
Even though the role is so contingent, we have identified some success factors that came up consistently in our interviews with executives in widely varying situations. The single element most critical to the success of a CEO-COO pairing, we quickly saw, is the level of trust between the two individuals.
Perhaps it is the most difficult of all organizational working relationships because more than others, it is a balancing act on the threshold of power. How can a pair of executives get past such perils and develop an extraordinary level of trust? Again, consistent themes in our interviews suggest the answer. Conversely, the COO must be sure that the CEO will provide whatever is needed to do the job, will not put any obstacles in the way, and will not thwart future career advancement.
Chief operating officers, by virtue of their inherent talents and their organizational position, are highly visible and powerful. If you have an agenda that is different than his or hers, you will absolutely fail the company.
In the interviews we conducted—particularly those with COOs—we heard repeatedly how critical it is for seconds in command to check their egos at the door. When you are solving technology issues, such as is the site up or not, it is pretty black-and-white, and you see some of the results pretty quickly. But you are working on things through a lot more layers as COO, and the results come much slower. Often, the results do come more slowly—and often they come in a way that makes their proper attribution more difficult to discern.
Regardless, the COO is not necessarily in line to receive the kudos for a job well done. Back in the s, people in organizations jokingly picked up on a phrase from the television series Star Trek: The Next Generation.
They must be able to trust that they can afford to address longer-term and bigger picture issues because their second in command will maintain a focus on the here and now. Even COOs who are not primarily playing the executor role should have an execution mind-set and a bias toward action. A COO must be able to direct and coach others throughout the business. You get to mold the strategy; you get to direct the efforts every day.
You have the functional people that you work with, and that team performs against a mission, and it is an exciting experience. CEOs constantly have fresh thoughts with operational implications; they must be in the habit of discussing those with their COOs without delay.
Ken Freeman told us how he and Surya Mohapatra kept the lines of communication active at Quest Diagnostics. To a person, the executives we interviewed stressed the need for explicit and reasonable lines of demarcation between CEO and COO responsibilities. While there was no consensus on what exactly should be part of each job, everyone agreed that the matter had to be sorted out at the start of the relationship.
The greater the overlap in competencies, the greater the likelihood that the COO might feel perhaps accurately that the CEO is micromanaging and second-guessing decisions. Such behavior on the part of the CEO communicates to the COO a lack of trust that is likely to engender friction in the relationship. The way it gets worked out is the individuals—through trial and error, as well as through discussions—figure out who is going to be doing what and who needs to check with who on key decisions….
How the pair will make that happen needs to be agreed to very early in the relationship. Obviously, the creation of the COO role adds a layer of management; executives who previously had direct access to the CEO now have an intermediary to address. This is not to say that restricting access to the CEO is the goal. But the lines of responsibility were still respected. He would hear people out but then send them to me. I think what you have to do in that case is to enable, not control, communication and be transparent.
Without exception, the COOs we interviewed accepted the fact that their job was to make the CEO successful—and that in doing so they in many ways rendered their own contributions less visible.
But, especially for COOs who aspire to the top job, that creates a dilemma. Once you are in the COO role, you have to…broaden the network of things you do. You need to work with the board, work with the CEO, and work to lead others to be successful.
If the CEO is not deliberate about this, then the board will have no reason to be impressed by the number two, who may then prove ultimately unpromotable. Does the CEO give the number two real authority, real operating responsibility, power that is real, power that is seen by the rest of the company as real? Second, does the number one actually encourage and let the number two person have his or her own voice in board meetings and operating reviews?
Ask anyone who has worked as or alongside a COO—the job is demanding. Is it a role in decline? Some observers, as we have said, certainly think so. We can easily argue that there is a growing need for the role. Today, we have bigger companies, with expanding global operations, aggressively pursuing acquisitions. CEOs are asked to be public figures, communicating with many constituencies at the same time that increasingly democratic and knowledge-based organizations require them to spend a great deal of time campaigning internally for any change they hope to make.
Second, companies are becoming more deliberate about succession planning. Boards are anxious to identify and groom heirs and often see the COO title as a useful step in the process.
Finally, the easy mobility of top talent means companies must find ways to hold on to their most valuable non-CEO executives. The COO title can be effective in staving off wanderlust. Our suspicion is that they would be if there were less variability and confusion surrounding the role.
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